Westminster Hall Sitting of 27 March 2001

Preamble
[MR. MICHAEL LORD in the Chair]

Foot and Mouth
Motion made, and Question proposed, That the sitting be now adjourned. —[Mr. Jamieson]
9.30 am
Mr. Keith Simpson: I welcome the opportunity to debate the important subject of the foot and mouth outbreak's impact on the rural economy in what can only be described as an escalating crisis. When I applied for the debate a week ago, we had not seen and heard about all the events of the past four or five days. The Prime Minister has now taken personal control of the crisis. In the past 24 hours, we have received the appalling news that there are cases of foot and mouth in the Lake district. I emphasise that the foot and mouth outbreak is not just about farming. Obviously, foot and mouth has a terrible and immediate impact on farmers, their families and workers, but it also has an impact on the wider rural economy. Increasingly, we have seen much support and sympathy from the urban population
There will no doubt be a serious debate later on the future of farming, the food industry, the rural economy and the management of the countryside. The purpose of this Adjournment debate, however, is not to consider the long term, but to concentrate on the immediate and short-term impact of foot and mouth on the rural economy. The views and questions that I shall put to the Minister are based on representations, letters, telephone calls and visits in my constituency. I suspect that other right hon. and hon. Members will do the same. Mid-Norfolk is a mixed rural constituency with small towns and villages. It still depends very much on farming, the food industry, small businesses and tourism
The Government fatally underestimated the scale and speed of the crisis. It gives me no pleasure to say that, because the people in the eye of the storm find the party politics of the crisis largely irrelevant. Nevertheless, I have come here today to represent my constituents' views on the subject. The Minister is probably aware that an NOP poll in today's Daily Mail shows that an overwhelming 77 per cent. of voters think that the crisis is out of control and that only 15 per cent. believe that it is being contained. That may be only a perception, but it is a worrying perception for any Government
Mrs. Gillian Shephard: Was that not also the perception last Thursday and Friday of the Government's chief scientist, who stated unequivocally to the media and elsewhere that the crisis was out of control?
Mr. Simpson: My right hon. Friend is absolutely correct. I think that it was only last Thursday when we received reports by the various scientists involved that
182WH
the Government fully realised for the first time that this was not a minor regional problem, but a major crisis. As my right hon. Friend said, it is sadly out of control.
Mr. Michael Fabricant: During the weekend, I have been discussing the issue with vets, including local veterinary inspectors employed by the Ministry of Agriculture, Fisheries and Food who are not able or willing to give their names. Clearly, they cannot criticise the Government openly. Is my hon. Friend surprised to learn that they say that this is no longer an epidemic, but a pandemic? They also say that, because of the Government's inability to act quickly—not only in taking the decision to cull animals, but in implementing the cull—the position has moved on so far that vaccination should be considered. Sadly, it seems that MAFF is taking no contingency—
Mr. Deputy Speaker: Order. That is sufficiently long for one intervention.
Mr. Simpson: Thank you, Mr. Deputy Speaker. My hon. Friend makes valuable points to which I shall return shortly. Following on from what he said. farmers, vets, business men, local authorities and the rural population at large have been bewildered by what could best be described as the orders, counter-orders and disorder that have characterised the crisis over the past month.
Mr. Patrick McLoughlin: Does my hon. Friend agree that part of the problem was that in the initial stages of the outbreak, the Government said that people should not go to the countryside? Respectable bodies, county councils and national parks also urged people not to go into those areas. That has had a devastating impact on the tourism industries, particularly in the run-up to Easter, which is usually their busiest time.
Mr. Simpson: My hon. Friend is absolutely right. During the past month, MAFF has moved from saying that there was a crisis, to saying that the crisis was under control, to the political direction of the crisis effectively being in the hands of the Prime Minister.
Mr. Michael Jack: Is my hon. Friend aware that, at the Select Committee on Agriculture last Wednesday, the chief veterinary officer admitted that, apart from a shopping list exercise to buy railway sleepers and indifferent quality coal, MAFF had effectively done no desk-top, real-world scenario planning for an outbreak of this size and complexity?
Mr. Simpson: My hon. Friend makes a good point. Many of us are worried that MAFF appears not to have undertaken such contingency planning. In my own area of Norfolk and Suffolk, for example, we had an outbreak of swine fever last year and had thought that lessons would be learned from that. For two and a half years, I was a special adviser for the Ministry of Defence, where contingency planning, standard operating procedures and so on were the norm for dealing with major crises. I hope that the Government will learn a lesson from that, even it is too late for this crisis.
Mr. Owen Paterson: Does my hon. Friend agree that the real tragedy is that the

183WH
Government did not learn the lessons of the 1967 outbreak? At the weekend, I held a meeting of experienced vets who worked through 1967 in Wem and they made an excoriating attack on the manner in which the outbreak has been handled. The words "gross ineptitude" and "far too little, far too late" were used.
Mr. Simpson: My hon. Friend is quite right. We have also heard that in Norfolk. There is an obvious lack of joined-up government, centrally and locally, which has led to frustration not just on the part of Members of Parliament—we are merely in the business of communicating that frustration—but of tens of thousands of our constituents. Until 10 days ago there was little co-ordination between MAFF, the Department of Health and the Department of the Environment, Transport and the Regions. Indeed, the DETR has shifted from advising that the countryside be closed down, to the Asquithian "business as usual", to encouraging people to visit the countryside with care. Many people believe that the Government's desire to hold a general election has influenced the outcome of the crisis. That is not a view being put forward by just Conservative, Liberal Democrat or nationalist MPs; there is a widespread belief that the timing of the general election has become caught up in the handling of a major crisis, to the detriment of that crisis.
Mr. James Paice: Is my hon. Friend aware of the chief veterinary officer's statement on the DETR website, which was an attempt at joined-up government? That statement, which was removed only last weekend, specifically said that it could not be assumed that any part of the country was free of the disease—which flies wholly in the face of everything that DETR Ministers and, latterly, MAFF Ministers have been saying.
Mr. Simpson: My hon. Friend makes another good point. The people at the sharp end—farmers, business men, local authorities—are bewildered by the process of order, counter-order, disorder. The Prime Minister said yesterday that trying to follow the length and breadth of the disease is like trying to follow a flu germ. If hon. Members will pardon the analogy of an old military historian, it is a bit like trying to deal with the German blitzkrieg in May 1940: the Government are always building road blocks where the enemy has broken through. There is a similar lack of co-ordination.
Mr. Richard Livsey: The hon. Gentleman is referring to the need for command and control. Only now has the MOD been properly engaged. In my area of Powys, we need not only a senior Army officer to sort out the logistical problems but the burial of livestock. Does he agree that that is urgent?
Mr. Simpson: The hon. Gentleman is absolutely right. Many of us, including my right hon. Friend the Member for Richmond, Yorks (Mr. Hague), have been calling for weeks for greater involvement of the Army than senior military personnel only, but it is a reflection on the Government if the Army is called in on such a scale. The public know that it is a national emergency.
Mr. Eric Pickles: In the context of joined-up government, one of my constituents who deals with the equine and canine industry took advantage of the Government's offer and rang the Department of Trade and Industry to ask what help would be given. The official advised him to declare bankruptcy and contact the Department of Social Security. He contacted the DSS, but it did not have the remotest idea of what help or advice it could give him.
Mr. Simpson: I shall refer to that issue in relation to a constituent of mine a little later.
The DTI advice has shifted from "close down the countryside" to "business as usual" to "visit the countryside with care". The Government face a fundamental challenge to their political strategy: how will they square the need to implement drastic and wide-ranging measures to control foot and mouth with the need to prevent damage to the rural economy? Such damage will be serious in my constituency, and Cumbria, Scotland, Essex and Devon are close to total meltdown.
Mr. David Prior: A company in my constituency, Osprey Foods, imports beef and meat and dairy products from abroad but cannot obtain certificates to re-export those products. I hope that the Minister will address that issue in his winding-up speech.
Mr. Simpson: My hon. Friend makes a good point. A number of my constituents are similarly affected.
Mr. Peter Bottomley: On behalf of the butcher trade, I wish to ask whether the Government acknowledge that butchers who might be tempted to close their businesses if the meat trade flattens might be able to survive the crisis with some transitional help, perhaps with business rates.
Mr. Simpson: I hope that the Minister will answer that question.
My constituents ate concerned that MAFF appears to have no collective memory of or ability to learn the lessons from previous crises. It learned nothing from the inquiry into the 1967 foot and mouth outbreak, as my hon. Friend the Member for North Shropshire (Mr. Paterson) said, or from the swine fever outbreak last year. The Government must address that.
The Minister's problem is that the crisis is similar to the fuel protests, but on a much wider scale. The Government are unable to comprehend the scale of the crisis and downgrade it. They say that the Opposition are making party political points. They try to move up the learning curve, but, unable to deal with the situation, they blame the people at the centre; they whip the farmers.
Dr. Ian Gibson: Without trying to downgrade the real problems in many areas, does the hon. Gentleman have any idea why the disease has not affected Norfolk? In the interest of moving along the learning curve that he mentioned, is there a message there for the rest of the country?
Mr. Simpson: The hon. Gentleman is a scientist and, I understand, an expert in the subject; I await his

185WH
contribution with great interest. It might be because of luck as much as anything else that the disease has not reached Norfolk, but my constituents and his in Norwich are praying that it does not. It is not simply a question of whether they carry on with business as usual; they are terrified.
The foot and mouth crisis must be seen against the wider slump in farming. Since 1999, farmers' incomes have fallen by 27 per cent. in real terms, and the industry's income has fallen by £700 million. Rural communities carry an enormous burden of fuel price rises, red tape and the cost of raw materials. In Norfolk and Suffolk, the pig industry is slowly recovering from the swine fever outbreak. The Minister, in his statement last week, said that the pig sector is back to 85 per cent. of its normal production. That is excellent news, but there is still a 15 per cent. gap. Farmers in Norfolk remain worried about the European Union's everything but arms proposal, which could have a dramatic impact on sugar beet production.
Mr. Bernard Jenkin: My hon. Friend addresses the plight of farming, but it is the farmers near outbreaks and with restrictions on the movement of their stock who are suffering most acutely. They could be forgiven for wondering even whether it would not be better for their farms to have the disease, because they would then receive compensation. Is it not essential for the Minister to address the plight of those farmers, in Essex and elsewhere, who are paralysed because of their proximity to outbreaks, even though there have not been any outbreaks on their farms?
Mr. Simpson: My hon. Friend makes a good point. I was telephoned yesterday by a constituent, Robert Long, of Hillfield farm, Scarning, who desperately wanted to move hundreds of calves. He told me that he has animals stacked up like aircraft over Heathrow airport. That is an enormous source of frustration for farmers. It is also a major animal welfare problem, which seems to be overwhelming the Government.
Mr. Tony Baldry: Further to the point raised by my hon. Friend the Member for North Essex (Mr. Jenkin), the problem is not only that farmers in exclusion zones are unable to move their livestock, but that MAFF is incapable of giving any answers. Farmers in my constituency, where there has been a foot and mouth outbreak, asked when their farms would be cleaned up. They did not get any answers from MAFF, so I tabled a parliamentary question, and the reply, which I received today, was simply that the Minister would reply as soon as possible. If Ministers cannot even give answers to hon. Members, what hope is there?
Mr. Simpson: I regret to have to say this to my hon. Friend, but that is what happened during the swine fever outbreak. The lesson that I learned from that outbreak was that the House was in recess when it should not have been. If we go into a long recess for a general election, our ability and our constituents' ability to press Ministers will be incredibly limited. Ministers should bear that in mind.
Mr. Lembit Öpik: On information transfer, does the hon. Gentleman agree
186WH
that it is important that farmers receive information and do not feel excluded from the decision-making loop? That would make it easier for them to act in partnership with the Government to resolve the issue. On that basis, does he agree that one lesson that we have learned already is that MAFF needs more resources for its information and communication systems?
Mr. Simpson: I am sure that the hon. Gentleman will agree that, when the crisis is over, the Government—whether this one or another—must seriously examine not only the organisation of MAFF, but the entire Whitehall structure that deals with food, the food industry and the environment.
Mr. Christopher Gill: My hon. Friend will be aware that Ministers have relied heavily on their officials' advice. Where that advice seems to have been faulty, or Ministers' judgment has been faulty in accepting it, why did neither of those bodies not simply accept the findings of the 1969 report and implement them immediately?
Mr. Simpson: I am sure that my hon. Friend will agree that, if there is a Government inquiry into the outbreak, that point must be made.
Farming is not an isolated activity, but part of the integrated food chain and the rural economy. We calculate that, for each person directly employed in farming in Norfolk in 1967, four were indirectly employed; now, for each person directly employed, 14 people are indirectly employed. Any impact on farming will affect not only people who are physically involved in it, but the wider community. The irony for the rural community is that, during the past 20 years, it has been asked to diversify, it has done so, and many farms now have businesses on them. If movement is restricted, despite modern information technology those businesses are likely to have a cash flow problem.
Mr. Geoffrey Clifton-Brown: Cash flow will be a real problem for farmers who have their cattle slaughtered and for those who are unable to move their stock; farmers whose cattle are slaughtered will not be able to restock for at least six months because of the quarantine. If the Minister, who is in charge of the taskforce, is to do anything, he should co-ordinate the work of Departments. Is it not reasonable for those suffering an extreme cash flow problem to have a VAT, income tax and council tax holiday until their cash flow returns?
Mr. Simpson: My hon. Friend is slightly ahead of me and has eaten one of my parliamentary sandwiches. I shall come on to that subject in a few minutes.
I shall now deal briefly with the impact on the rural economy and tourism. Many hon. Members know the figures. Total expenditure in the UK in 1999 was about £64 billion, overseas visitors spent about £12.76 billion and an estimated 1.85 million jobs are in tourism. The English Tourism Council reckons that total spending by visitors to the English countryside amounts to £12 billion supporting 380,000 jobs.
What of the impact on tourism of foot and mouth disease? At parliamentary questions yesterday, the Secretary of State for Culture, Media and Sport

187WH
acknowledged a potential loss of about £250 million a week now, rising to £375 million per week in April and £500 million in July. The downturn will not be short; I suspect that it will continue for some time. The Countryside Agency estimates that rural tourism losses could rise to £2 billion by the end of the Easter break.
I shall now deal specifically with the impact of foot and mouth on the economy of Norfolk. Acknowledging the argument of the hon. Member for Norwich, North (Dr.Gibson), I am aware that Norfolk is lucky in not yet experiencing a specific case of foot and mouth, but the county has been affected. Tourism expenditure in Norfolk is about £1.3 billion a year and supports 41,000 jobs. It is a major industry by any standard. The Norfolk tourism partnership concluded that long-term bookings were down slightly, but that short-term bookings were down by as much as 50 per cent. People in the rural economy and tourism are receiving a mixed message from the Government. They recognise that unless the Government is able to contain and eradicate foot and mouth, even though it is not yet in Norfolk, the problems of the rural economy and tourism are bound to continue. The top priority must be to deal with the disease.
Mr. Fabricant: My hon. Friend will know that many Americans visit Norfolk as well as other parts of the United Kingdom. Would he be surprised to learn that friends working in the consulate general in New York have told me that, despite the recent visit of the Minister for Tourism, Film and Broadcasting to New York, bookings to the United Kingdom are more than 30 per cent. down during the coming months—which we hope will see the end of the foot and mouth outbreak—and that cancellations to all parts of the UK, including Norfolk, have reached a staggering 80 per cent?
Mr. Simpson: My hon. Friend is correct. I disagree with Ministers who say that continuing to talk up tourism, and stressing that large parts of the country remain unaffected, is all that we need to do. I agree in theory, but as long as the photographs and pictures continue to be published, people see the spread of disease and that is what makes the major impact.
Mr. Roger Gale: As a military historian, my hon. Friend will know that on 15 April 1986 American war planes flew from East Anglia to bomb Colonel Gadaffi. I remember it well because at that time I was in the air on my way to America to promote tourism in the United Kingdom. We arrived to face a damage control exercise with pictures of armed policemen at London airport all over American television. American tourists cancelled their holidays to the United Kingdom in droves, and that went on for months. However eccentrically charming it may be, does my hon. Friend agree that the sight of a Minister holding up a pair of green wellies on American television is unlikely to supersede the pictures of burning sheep? Should we not be dealing with foot and mouth first?
Mr. Simpson: My hon. Friend makes his point. I am trying not to make personal points here. We have a major problem relating to organisation and politics and
188WH
I want to hold the Government to account on that. My hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) made the point that one of the countryside activities that has been seriously affected by foot and mouth is the equestrian sector. One of my constituents, Mr. David Sayer, of Great Witchingham horse trials, had to cancel those trials and has lost more than £40,000. He is one of a number of small businesses that have been dramatically affected with the prospect of little help in the near future.
It would be churlish of me not to acknowledge that the Government have come forward with packages during the past month. The Minister of Agriculture has introduced packages to help farmers. The Minister for the Environment is chairing the rural taskforce and he also outlined a series of measures. I want to put one measure to him, which he should take seriously. It was put to me by local councillors and business men in my constituency. He should go beyond what he has done already and possibly have a business rate holiday for affected businesses. The business rate will have a large impact on those businesses and a holiday might give them a breathing space. Secondly, we should seriously consider the proposal from my right hon. Friend the Member for Richmond, Yorks for a financial package of between £10,000 and £12,000 to tide over small businesses that might otherwise go to the wall.
Mr. James Gray: We welcome the partial business rates holiday that the Government have announced, but will my hon. Friend give particular consideration to one group of people who will not benefit—small village shops and post offices, such as the one in Laycock in my constituency? It is in an affected area that already has business rate relief because of the initiative that the Conservative Government introduced. The Laycock village postmaster tells me that me that his income is down by 50 per cent. and nothing that the Government have so far announced will help him.
Mr. Simpson: My hon. Friend makes a good point. I hope that the Minister will consider that.
I want to leave the Minister in no doubt, not about my feelings and those of other hon. Members, but about the feelings of my constituents about the Government's responsibility in this crisis. The Government underestimated the scale and the speed of the crisis. They lagged behind the outbreak and I fear that they still do. The Prime Minister failed to take a strategic grip until last Thursday or Friday. It took the report of the vets to frighten him into realising that he was standing at the edge of an abyss. I make no criticism of the Minister for the Environment, but a Minister of State is not at the right pay scale to chair the rural taskforce.
My right hon. Friend the Member for Richmond, Yorks was laughed at by the Prime Minister when he talked about having a war committee, but that is what is required. We need a committee of the Prime Minister, the Chancellor of the Exchequer—who, like Banquo's ghost, haunts proceedings but leaves no fingerprints—and the Secretary of State for the Environment, Transport and the Regions. The taskforce must be at that level to come to grips with the crisis, which is now at a national level. We have a mixed and muddled message about the need to isolate and eradicate foot and mouth while underestimating the impact on the rural economy.

189WH
Finally, many people, not all of them Conservative, Liberal or nationalist voters, are amazed that the Government appear to be more concerned about their preparations for the general election than the crisis. As one constituent put it to me yesterday afternoon, it is not just a question of what Ministers will be doing, but whether they will apply themselves to the real issues of the general election. Far from postponing the election sending a message to the world, as The Sun would have us believe, that Britain is not working, it would show that, unfortunately, Britain is only partly working, but that the Government are determined to get on top of it.
Mr. Tom King: Most hon. Members will agree that Members of Parliament have a role to play in this crisis. When MAFF is stretched beyond the limit, all sorts of problems arise. The impact on tourism in Norfolk is a sideshow compared with what is happening in my constituency. I had to tell people at a meeting in Porlock on Friday that there was a chance that in a week's time I would no longer be able to help them, because I would cease to have any authority to act; under the rules of reply, Ministry officials will presumably not be able to deal With ex-Members of Parliament. I find that obscene
Mr. Simpson: My right hon. Friend, for whom I worked when he was Secretary of State for Defence, has great experience of Parliament, and knows how to handle crises.
I know that the Minister is pressed for time and my hon. Friends and I have asked him many questions. The views that I have expressed are not mine alone; they are shared by a wide range of my constituents. The Government are in a hole and they had better stop digging.
Several hon. Members rose—
Mr. Deputy Speaker(Mr. Nicholas Winterton): Order. Before I call the next speaker, I repeat that an unprecedented number of Members rightly want to contribute to the debate, and, if all are brief, the majority will be able to speak.
10.1 am
Mr. David Drew: I shall take careful note of what you say, Mr. Deputy Speaker.
The debate comes at a particularly difficult time. In Berkeley in my constituency seven farms have already had to implement the slaughter policy and another 11—one of which has special breeds—will have to lose all their livestock. That is the result of the proactive policy. My right hon. Friend the Minister for the Environment does not speak for MAFF, but he could help with the definition of "contiguous" because it is open to misinterpretation. We must be fair to all those affected and ensure that they know the likelihood of their being involved in such dramatic action.
I was disappointed that, unlike today's debate, last week's debate on the Government's approach to food policy was not well attended, as this is not a one-off issue. The current foot and mouth epidemic, crisis or catastrophe does not come out of the blue. It comes on the back of BSE, bovine tuberculosis, which has had a
190WH
dramatic effect on the dairy herds in my constituency, and, in certain parts of the country, classical swine fever. If we do not learn how animal life is affected by one crisis after another, we do nothing in politics. We must learn the lessons very quickly.
I have said many times that the food chain has been over-centralised; that is nothing new. There is a case for re-localising, but this is not the time or the place to argue that point. However, from an agricultural perspective, there are some immediate lessons to learn about how the issue is being handled. One problem is that we keep alluding to 1967, but the current situation is on a completely different scale because of how the food chain operates and its much greater impact on the wider rural economy.
Some difficult issues need to be unpacked. I want my right hon. Friend to announce how the strategy of the taskforce is evolving and the amount of compensation that will be made available. I also hope that my right hon. Friend the Minister of Agriculture, Fisheries and Food will address those matters, if he makes a statement this afternoon.
Although I do not underestimate the impact of the crisis on the rural economy, it is strange that Opposition Members are proposing massive state intervention, not least because of the financial implications. One of the agricultural industry's problems is that it veers between believing that it is a private enterprise—which it is, at the level of the individual farm—and acknowledging that it is subject to enormous intervention from national Government and Europe. That contradiction impacts on both farming and the wider rural economy, and it is important that it is appropriately addressed. If it is not, the criticisms that I and others have of the common agricultural policy will be exacerbated.
Mr. David Tredinnick: The crisis would not have been as great if the Army had been involved earlier.
Mr. Drew: It is easy to say that. [HON. MEMBERS: "It is true."] Hon. Members may say that, but I have liased daily with my local Ministry of Agriculture, Fisheries and Food office, and I have talked with farmers and their representatives, and it is clear that, from the outset, more specialists were needed, but the Army does not employ many vets, and neither has it customarily performed the role of slaughterer or contractor. However, it certainly has a logistical role to play, and the forthcoming investigation will examine whether it should have been called on earlier to play it. One may easily assert that with the benefit of hindsight, but the disease has spread more quickly than expected.
Mr. Paice: Last week, the Prime Minister told the House that there was not a shortage of slaughterers, and that it would not be necessary to accept offers of help from hunts and other organisations. There is no excuse for the fact that the slaughter of infected animals has not kept pace with their diagnosis. On Friday, the chief scientific officer announced that the average delay had lengthened to three days. The widespread infection has

191WH
been caused by that delay: the chief scientific officer said that if it were reduced to 24 hours, the disease would rapidly be brought under control.
Mr. Drew: That was not a helpful intervention, but I will try to answer the points raised by the hon. Gentleman.
Some regions have experienced problems in terms of disposal rather than slaughter. I have religiously checked with my MAFF office, and it is satisfied with the current slaughter arrangements. There is, however, a missing ingredient that must not be overlooked. It is understandable that money matters, such as valuation and settlement, should generate considerable emotion, but if individual farmers' concerns were ignored, the entire process could be accelerated. However, those concerns must be addressed, because the United Kingdom is a democracy. The Government require consensus to rule and although they might want to exercise greater power, the farmers are under enormous strain and some of them might not readily agree to compensation packages that were imposed on them. That would create greater problems.
It has been alleged—I will not use a stronger term—that there have been instances of stock being illegally transported, although that has not happened in the region that I represent. That has also created problems.
My right hon. Friend the Minister for the Environment has been speaking about the taskforce, but it is also important to examine the implications of the crisis for the wider rural economy. How will the farming industry be rebuilt? How will farmers restock during the six-month quarantine, and how will they generate income in that period?
It is also important to address the implications of the crisis for the wide variety of businesses that are involved in the rural economy. My right hon. Friend may care to write to all hon. Members with a clear statement about exactly what help is available to businesses—not only those in the most affected areas, such as my constituency, but those that have suffered lost tourism business.
Mr. Jack: Will the hon. Gentleman give way?
Mr. Drew: Not at the moment, as other hon. Members want to speak.
The viability of some businesses is contingent on what happens in rural Britain. We are dealing with a difficult message. I accept that that message has not always been right, but we must try to keep the rural economy functioning while a large segment of it is effectively closed down because of its wildlife and these tragic circumstances.
I hope that my right hon. Friend will clearly restate exactly how we are approaching the matter. We must ensure that we give money to those who are suffering enormous cash flow problems. We must also send the message that we are trying to ensure that tourists can visit the places that they want to see. I have been rather taken aback by how the idea is bandied around that the countryside is open or closed, when some places, such as
192WH
the vast majority of market towns, are accessible, and there is no reason for people not to visit them. That is the message that we should send.
We must also ensure that in the short run businesses receive help with their cash flow and taxation. We should introduce measures to help them to relaunch their business, as that is what they must do. I hope that my right hon. Friend will do that today, in liaison with MAFF and the Prime Minister, in order to send the difficult but essential message that we must rebuild the rural economy and that we cannot start a day too soon.
Several hon. Members rose—
Mr. Deputy Speaker: Order. I appeal to hon. Members to make short speeches. Many hon. Members want to speak on behalf of their constituents. If they limit their remarks to about three minutes, a worthwhile number of them will be able to speak.
10.12 am
Mr. Tom King: I have already commented on the need for Members of Parliament to be able to continue to help their constituents during this appalling crisis. I follow the hon. Member for Stroud (Mr. Drew). I have just received the latest issue of the foot and mouth bulletin, which is produced by the south-west National Farmers Union and is a most excellent document. It will not have made pleasant reading for him, as the last two days have seen a rash of new cases in Devon and Gloucestershire, heightening fears that those counties may be following the pattern established in Cumbria. The simple statement made by a gentleman who was standing beside the Prime Minister in Exeter on Saturday, Anthony Gibson, who has been very much involved in the communication, highlights the scale of the problem. I know that the Minister was in Taunton and Devon and will understand the scale the problem.
I have here a copy of the 1968 inquiry. Now is not the time to discuss the issues involved, but serious questions will have to be asked, and a full public inquiry or royal commission will have to be held into how the matter was handled. It is a scandal that the matter has got out of control, but I shall not discuss that today.
On Friday evening, I visited and had a meeting in Porlock in my constituency. Porlock is on the edge of a national park—Exmoor—which, thank God, does not have foot and mouth at the moment, although it is creeping all around the area. Following the announcements that Combe Martin and Blackmoor Gate, a big cattle auction area, are now in an infected area, the disease could be drawing towards Exmoor. Exmoor is, rightly, closed. It has a fabulous herd of red deer, and, following the terrors of what is happening in the Lake district, we have the same terrible fears of what might happen on Exmoor if the disease got into the red deer. Arguments have been advanced about whether red deer are susceptible to this strain of foot and mouth, but we do not want to run such risks.
I want to discuss the role of the rural economy. At Wednesday evening's meeting there were 200 people who run various forms of business, including rural accommodation, holiday accommodation, caravan parks, pony trekking and various events and

193WH
attractions. My hon. Friend the Member for Mid-Norfolk (Mr. Simpson) is lucky. The people I met have no bookings at all. Everyone has cancelled, having been told that Exmoor is closed for riding or walking holidays. Many other Members of Parliament will share my experience. Those people say that they are four weeks from meltdown, which is about as long as they hope that the bank manager will not come to call. They do not know where to turn. I am an experienced Member of Parliament and I felt as hopeless in that meeting as I have ever felt. Those people had built up livelihoods. I could not think how to advise them on how to survive.
I can make a special case for Exmoor. It is a national park with a fabulous and important herd of red deer. Rural business people could encourage others to visit the park and say that they can walk on the roads and the lanes, but they do not want to do that because they know that their whole business is built around the attractions of Exmoor and its herd, and they do not want to put it at risk. They were terribly torn and asked me what they could do.
My hon. Friends have made various suggestions, such as that concerning the business rate and the Inland Revenue not calling for its money in a hurry, and for a sensitive and intelligent approach to be taken by banks. My right hon. Friend the Member for Richmond, Yorks (Mr. Hague) suggested in a non-partisan manner to the Prime Minister that some form of interest relief grant from the banks might see people through and the Prime Minister said that he would consider that. I am not sure how much of the tourism structure will survive. I am also conscious that, depressed though farming is given the state of fanning prices, many agricultural diversifications, such as farm accommodation and bed and breakfast, will also be affected, leading to a further destruction in farming incomes. Tourism will be the most difficult problem for the Minister. We will see a significant part of its fabric collapse
Somerset county council and o hers have appealed for the power to close roads. A road over the top of the Quantocks is not too heavily used. There are alternative routes. I think that the Minister knows the Quantocks well. It has a deer herd. The access roads on the southern flanks of Exmoor should be closed There are infected areas to the south of Exmoor. There should be powers at least to restrict the use of minor roads and to establish an intensive disinfectant operation perhaps with Army support on the southern roads There should be access only to a limited number of roads on Exmoor.
Lord Whitty, the Under-Secretary of State for the Environment, Transport and the Regions, helpfully said in the other place that the county council had powers to close the roads. The county solicitor told me that it did not have such powers. I tried to clarify the matter and contacted a senior lawyer in the DETR who said that he did not know who had advised Lord Whitty, but that the Department has no more powers concerning non-infected areas than a county council, and that neither of them had the power to close roads. The only way round the problem is to use emergency powers.
Mr. Jenkin: A fortnight ago, I wrote to the Minister for the Environment about road closures, because they 194WH
affected outbreaks in my constituency. I have yet to receive a reply and I hope that he can deal with that matter when he responds to the debate.
Mr. King: If Exmoor becomes an infected area, we will have the power to close the roads. I admired the Minister of Agriculture, Fisheries and Food when he talked about the precautionary principle, but that now seems to have been lost. I telephoned the Benefits Agency about people who will be laid off and asked what plans had been made for them. As a Member of Parliament, I can get a reasonably good service, but it did not seem to be switched on to the problem or to have any idea about it. No message seemed to have come down from above saying, "Make sure you are ready to help such people."
10.19 pm
Mr. Martin Bell: I shall be extremely brief. I rise to speak at a time of great and unprecedented crisis and with a heavy heart. A cull started on a farm in central Cheshire at 9 o'clock this morning, and the Cheshire show has been cancelled. During the weekend, the foot and mouth outbreak spread to my constituency. The farmer, Mr. Malcolm Evans, knew exactly where it came from—it was borne on the wind from the rendering plant at Widnes. We should have listened to the farmers early on. Farmers have long careers of 50 years or more working on the land. Many of them were working during the last crisis in 1967, and knew how to deal with animals by instant dispatch and burial on site in deep pits. Diseased, infected carcases were not transported through the open countryside.
However, this outbreak has happened and it is not under control. As the hon. Member for Mid-Norfolk (Mr. Simpson) accurately stated, farming is not an isolated activity; it is bound up in the welfare of the entire rural economy. Businesses in my constituency are facing bankruptcy—not in the medium or long term, but next week and the week after on an escalating scale. It is time for a Marshall plan, because we are, in a sense, at war with the virus that is wreaking havoc on the lives of the people whom we represent.
This is not the time for us to be without Members of Parliament, although I share the sense of helplessness of the right hon. Member for Bridgwater (Mr. King), a much more experienced parliamentarian than I am. I cannot believe that the Prime Minister will go to the country and will be electioneering instead of getting a hold on the crisis. The Minister of Agriculture, Fisheries and Food and the Minister for the Environment will also be electioneering. It is time to get a hold on this crisis. There is also the question of respect and dignity for those suffering in the countryside. This is a time for special measures and intervention—not for politics as usual.
Mr. Deputy Speaker: I thank the hon. Gentleman for that brief speech.
10.21 am
Mr. Eric Pickles: It is a great pleasure to follow the hon. Member for Tatton (Mr. Bell), because that may well have been his last speech as a Member of Parliament. I sympathise with

195WH
him for the plight of his constituents. My constituents in Brentwood and Ongar were the first to suffer the fear of foot and mouth and they continue to do so.
In an intervention on my hon. Friend the Member for Mid-Norfolk (Mr. Simpson), I raised the plight of my constituent, Mr. Lipman, who lives in the village of Abridge. Eight years ago he started a successful equine and canine business that supplies leather goods. His entire trade is at country fairs in this country and on the continent. His business has now virtually closed down because fairs and county shows have been cancelled and he is not welcome on the continent where—he told me this morning—there have been instances of tyres being slashed and lorries being stoned. He cannot do anything.
One would have thought that the Government would want to help such a person, whose business is dependent on the countryside. However, he does not qualify because, geographically, Abridge is outside the Government's definition of the countryside. It does not matter that Abridge is entirely surrounded by fields in a rural part of Essex. Mr. Lipman thought that the Government would help, so he rang the DTI and said, "I run a successful business, but I have a liquidity problem and no money coming in. What can you do to help me?" As I told my hon. Friends a few moments ago, the advice was to go bankrupt.
I thought that the DTI was supposed to be in the business of preserving companies. Mr. Lipman's company is not inefficient; it is a good company with enormous prospects. Had the foot and mouth outbreak not happened, the company would be standing high in the esteem of the local community. The DTI then said, "If you contact the Department of Social Security, it may be able to offer help, because it has been given instructions to be flexible," but when he made that contact he found no flexibility whatever. No one knows what they are supposed to be doing and no one has received any instructions. The Government need better co-ordination.
10.24 am
Mr. David Rendel: I begin by pointing out the sheer variety of industries, other than farming and tourism, that are affected by the disease. There is an outdoor clothing business in the middle of Newbury that will not receive any of the advantages that have been offered in terms of rate relief. Last week, its takings were down by 50 per cent. There is also a veterinary diagnosis and consultancy business in my constituency. It cannot get any samples in, so the business is collapsing completely. Each business may employ only a handful of people, but such people are threatened with redundancy almost immediately.
Another business, which deals with pet food and bedding, is finding that goods cannot be moved away from the area because an affected flock is too close to it—movement has been restricted in the area. My constituency also contains Sheepdrove organic farm and Elm Farm research centre, and I am pleased that the Government have taken notice of the research work on vaccination that has been done. It should be considered seriously, whether it is the right policy or not.
196WH
I wish to concentrate on the racing industry because, although it is not peculiar to my constituency, there is a great preponderance of it there, unlike in most other parts of the country Many people think that racing is not affected and is all right—it shut down for seven weeks and then started again. However, although the weather has been so appalling that it has caused several meetings to be cancelled, meetings have been lost explicitly because of foot and mouth disease. People who rely on odd earnings—perhaps once a month—to upgrade their poor incomes have entirely lost that. Such people are programme sellers, providers of refreshments and some on-course bookmakers. They may earn only a small amount from racing, but are dependent on it to eke out an otherwise meagre standard of living.
Trainers and owners are involved in racing, although some people may think that owners will do better from a cancellation because they usually lose money from racing, rather than gaining it. However, racing is important to jockeys and, particularly, self-employed jockeys, who are paid for each race in which they ride, rather than a retainer. If races are cancelled, such jockeys may find that their income quickly drops. They are not being offered compensation.
People feel that it is unfair that farmers automatically receive compensation for loss of stock, but that no other people are given compensation, even when they may be losing as much of their livelihood as the farmers. I hope that the Government will recognise the feeling that the current compensation method is unfair to people who suffer consequential losses, rather than to farmers who suffer direct losses.
10.27 am
Mrs. Gillian Shephard: The foot and mouth outbreak has made the extent to which the country's economy depends on agriculture eye-openingly clear. The Minister will have noticed the headline in today's issue of The Times, which shows that the Government are blaming the outbreak on smuggled meat. I wrote to the Minister of Agriculture, Fisheries and Food on 15 November 2000 to point out that I had heard reports of meat that had been illegally imported from France via Ireland. In February—two and a half months later—I received a reply that said that such imports could not take place because they are illegal. Hon. Members will form their own conclusions on the adequacy of that reply, and the fact that the outbreak is being blamed on that cause.
My second point, and the principal concern in my constituency—where there is not currently an outbreak—is the sheer difficulty that farmers and producers experience in obtaining clear instructions and directions from MAFF. Of course, we have already experienced such events through classical swine fever. However, one example will suffice, such as the farmer who approached me this weekend with what appeared to be the simple problem of the disposal of dirty water that results from pig production. He told me that when he asked MAFF for advice, he was told, "It is your problem." He added that it would be illegal to spread the water with his machines, and that he would be fined for doing that. However, to do what MAFF asks would also be illegal, and he would be fined by the

197WH
Environment Agency because the water would go through the drains. People at risk of losing their livelihoods do not need that kind of aggravation.
Thirdly, it is the Government's prerogative to call a general election when they choose. The public know that they do not need to do so for another year. If they do call an election, however, they must be able to give a full assurance to people affected or potentially affected by the outbreak of foot and mouth that a general election campaign will in no way affect the spread of the disease. They must also assure the public that they will be able to give their full ministerial attention to fighting the disease, which they describe as a crisis, while fighting a general election that they do not have to hold. As hon. Members have said, it is at this precise moment that we need Parliament, and Members of Parliament to question Ministers on the progress of the disease. Whichever choice the Government make, their conduct will be judged as evidence of their concern for rural Britain.
Several hon. Members rose—
Mr. Deputy Speaker: Order. I shall use my discretion and call one more Back-Bench Member.
10.30 am
Mr. Tony Baldry: I shall be extremely brief. I wish to make two points.
In a written answer to me last week, the Minister said that his remit was to kick-start the rural economy once foot and mouth had been eradicated. That begs two questions. What does the phrase "to kick-start" mean? It is one of those wonderful new Labour phrases that is intended to give the impression of something happening. Every indication is that the foot and mouth outbreak will not be eradicated for months. If the Minister has not heard the voices it this Chamber today, I should tell him that the countryside wants action now, not months in the future.
The countryside needs information. There was an outbreak of foot and mouth disease in my constituency, at Grange farm, Little Chesterton, some weeks ago. It is not sufficient merely to slaughter the affected animals; a MAFF-supervised clean-up of the farm is necessary. The farmer is still waiting to know when that will happen. Farmers whose farms art near to an exclusion zone want to know when they will be able to move their stock, but no one is telling them anything, and no one is telling the National Farmers Union anything.
Last week, I tabled parliamentary questions to the Minister of Agriculture, asking when he expected the post-slaughter clean-up at Grange farm to begin. I received a reply from the Minister today, saying that he would reply as soon as possible If MAFF cannot even tell Members of Parliament when a clean-up will start on farms on which an organised foot and mouth slaughter took place weeks ago, the epidemic is totally out of the Government's control and the sooner the Government get a grip on the matter the better.
10.33 am
Mr. David Heath: I congratulate the hon. Member for Mid-Norfolk (Mr. Simpson) on securing this debate on the impact of
198WH
foot and mouth on the rural economy. He rightly spent 20 minutes talking about agriculture. All hon. Members who represent rural constituencies understand that the impact on agriculture is total and absolute, and that is why we underline it constantly.
I said last week that those whose farms were not infected and were outside restricted areas felt that the sword of Damocles was hanging over their head. Floods provide a better analogy—people see the water lapping around their buildings, take precautions and put out the sandbags, but they know that once the water breaches those defences, disaster will ensue. That is how people feel in the dairy lands of Somerset. The crisis affects not only farmers but everyone associated with them. Last Sunday was Mothers' day, so perhaps it is right to recognise that the families of farmers are as affected as much as the farmers themselves. There are, of course, also women farmers.
I do not want to rehearse the same arguments that we had in last week's debate on agriculture. Those arguments have been well ventilated. The halving of the number of state veterinary surgeons in the country was not helpful. Nevertheless, contingency plans were clearly not in place; adequate senior management was not focused on the infection at an early enough stage. The logistics have proved to be a shambles.
Mrs. Shephard: The hon. Gentleman and his colleagues, along with us, pointed out the potential problem at the time of the classical swine fever outbreak. Last autumn, we said clearly that if the resources available for classical swine fever had to be stretched further, disaster would ensue—and it has.
Mr. Heath: The right hon. Lady is correct. Very few of the lessons of the classical swine fever outbreak in East Anglia seem to have been learned and put into practice in dealing with this epidemic. Issues such as the welfare of animals, putting a floor to commodity prices and how we deal with this crisis continue to exist.
I introduce one note of caution. A bandwagon appears to be developing in favour of vaccination, but I would treat that with care. Vaccination may have a part to play, but no more than that, because there are clear difficulties in using it. I would not like an orthodoxy to develop that perceived vaccination as a panacea and thought that we would be free of foot and mouth if the Government introduced vaccination measures. That is nonsense.
Mr. Tredinnick: Will the hon. Gentleman give way?
Mr. Heath: No. I do not have time. I know that the hon. Gentleman has theories about borax, but we must continue with this debate.
This debate relates to the extent of the impact of foot and mouth on the rural economy as a whole. It is impossible to overstate that impact. I was staggered to discover, when I talked to people in the high streets of the smaller towns and villages in my constituency in Somerset one week after the start of the epidemic, that everybody's businesses already showed a downturn in turnover. It did not matter what kind of business it was—the impact was felt by not only those directly related to tourism but newsagents, butchers and gift

199WH
shops. Everybody felt the impact of the cancellations and the lack of money coming into the rural economy, because sociably responsible people who would usually visit rural areas such as mine at weekends no longer do so. They have read in The Guardian, The Daily Telegraph or wherever that they should not visit the countryside, so they do not—and who is to say that they are wrong?
It is difficult to know how to deal with the problems. The Minister has stressed that the countryside is open. Yes, it is open—but there are heavy caveats. I would still be worried if I saw people using footpaths across dairy lands in Somerset or wandering at will around our country lanes. As the right hon. Member for Bridgwater (Mr. King) said, those lanes should be closed as a sensible precaution, because they provide access only to farm lands.
How do we deal with the lack of turnover and the cash flow problems that businesses are experiencing? Suggestions have been made, such as revaluing for business rates purposes. Will the Minister tell us how many revaluations he expects to put through the system in what period of time? How will that have an immediate effect?
A VAT holiday or another kind of tax holiday has also been suggested. That could make a difference, but any business that uses a deferred payment of VAT or another tax to maintain its current cash flow is in line for perdition and needs to treat the matter with great care.
Large estate owners must consider whether the rental on agricultural land and agricultural businesses should be revised. I made that point to the hon. gentleman representing the Church Commissioners yesterday. The rental might be reduced and made more appropriate, and that might be backdated to Lady day or before.
The definitions of rural areas used by the Minister present some difficulties. I do not accept that we are dealing only with centres of population of less than 3,000, which is the traditional yardstick, because the market towns that are suffering do not come into that category. Anyone who understands the country knows that business goes on in the towns rather than in rural areas. We need to deal with that.
We need greater clarity because we are getting mixed messages. We still do not know what activities can and cannot appropriately be continued. There is the question, for example, of whether to cancel the Royal Bath and West agricultural show, which is enormously important to many small businesses as a showpiece and shop window. I was with representatives of the show on Friday and they do not know whether they should go ahead without animals. There is difficulty with instructions to Departments—whether the Inland Revenue, Customs and Excise or the Department of Social Security—which are simply not receiving clear guidance. They do not know what they are supposed to be doing, and at this stage in a crisis, they should know.
There is also the issue of resources. We still have been given no clear view on consequential loss or compensation. We are constantly told that agrimonetary compensation was the payment to the farmers. It was not; that was for a totally different purpose. It certainly helps in the current crisis but we
200WH
need proper compensation. Will we get it? The Minister has a taskforce but it has no financial backing. Surely it is time that contingency funds were made available so that it can do the job with which it is entrusted.
Finally, the crisis has made it clear that MAFF is not a rural affairs department. The more that MAFF has concentrated on its narrow viewpoint, the worse a job it has done for the wider rural economy. Surely it is time that we had better co-ordination in Government affairs to ensure that rural areas are properly represented, as they should be.
Mr. Deputy Speaker: I thank the hon. Gentleman for his discipline.
10.41 am
Mr. Damian Green: This has been a sombre debate and my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) deserves to be congratulated on utilising this Chamber, probably as well as it ever has been, to address the most serious issue facing the country at the moment. The position of the Opposition has been clear throughout the crisis; we will support the Government when we can and criticise it when we must. That is the role of a responsible Opposition and we will continue to carry it out.
We have heard this morning about the many inadequacies of MAFF in dealing with the outbreak, particularly its lack of clear, speedy information to farmers. I know that from my own constituency experience; I get daily phone calls from desperate farmers who simply want advice and clear guidance. Five or six weeks into the crisis they are still not getting it. That is one of the most urgent issues that the Government need to address.
Mr. Clifton-Brown: The Government will shortly have to deal with the serious issue of advice to farmers on whether to turn their stock out. Many will not have enough fodder to keep the animals in sheds and once they go into the fields the disease is likely to spread much more quickly and over a much bigger geographical area. We need clear advice on that matter.
Mr. Green: My hon. Friend is of course right. There will be other times and opportunities to discuss many of the purely agricultural issues surrounding the tragedy, but today I want to concentrate mainly on non-farming matters, particularly the activities of the taskforce, which the Minister is in charge of—I use the word "activities" loosely. The first outbreak of the disease was notified to MAFF as far back as 18 February. On 11 March, the Minister for Agriculture said that the outbreak was under control—a catastrophically wrong analysis, as events have proved—and it was during that week that the Minister's taskforce was set up. On 20 March, he made a statement to the House about its preliminary findings, including several announcements on business rates, holidays, the attitudes of banks and other ways of helping business through the immediate cash flow problems, which, if they are put into practice, will be welcome. Hon Members have referred to several of those announcements this morning. The rest of the statement largely consisted of aspirations to reopen tourist attractions—aspirations that may or may not come to mean anything, depending on the spread of the disease.

201WH
Since then, the taskforce for which the Minister is responsible has largely disappeared from sight and he must answer the charge that it was set up too late, has been half-hearted in its actions and has simply been overwhelmed by the scale of the crisis. The effect of the Minister's taskforce has been like that of opening an umbrella in a hurricane. In confronting a rapidly growing and spreading national crisis, it has proceeded like a normal Whitehall committee, thinking that it has all the time in the world.
I am afraid that the Government have not got to grips with the root of the problem, which is dual control. The Minister sees it as his job to repeat as a mantra, "The countryside is open for business." He says that things are fairly normal across the countryside, while, on the other side of the street, MAFF is, rightly, trying to close down large parts of the countryside to avoid the spread of this terrible disease. Sending out not only mixed messages, but flatly contradictory messages has left all those at the sharp end of the crisis feeling confused and increasingly angry. People's livelihoods are disappearing by the day. That is not remotely a political point. The least that they can expect from any Government is clear leadership and clear messages, but they have been failed miserably during this crisis.
Also lacking is a proper attitude by the taskforce to the scale of the crisis. To take one example, the tourist-industry is clearly suffering greatly. The Government said that British tourism would get a £10 million cash injection to counter misinformation about foot and mouth, but the Cumbria tourist board estimates that the county is losing £8 million to £10 million a week. That illustrates the inadequacy of the scale of the Government's response.
Many hon. Friends have mentioned specific companies and industries that are badly affected. I should like the Minister to address another—the angling industry. The National Angling Alliance says that it
"represents six major angling organisation…There are 3.3 million anglers in the UK and the industry had a turnover of £3.3 billion in 1994."
It says that the foot and mouth epidemic is having "a huge impact" on their businesses. The secretariat writes that
"the Government does not appear to recognise either the importance of angling or our contribution to the rural economy. The NAA estimates that angling and fishery businesses are losing some £7 million each week".
That is just one example of a sector that is being almost totally destroyed by the outbreak, which feels that the scale of the Government's response is not adequate.
Simply repeating that the countryside is open for business is not good enough. We all wish that it were open for business, but increasingly it cannot be. During the past 24 hours, we have heard the Minister say that we should not get over-excited about the problems in the Lake district and that, so far, there has been only one outbreak in the national park. In this morning's newspapers, however, people involved in selling and managing the Lake district as a tourist destination use phrases such as "a doomsday scenario". In all conscience, I must tell the Minister that, if the people whose job is to keep tourist destinations alive are using such phrases, Ministers who say that we should not
202WH
worry and things are reasonably normal sound increasingly like Corporal Jones in "Dad's Army". They say, "Don't panic", but are in fact increasing the level of panic. They do not measure up to the scale of the crisis.
I have some sympathy for the Minister, because he is at the sharp end of a Government who are trying to face both ways. If they take determined measures to save our remaining livestock, they could damage the tourism industry. If they try to save the tourism industry over the next few months, they may put at risk thousands, perhaps tens of thousands, more animals. I agree that that is a dilemma, but to do neither effectively and end up doing unnecessary and permanent damage to the livestock industry and rural tourism would be unforgivable by both the agriculture and tourism industries, and I am afraid that that is what is happening at the moment. The Minister is aware of the dilemma. Many people, particularly those whose livelihoods are at stake, have some sympathy for him, but it will disappear in a second if it seems that the Government's eyes are focused elsewhere.
This morning we heard the Prime Minister say that he would strain every sinew to solve the crisis. If he is straining every sinew this Tuesday, I hope that he is still straining to solve the crisis next Monday when he might be calling a general election. If he does, it will be starkly clear to people in the countryside whose livelihoods are at stake that he did not mean it when he said that he was straining every sinew, but that that was just today's soundbite. Soundbites are not enough to solve the crisis. People will feel betrayed by the Government. I hope that the Minister will take with him the clear message that, so far, the Government have not measured up to the scale and extent of a crisis that is devastating large areas of our countryside.
10.50 am
The Minister for the Environment (Mr. Michael Meacher): I congratulate the hon. Member for Mid-Norfolk (Mr. Simpson) on securing the debate. It is recognised on all sides that it is a matter of extreme gravity. I pay tribute to the largely sober manner in which the hon. Gentleman debated the issues. It is extremely serious and should not be a party political matter. Everyone wants to overcome the crisis.
Many of the opening remarks of the hon. Member for Somerton and Frome (Mr. Heath) were directed at my right hon. Friend the Minister of Agriculture, Fisheries and Food. I shall attempt to reply to as many points as possible, including questions about agriculture.
First, let me make it clear that neither the Government, not the Department of the Environment, Transport and the Regions, nor the Ministry for Agriculture, Fisheries and Food ever said that people should simply keep out of the countryside. What they said right from the beginning was that people should be careful about where they went in the countryside. We have consistently argued that susceptible livestock must be avoided and that people should keep away from farmland, particularly in infected areas. Above all, we encouraged people to obey the "Keep out" signs. All that is obvious, but there remains a large part of the countryside that people can safely visit.

203WH
I accept the point made by the hon. Member for Ashford (Mr. Green) that the Government face a difficult dilemma. Our paramount concern is to do everything possible to contain and eradicate the disease. The whole nation shares that view and is co-operating with the Government. At the same time, however, because of the size and importance of the tourism industry—our fifth largest and worth £65 billion—we must also take account of the needs of small businesses, tourist attractions and the ancillary and related retail sector, which has been severely damaged as a result of the crisis. We are trying to walk a difficult tightrope between the two. Our message is that it is possible to enter large swathes of the countryside perfectly safely as long as the basic rules are obeyed. I do not know of any alternative sensible policy that we could adopt.
The right hon. Member for Bridgwater (Mr. King) asked about contingency planning. Obviously, there will be an inquiry later into the handling of the crisis. As my hon. Friend the Member for Stroud (Mr. Drew) said, the present outbreak is unprecedented. It is on a wholly different scale from that in 1967, to which I shall return later.
Mr. Tredinnick: Will the Minister give way?
Mr. Meacher: I have only seven minutes and cannot give way.
On joined-up government, we shall have to investigate with a fine toothcomb later, but I suspect that the DETR and MAFF have liaised from the start. The rural taskforce includes Ministers from the DETR, MAFF, the Department for Culture, Media and Sport, the DTI, representatives from No. 10 and all stakeholder interests. The Prime Minister is now presiding over the multi-departmental committee under the COBRA procedure—named after Cabinet Office briefing room A. I insist that close co-operation has been evident throughout.
I know that hon. Gentlemen strongly believe that the Army should have been brought in earlier. We have never had any objection to bringing the Army in, the question was whether the Army was most suitable for the tasks that we faced, including dealing with the lack of vets. There are still insufficient vets—
Mr. Dominic Grieve: Will the right hon. Gentleman give way?
Mr. Meacher: No, I am sorry. There are myriad questions, but I have many points to answer.
We have significantly increased the number of vets but there is still a shortage. However, the problem with slaughtermen and JCBs has largely been overcome. There is also the logistical problem of handling a crisis of this scale. The Army has great skills in that, which is why we brought it in.
I turn to the measures that we have sought to take. Several hon. Members have acknowledged the financial package in the first statement that I made last week.
204WH
First, there will be business rates relief. For many small businesses that will pay perhaps £1,250 over six months. The size of the package will be a complete rates holiday. We have increased the amount that the Government will fund from 75 per cent. to 95 per cent. The hon. Member for Newbury (Mr. Rendel) said that some businesses, such as outdoor clothing and pet food, are outside the area. But there is still the 75:25 break-down between Government and local authorities that local authorities can invoke to help those outside the immediate area, such as those in rural areas and in the hardest hit areas and businesses with a rateable value of less than £12,000. That is the prime concern.
Mr. Eric Martlew: Will my right hon. Friend give way?
Mr. Meacher: I cannot give way even to my hon. Friend. I have refused to give way to others and I must refuse to give way to him too.
There will be a rescheduling and deferment of VAT and PAYE, so far as there is discretion within the legislation. I have spoken to the banks about extending lines of credit and easing interest payments and the whole question of holidays for capital repayments. Many hon. Members argue that there is a case for further interest relief, and we are considering that. I made it clear that the original statement was a preliminary package. I intend to come forward at an early point with further measures. I can assure the hon. Member for Ashford, who suggested that the rural taskforce has disappeared, that it is exceedingly active. I am devoting 18 hours a day to its activities, and it is meeting tomorrow We will consider the matter and a number of other measures and will come forward with further action.
We are extremely conscious that damage has been done. Utterly inaccurate and hysterical stories have been produced about the state of the country, such as that it is not safe to eat here or that people need to be disinfected when they return to the United States. We are funding the British Tourist Authority to try to correct that image. We are telling our embassies and posts abroad to do all that they can to monitor the newspapers and broadcasts to try to correct immediately any of those absurd travesties.
The right hon. Member for South-West Norfolk (Mrs. Shephard) made point about putting the blame on smuggled meat. We are not apportioning blame; we are trying to find out the cause. If that was the cause, we certainly need to deal with it. She said that clear directions from MAFF were needed, and several right hon. and hon. Members have mentioned that. We realise that. As the right hon. Member for Bridgwater fairly stated, because of his track record and his knowledge of ministerial life, the pressures on MAFF at the moment are nearly intolerable. The people at MAFF are doing their best and coping extremely well with an enormous crisis that in some ways is almost unprecedented.
We appreciate that there is a need for clear directions for all sorts of people, and we are trying to deal with that. When we say that we will reply to letters as soon as possible, that is exactly so.

205WH
The hon. Member for Banbury (Mr. Baldry) asked what I meant by kick-starting the economy. Our first concern is to overcome the crisis and to provide rates relief and assistance with deferment of other statutory payments that have to be made to tide people over the crisis. That is our first concern, but there must be a rural regeneration package. We will implement the rural White Paper proposals as soon as we can when we begin to reduce the number of—
Mr. Deputy Speaker: Order. This is an important debate, but I regret that time is up.

Scottish Economy
11 am
Mr. Eric Joyce: Thank you, Mr. Winterton—
Mr. Deputy Speaker (Mr. Nicholas Winterton): I remind the hon. Gentleman that fortunately, because of a motion of the House, I can now be addressed as Mr. Deputy Speaker.
Mr. Joyce: Thank you, Mr. Deputy Speaker, and congratulations.
The last full financial year showed Scotland's manufacturing sector output growing 2 per cent. faster than the rest of the United Kingdom. Scotland's share of United Kingdom-manufactured exports is considerably higher than its share of manufacturing employment. That can be explained partly by Scotland's success in attracting export-oriented inward investments; it is also attributable to the excellent productivity of Scotland's workers.
The Scottish National party argues that the Bank of England's Monetary Policy Committee takes decisions that favour the service sector in the south-east at the expense of the Scottish manufacturing sector, yet the fact that Scottish-based manufacturing industries are out-performing their counterparts in the rest of the United Kingdom is core evidence that the SNP's premise does not stand up.
Scotland's economy is integral to that of the United Kingdom and its success is due in large part to our competitiveness in the global market. Non-United Kingdom companies now produce more than 70 per cent. of all Scottish manufactured exports and 10 Scottish exporters account for roughly 50 per cent. of the total of Scottish manufactured export sales. The electronics sector is particularly important, accounting for about 53 per cent. of all exports.
Employer survey data suggests that manufacturing employment is still falling, which is worrying to those in that sector. There is no doubt that the difficult conditions in the global economy put pressures on all industrialised countries, as well as Scottish manufacturers. However, Scottish firms are performing well, all things considered, and are well placed to benefit from recent improvements in the global outlook.
That said, Scotland, in line with most developed economies, has seen a significant decline in employment in manufacturing in the past 20 years. During that period the number employed has fallen by a third to about 300,000. That represents 30 per cent. of total employment in Scotland. Much of the decline can be explained by the long-term trend of job losses in the large, labour-intensive industries such as shipbuilding, textiles and steel. However, during the same period, the total number of jobs in Scotland has increased as the growth of the service sector and new high-tech industries, particularly electronics, has more than compensated for the loss of traditional manufacturing jobs.
Manufacturing still accounts for about one fifth of Scottish gross domestic product, however, and it remains the case that there are significant links between

207WH
manufacturing and the rest of the economy. For example, it is estimated that Scottish manufacturers spend more than £6 billion per annum on services from companies in Scotland. Manufacturing, therefore, remains a significant contributor to Scottish GDP when direct and indirect contributions are taken into account.
My constituency, Falkirk West, serves as a microcosm of the Scottish economy. Historically, the iron industry employed a high number of men in the area. In the past quarter of a century, conforming to wider economic trends, most of the foundries have closed. For many, that has been a painful process, and unemployment was high during the Conservative years. In the past four years, however, under the Labour Government, while there remains much to do, employment levels in Falkirk have grown well, and 74 per cent. of working-age people are now in work—the Scottish average is 72 per cent.—and unemployment is down by more than a third on 1997. Much of that is because local people have embraced the need to change with the times. New industries have moved in to replace older ones, taking advantage of central Scotland's excellent communications links and the productivity and enthusiasm of local workers. Jobs may be lost from time to time—for example, in the metals industries, and in the former Wrangler factory, at Camelon—others take their place, with substantial recent investment by companies such as Thomas Cook and Telecom service centres in Larbert, and Scottish Power.
There is no single response to the globalisation of services and products, however, and modernisation cuts across the whole of society and the economy. Our success or failure in the years to come will be based largely on our ability to adapt quickly to the changing nature of the world's economy.
It is therefore vital that we recognise the criticality of diversification. Exports are currently dominated by the electronics, drinks and chemical industries, so we must ensure innovation in new growth areas. That means continuing to address the business birth rate by creating an entrepreneurial culture where business success is recognised and rewarded and business start-ups are nurtured and supported. It also means ever-increasing—
Mr. Dominic Grieve: Is the hon. Gentleman aware that in 1997, when the Conservative Government left office, there were 6,600 business startups per annum in Scotland, and in the second quarter of 2000 the figure was 4,500 per annum? How does that square with the hon. Gentleman's eulogy of Government economic policy in Scotland?
Mr. Joyce: The hon. Gentleman will be aware of the development of local enterprise companies; my constituency is covered by Forth Valley Enterprise. There is a tight relationship between LECs and the Government. There have been several recent policy statements which would make good reading and encourage the hon. Gentleman in his projection of how well the Labour Government will perform in the coming years.
For 18 years, the Tories pretty much prevented meaningful economic development happening in tandem with social advance because of their economic
208WH
policies that led inexorably to boom and bust. It is important therefore, to highlight features of the Government's economic management, which has changed the pre-1997 economic environment of Scotland almost beyond recognition.
At the 1997 general election, the Labour party pledged not to increase the rate of income tax and it has not done so. It also introduced a new, higher starting rate of tax. We have always been committed to fairness in the workplace and to striking a balance between the interests of the employee and the interests of the employer. The Tories, on the other hand, have never recognised that protecting the interests of the employee is directly in the interests of the employer. Partnership with trades unions remains fundamental to the Labour Government's approach. In my constituency, that contrasts with the recent example of the SNP-Tory council in taking a major decision, which, in due course, could affect all its employees' conditions of service, without a single mention in advance to Unison, the relevant trade union.
Labour has introduced the individual savings account; far from n attacking savings, the new arrangement will encourage many more people to get into the habit of saving regularly. That is a positive measure that will benefit Scotland and the rest of the United Kingdom.
Labour is committed to reforming welfare in a way that stresses the importance of individual productivity through work. The new deal has been a remarkable success. Labour is also committed to ensuring that works pays. That was clearly demonstrated by the introduction of the national minimum wage and its recent upgrade by the Chancellor. It is worthy of note that the Scottish National party was unable to send a representative on a day trip to attend either the original vote on the matter or the Secretary of State's statement on the upgrade of the national minimum wage to £4.10
Sir Robert Smith: Or to this debate.
Mr. Joyce: Indeed, or to last week's debate on a similar topic. They talk the talk but they do not walk the walk. There is no meaning or sense in having representatives who do not come down to Westminster.
As my hon. Friends know, low pay and low skills go together and are the hallmark of the Tory approach to job creation. Scotland has suffered for too long from both unemployment and skills shortages before 1997. There is no future for Scotland as a low-wage economy. We will never be able to compete on wages with countries—particularly in the southern hemisphere—that pay wages that are a tenth or a hundredth of British wages. National boundaries mean very little in a world where capital can be instantly transferred from one continent to another at the touch of a button. In the modern world of work, both businesses and consumers increasingly interact on-line and across continents.
Labour is committed to driving up the knowledge base throughout Scotland. Our 1997 manifesto stated:
"The UK must be positively committed to the global pursuit of new knowledge, with a strong science base in our universities and centres of excellence leading the world. We support a collaborative

209WH
approach between researchers and business spreading the use of new technology and good design, and exploiting our own inventions to boost business."
The foundations of the knowledge economy are: high levels of education, technical skills, and technological knowledge; widespread collaboration and partnership between universities and enterprise, leading to greater commercial exploitation of useful knowledge; and the creation of an entrepreneurial culture that encourages the growth of new businesses and encourages changed attitudes to wealth creation and risk taking.
Scotland is well placed under the Labour Government to develop the education, skills and technological know-how that are central to the knowledge economy. Our universities produce 21 per cent. of Britain's computer science postgraduates and 11 per cent. of all British engineering and technology graduates.
Through the combined effort of the Labour Government, the Labour-led Scottish Executive and many other agencies including the local enterprise companies, Scotland is experiencing a learning revolution in which skills are continuously upgraded and lifelong learning is a reality. Of course, that must happen in a manner that enables people to balance the responsibilities of work and family life while learning. That is happening, and it is reflected in the wide participation in tertiary education. Almost 50 per cent. of Scottish young people attend higher education, and more people than ever are attending vocational courses later in life at institutions such as mine, the Falkirk college of further education. That ever-deepening pool of talent is a tribute to the quality of Scotland's tertiary education system, and it is a fundamental part of the excellent economic prognosis for the next years under a Labour Government.
Only by the practical application of the knowledge generated by our outstanding universities can we hope to generate a successful high-technology economy. By building on the model provided by Cadence and other emerging centres of excellence, such as the research centres for aerospace technology at Prestwick and for semiconductors at Livingston, we will continue to encourage partnership working. Those centres represent best practice in partnership between companies, educational institutions and the public sector.
The Scottish Executive, the DTI and the Office of Science and Technology operate number of programmes and initiatives to support technology, technology transfer, business innovation and lifelong learning. To build the knowledge base, there are programmes such as the joint infrastructure fund, foresight, the foresight link awards and the Scottish Higher Education Funding Council research development grant. The main grant programme for business innovation is SMART, the small firms merit award for research and technology. The new tax incentive for small and medium-sized companies to undertake more research and development is of major potential importance to this part of the corporate sector.
Several Government initiatives aim to help companies learn from each other. Scottish Enterprise's cluster development action plans are of particular importance to firms in the manufacturing and services sectors. A great deal is being done to promote education
210WH
and skills, including the Scottish university for industry, the national grid for learning and the doubling of the number of modern apprenticeships.
The backdrop for Scotland's economy has not looked so positive for decades. Labour's economic policy has shifted the UK from a boom-and-bust economic cycle to one of stability with a high employment rate, low inflation and low long-term interest rates. The success of the UK and Scottish economies has not happened by accident but most definitely by design. However, even with its inherently positive environment, Scotland still has much to do to maximise its economic potential. Our greatest challenge is, perhaps, the productivity gap. Scotland and the rest of the UK lags behind the productivity of our competitors. The growth of the United States economy over the past decade has been driven mainly by productivity. Scotland has some way to go to catch up.
Increasing productivity is consistent with Labour's idea of sustainable development. It is sound to use natural resources efficiently, while simultaneously increasing business competitiveness. We should note that Scotland's birth rate is persistently low, which means that we must maximise the entrepreneurship of the people that we have. Entrepreneurship does not come naturally to us, and more must be done to create a cultural shift in our attitudes to self-employment and risk taking.
The greatest challenge facing Scotland's labour market is the skills gap, which occurs when the skills of the labour force do not match job vacancies. The Government and the Scottish Executive are rightly attaching importance to stimulating demand for learning, and finding new ways of reaching out to workers who have not traditionally participated in formal education and training. Brains matter much more than brawn in today's labour market, and even low-skilled vacancies now require levels of skill that were not previously needed in equivalent jobs in the mid-20th century.
Labour stands for a higher skill, higher wage economy. The Tories were always happy to have a section of the economy that competed on the basis of cheap labour. We believe that lifting the level of employment for all will lead to higher standards of living and, ultimately, a more fulfilled society. The role of Government in that is to facilitate a strong and vibrant business economy, which can generate growth and promote social well-being. That has meant modernising the relationship between the state and the economy, although not along the lines of the Conservative free market economy or the Scottish National party's economics of independence. Such policies do not benefit the wider economy or society.
Labour has worked towards creating an economy that achieves the correct balance of supporting business and enterprise, while promoting social development. Economic development not only generates higher incomes and a better quality of employment, but helps us to achieve our goals of social justice and sustainability.
Business growth promotes lifelong learning, and that raises the value of human capital in our economy. However, ultimately, the purpose of a Labour Government is not only to facilitate growth, but to

211WH
spread widely the benefits of such growth. That means ensuring that public services are well funded and are of a high standard. In my constituency, that includes matters such as the provision of the best health care that a dynamic economy can provide, through the excellent Falkirk and District Royal infirmary.
I close by referring to the Scottish microcosm of Falkirk, West. We must ensure that people who are affected by changes in the economy around them are well served by an imaginative and visionary approach by relevant regional development agencies. Next month, in Larbert, one of the last iron foundries in the Falkirk area will close with the loss of about 45 jobs. In numerical terms, those jobs will be replaced—and more—by jobs of a different type, as I previously described. However, for the individuals and families involved, it will be a painful experience. I believe that the company and the relevant unions have gone to some lengths to ensure that the workers get the best possible deal to help them through the difficult times ahead. However, I wonder why the workers' skills could not be employed on a project such as the Falkirk millennium wheel, which is a huge engineering project in my area. That would have utilised the skills of workers who come from a metalwork background. Forth Valley Enterprise may have been able to facilitate that and, although it is doing what it can to alleviate the plight of the relevant workers, I think that a small chance may have been missed. However, that must be set against the context of success that is reflected in the economic landscapes of Falkirk, central Scotland, Scotland and the whole of the UK. The success of the Labour Government to date has been a consequence of choice and planning—definitely not of chance. I believe that the Scottish public recognise that, and will act accordingly upon that knowledge at the appropriate time.
11.19 am
Mr. Eric Clarke: I am sorry for being late, Mr. Deputy Speaker, but I was watching the debate on the monitor. I congratulate my hon. Friend the Member for Falkirk, West (Mr. Joyce) on securing it. I do not know why there are not many people here, because there is great interest in the subject.
My speech will be brief. Scotland is a leader in the cluster system, which the Government support. I am referring to the electronics industry around Livingston—Cadence Design Systems and so on. An inquiry was held on the subject and feedback from Ireland and America suggested that people were envious of us and complimentary about what is happening in Livingston. The electronics industry involves not only manufacturing, but research and development, and in that we are ahead of the rest of the world.
We are part of what is called the Celtic corner, because we have a turn of phrase that is second to none. The Welsh, Scottish and Irish are seen not as competitors but as partners in the go-ahead situation of education. When the Livingston plant was established, Cadence told us that 60 per cent. of the graduates there were home-grown although many of them had returned from studying abroad. The development in the electronics industry augurs well for Scotland, and the potential spin-off is mind-boggling.
212WH
I want to discuss a parochial situation in Midlothian, my own constituency. The research and development departments of all the institutions involved in biochemistry have clustered together, and universities and industry are co-operating. The institutions on the Pentland and Bush industrial estates are clustered together and feeding off the universities of Edinburgh, Herriot-Watt and the Royal (Dick) School of Veterinary Studies.
We also have the Roslin institute, which was the creator of the famous Dolly. That is the one that got the headlines, but there are other projects that are just as important. We are lucky that other developments have come from the Dolly project, in manufacturing the enzymes contained in the beasts that have been created, which are beneficial to human beings in treating skin diseases and other things. Those developments are in their infancy, and .the mind boggles once more at the thought of their potential. The Moredun and Lasswade institutes are involved in animal husbandry and agriculture; further scientific study of those subjects is clearly necessary, given the way things are at the moment.
I must declare an interest in the coal industry in Scotland. We always said that the British coal industry was the finest in the world technically and in terms of safety, and yet it has been partially closed down. However, I am happy that the Government subsidy allows the Scottish coal industry to continue. The Government are to be congratulated on that. I shall conclude my remarks now because I am running out of steam.
11.24 am
Sir Robert Smith: I congratulate you, Mr. Deputy Speaker, on successfully overcoming the hurdles of late-night debates in the House to arrive on the Order Paper with your proper title. I am pleased to follow the hon. Member for Midlothian (Mr. Clarke). Given all the present uncertainties, we face the danger of never quite knowing whether it is the last time that we shall speak in this Chamber. I congratulate the hon. Member for Falkirk, West (Mr Joyce) on introducing the debate. I join him in expressing a slight worry about the lack of hon. Members present, but that again could be due to outside uncertainties, which could be focusing their minds on other matters.
When it comes to debating the economy, there is consensus about how the free market operates, although there is still worry about free trade and how that operates. In a sense, political debate can have a less direct effect on the economy and while Governments like to take a lot of credit for helping the economy, in many ways it is helped by their restraint rather than by their actions. The success of our economy is down to the ability, entrepreneurial spirit and the innovative ideas of the individuals behind the businesses that operate in the economy. We muse not lose sight of the fact that our success lies on their shoulders.
Yesterday, I attended Shell livewire business start-up regional awards for the north-east of Scotland. One of my constituents, Julie Rendall, of the Roselodge Nursery in Aboyne successfully went forward to the Scottish final. Scotland often tends to dominate the

213WH
United Kingdom final. We have the talent; 40 per cent. of the judgment of those who decide the awards depends on the quality of the businesses, but 60 per cent. of their judgment is based on the people who drive them. They look for livewires who will take businesses further.
Some of the issues to which the hon. Member for Falkirk, West referred are now matters for the Scottish Parliament and the Scottish Executive. Many surround the problem of business start-ups Lessons can be learned from different parts of Scotland about how to maximise potential and not throw away good practices. We are lucky in the north-east of Scotland, in the way in which we nurture business start-ups. We ensure that there is a good interchange of experience from different enterprise trusts and companies, to maximise support.
As for the reserved matters, the key worry concentrates on the roles of the Chancellor and the Department of Trade and Industry, our relationship with Europe, the wider infrastructure in terms of linking Scotland to the rest of Europe through our rail system, or what is left of it, improving the freight link through the channel tunnel and the direct link between Scottish business and the rest of Europe. There is a range of successful business in the Scottish economy and challenges must be faced. A big driver in the economy is the oil and gas industry and we shall discuss that industry and its future tomorrow in the Grand Committee. It plays a crucial role in manufacturing investment in the United Kingdom. Those of us who live in the north-east of Scotland see it on our doorsteps, but there is a great danger that for the rest of the country, industries that are out of sight are out of mind. It is important for all of us in politics not to lose sight of how much investment has come from the North sea and how much more there is still to come.
Any talk of a windfall tax on the oil industry must be considered carefully. It is tempting for those removed from the industry and its importance to see it as an easy hit for another tax. I pay tribute to the Secretary of State for Scotland for her previous role as spokesman for energy. It is recognised in the industry that her understanding played a crucial part in bringing together Government and industry in a dynamic and constructive way. At yesterday's awards, she was praised by a spokesman from Shell who said that in his experience she was unique in being the catalyst in bringing together different sectors of the industry—contractors and operators—to home in on how best to maximise the take for the state and for the industry. Although contractors and operators are in competition with each other, recognising the many ways in which they help each other may help them in areas in which they are competing.
In tomorrow's Grand Committee, we shall no doubt deal in more depth with issues relating to our gas industry.
The hon. Member for Falkirk, West raised the role of our high-tech industry. That is clearly an industry of the future. Business a.m. has issued a warning with its technology index. At the start of the Scottish Parliament the index was up in the thousands, but it is now down to 660. Clearly, there are challenges in getting wealth out of the technology industry and the Minister must tell us where he sees the problems facing that industry. As with
214WH
all these things, we must recognise that the role of Government should be not to step in with both feet and disturb things.
The financial services sector is another key industry in the Scottish economy that has not yet run away to other parts of the United Kingdom because of the creation of the Scottish Parliament, despite the pronouncements of the prophets of doom. As with the oil industry, we cannot see or touch the financial services sector, so we may underestimate its importance in underpinning our economy.
The drinks industry was touched on by the spokesman for the Scottish Affairs Committee and I do not want to prejudge the outcome of its inquiry, which has been affected by events beyond its control in terms of the timing of the report's publication. I was impressed by the witnesses who appeared before the Select Committee—by their entrepreneurial spirit and enthusiasm for driving forward their industry and their products. Now that Scotland produces 75 per cent. of the United Kingdom's spirit production, the drinks industry is part of the key cluster, to use the jargon.
The hon. Member for Midlothian rightly raised the importance of linking research, turning it into economic activity and recognising its value. Although many such matters are now devolved, there is a warning sign that when it comes to fundamental investment into pure research, it is crucial that short-term headlines are not the goal. Much of what is now exploited in Midlothian came from research that was funded with no particular idea of its benefits. Lord Rutherford did much to further our understanding of nuclear physics, but when he was challenged as to his motivation, he replied that it was pure research, purely for academic interest. A huge industry that has made an enormous impact on our country was established on the back of that work. He had no interest in the economic application of his research, but had he not received funding and been able to enjoy his pure research, we would not have the understanding and technological advances that resulted from it.
The biggest challenge currently facing the Scottish economy is the foot and mouth outbreak. Although it is based in our rural economy, its tentacles spread throughout the country. It has a direct effect on farming and a wider effect on the tourist industry. I am already getting feedback from tourist centres about people from abroad cancelling holiday bookings. Our key message must be the normality of life outside the direct impact of the crisis, but that is a hard one to get across. I am interested to hear about the Minister's role in the task force, and, while we have the Scotland Office, his role in providing the link to ensure that the challenges facing Scotland are not lost in the United Kingdom response. I was rather disappointed to read an advert in the Evening Standard last week that was designed to encourage people back to the countryside. In the traditional manner of unjoined-up government, towards the bottom a short line stated that the Scottish Executive would issue a separate advert on the issues affecting Scotland. I feel that—
The Minister of State, Scotland Office (Mr. George Foulkes): That is fair enough in the Evening Standard, which circulates only in London.
Sir Robert Smith: That shows a classic lack of joined-up thinking. In considering the tourism industry and

215WH
encouraging people to come on walking holidays in their Easter break, we want to encourage not only people in Scotland to come; we hope that many people in London who enjoyed the excellent—[Interruption.] If the Conservative party ever want to represent Scotland, they will have to venture from outwith Scotland.
Mr. Grieve: I should point out to the hon. Gentleman that my principal recreation is walking in Scotland, but at the moment I cannot deduce from current information whether I am welcome.
Sir Robert Smith: That is the crucial message to send to the Government. Where people are welcome, information should be available to welcome them, and it should be clear when people are still advised to stay away from livestock. People need certainty. Scotland offers many other attractions, but I agree with the hon. Gentleman that if the key aspect that originally attracted someone to an area does not appear to be available, that person will not look further. It is important to have a joined-up strategy to market and reinforce the fact that we are still open for business and welcome careful tourist visitors.
On Friday, at a meeting of the Kincardine and Deeside enterprise trust with businesses from my constituency, I met an archaeologist, all of whose contracts have been cancelled as much of the land that he investigates is closed to him because it contains livestock. The need to get on top of the foot and mouth outbreak and eradicate its spread is extremely pressing for the Scottish economy.
The wider background affects the climate in which business operates. The organiser of the enterprise trust event pointed out that many businesses moan to him about developments that are in the realm of politics and Government. He suggests taking them forward, which is why he organised a meeting for Members of the Scottish Parliament and the local Member of Parliament to meet businesses. We need to increase that dialogue. Frustration is often felt at the coal face of a business, as those involved are so focused on running the business that they forget to go back to the political process and say that they have a problem as a result of regulation not having been thought through, and allow the political process to deal with their anxieties. It needs to be a two-way dialogue. The day before the Budget, I met a spokesman—I shall not name him, as that would be unfair—for a business that would be affected by the Budget. I said, "I hope we hear good news for you tomorrow", and he said, "Why, what's happening tomorrow?" The following day's Budget had completely slipped his mind. Business should engage in the political process in order to influence it. Although it must serve not only business, but the wider society, if our businesses and economy are not flourishing, we shall not have the investment required to underpin the benefits for the wider society.
I welcomed the proposal to create an independent central bank that appeared in the Liberal Democrat manifesto at the previous election, and which the Chancellor implemented almost as soon as the election was over. It helps to create more of a long-term culture for the underlying monetary policy and challenges of
216WH
inflation in a country that has often faced inflation. Inflation corrodes investment attitudes and results in extra cost in investment and extra risk to business activity. We often joke in the Chamber when the Prime Minister refers to ending boom and bust and smoothing out—it would be a brave politician who claimed to have ended boom and bust in the economic cycle—but it is helpful to try to dampen down some of the swings that can result if interest rates are at the mercy of political decision-making and election timing.
That does not absolve the Chancellor of his responsibility in producing a Budget to be aware that he is setting criteria and rules by which the Bank of England will have to operate. For instance, the Bank sets interest rates in accordance with its interpretation of the Chancellor's fiscal policy. Therefore, if he proposes irresponsible policies, he cannot be absolved of influence over the Bank's subsequent decisions and their consequences.
Much of the Scottish economy would also benefit from currency stability. Exchange rate stability would be especially welcomed by exporters, the tourism industry, and farming and the broader rural economy. There is widespread disappointment in such sectors of the economy that the euro has not been more vigorously debated, and that the Government have failed to display greater leadership, although they are beginning to be more resolute about expressing their opinions.
However, the United Kingdom's currency belongs to the British people, and they will take the final decision on the euro in a referendum. I welcome that. My party advocated a referendum in the previous general election. It forces those of us who are involved in the political process to engage with I he general public. We should not walk blindly into new political arrangements without taking the public with us because that could lead to an immense backlash.
Last week, the Confederation of British Industry emphasised that the Government's relations with Europe must be constructive and progressive to underpin much of our economy and trade. That is especially the case with regard to Scotland: farming and fishing constitute a large proportion of its exports and therefore the UK's relations with Europe are crucial to significant sectors of its economy.
Fishing is a particularly significant sector of the Scottish economy. With regard to that industry, will the Conservative spokesman explain why his party tells a different story in the Scottish Parliament about how it would tackle Europe than it does at Westminster? The Conservative party believes in the Union, but the United Kingdom has only a single voice in Europe and cannot therefore hold divergent opinions on the matter. That circle will have to be squared before the fishermen know where the Conservatives stand on the issue.
I have mentioned that, in terms of grand gestures, the political process has as a less dramatic effect on the economy than it had 100 years ago. The Chancellor has therefore taken to tinkering with his Budgets. If the political process were more robust and confident, one might expect the Chancellor to tell the House that the economy is thriving and nothing further needs to be done. However, because grand gestures can no longer be made, there is a dangerous tendency to tinker by introducing a series of little pots of money, several tiny

217WH
tax initiatives, or a few small tweaks to the tax system. That creates a complex tax system that can damage businesses. They might face extra costs and burdens, without reaping any compensating productive benefits, if they are confused about which pot they can benefit from, or which new innovative tax credit they can apply for, or if they are uncertain whether they or the Benefits Agency must operate the working families tax credit on behalf of the Government. The current tax system is complex and the Chancellor should begin to try to simplify it because people waste time trying to come to terms with it. I welcome the fact that he has started to try to do that with regard to value added tax.
The transport infrastructure is important because it links the Scottish economy with Europe. Freight links are especially important, but the UK's railway system is fragmented and in a depressingly poor condition. I am not claiming that everything was rosy before the previous Government intervened, but they did not leave as their legacy a railway structure that responded to the subsequent challenges. Individual freight companies have experienced some benefits, but it is necessary to secure the underlying investment so that proper height clearances on railway lines can be introduced and a uniform size of freight wagon can run from central Scotland to the heart of Europe. The opportunity for such a freight link is one of the most significant contributions of the channel tunnel.
The Government must be careful not to take too much credit. They must be keen to have an election because what is happening in the American economy will affect our stock exchange too. When economies turn around, Governments may not necessarily be at fault but, if they take all the credit in the boom years, they inevitably take more of the flak in the bust years.
One fundamental lesson about boom and bust is seen in the fact that, although the Government have smoothed out the economic cycle, they have certainly not smoothed out the public investment cycle in respect of investment in education. As was said earlier, it is important to underpin that. The Government spent the first two years imposing Conservative spending cuts that even the outgoing Conservative Chancellor said that he would not have stuck to, so as to present a nice smooth injection of cash into public services in the run-up to the election. However, that policy has meant that, as the Government reach the end of their term of office, they are spending less, as a percentage of the nation's wealth, than was spent under the policy that trey inherited from the previous Government. One may compare this Government's capital spending and under-investment with the achievements of the previous Government.
Many challenges continue to face the Government in terms of underpinning the economy, but the greatest is to be cautious about interfering in and playing around with the tax system unnecessarily, to tackle red tape and to show more leadership in respect of our currency and exchange rate. Finally, they must recognise and pay tribute to the fact that the positive state of the economy is due the spirit and hard work of the individual people working in businesses.
11.46 am
Mr. Dominic GrieveIt is a pleasure to have an opportunity to participate in the debate. I congratulate the hon. Member for Falkirk, West
218WH
(Mr. Joyce) on his speech and on securing the debate. His speech was fascinating because we heard in it the authentic voice of Scottish Blairism. It included a variety of propositions, with a mixture of emphases—on education and the "need for the cultural shift in the attitude to risk taking", to use his words. That is a very Blairite concept from the bosom of the Labour party; even 10 or 15 years ago one would have been unlikely to hear that from a Member of Parliament who supported the Labour interest.
The hon. Gentleman made a variety of other points based largely on his own experience in his constituency, which, I am sure, were valid and reflected in part the fact that his constituency has been historically very dependent on the old manufacturing industry base, as one can see when one drives through or past it. His speech was important, and I am sorry that such an important debate has attracted so little interest from his fellow Labour Members from Scotland and, perhaps unsurprisingly, zero interest from the Scottish National party. One has only to consider that party's basic proposals to realise that they are living on planet Tharg. It is not at all surprising that no SNP Members are present, because they do not want to engage in dialogue, as debate is a means by which one may be brought down to size and have to face up to one's shortcomings.
I hope that the hon. Member for Falkirk, West will bear with me if I am a little iconoclastic this morning, although that iconoclasm will be directed at my own party, too. It is my last opportunity to do that before the general election, and this forum may be appropriate, as we are having an informal and good-humoured discussion.
In 1997, the Conservative party experienced meltdown in Scotland for a variety of reasons, but mainly because the electorate were sick of us and wanted to get rid of us owing to our inability to grapple with the challenge of devolution and the extent to which we adhered on a philosophical basis to maintaining the Union in its old form. They also wanted to get rid of us because of the problems experienced in the economy during the period of recession that preceded that election.
It is noteworthy, however, that the available statistics reveal that in 1997 the Conservative party left Scotland with a series of economic indicators that were effectively unrivalled. I leave unemployment to one side and will return to it later.
Let us examine some of those indicators. In the four years after 1991, Scotland had a faster rate of economic growth than the rest of the United Kingdom. It weathered substantial parts of that recessionary period far better than elsewhere. In 1997, average earnings in Scotland were the fourth highest of the 10 UK regions, although I am the first to accept that some constituencies, such as the one represented by the hon. Member for Falkirk, West and others in Glasgow, had serious indices of social deprivation and poverty. We have such problems in the south-east of England, even in constituencies close to mine, which is the wealthiest in the UK in its heartland of south Buckinghamshire.
On top of that, from 1979 to 1996 earnings in Scotland had increased in real terms by 33 per cent. for men and a staggering 60 per cent. for women, although the latter increase was undoubtedly due in part to the

219WH
changes in working practices for women and the great growth of parity in pay. Nevertheless, those are major transformations. One had only to visit Glasgow in the early 1990s to see the extent to which that city—which had previously been hugely underachieving and looked dilapidated-was in the process of transformation. It is also noteworthy that, in 1995, exports peaked at £17.32 billion. That was a measure of the underlying strength that was developing in the Scottish economy.
Although the decline in unemployment has undoubtedly been one of the most significant and important features of the past three years, it was already declining in the years immediately before the Conservatives left office, as the inevitable consequence of the growth of productivity, and of the economy in general, in the period preceding that. My experience is that unemployment starts to decrease after the economic indicators of growth rise. They do not work precisely in tandem; we know that, in many matters concerning the economy, one trend follows another.
With that in mind, we must examine, with a degree of caution, the situation today. Several factors demonstrate that the Scottish economy is not doing as well as it should, and they are inherently linked to the Government's economic policies. We start with the basic fact that, despite the faster growth in Scotland under the Conservatives, there is no sign that that has led to the parity in gross domestic product for Scotland that one might have expected. In fact, it has fallen back: Scotland is now at 97 per cent. of UK GDP. Much more worrying is the fall in productivity, which was increasing nationally at 2.2 per cent. per annum in 1997. The rate of increase has now fallen to 0.7 per cent. That is reflected in Scotland, and it is a much lower growth rate than that enjoyed either in Europe or, much more tellingly, in America. Either the hon. Member for Falkirk, West or the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) made a point about the American economy. Until recently, it was surging forward, but that surge was not matched in Britain.
Most worrying is evidence of the past year, which shows a growth in business failure. The hon. Member for Falkirk, West spoke about risk taking, which we need to encourage, although of course one of the consequences of taking risks is that one may come a cropper. Nevertheless, if one takes risks, one should do so in a financial climate in which there is at least some hope that they will succeed. The Grant Thornton report shows that last year the number of businesses in Scotland that went into receivership rose by 67 per cent. I should be interested to hear from the Minister to what he attributes that and whether he concludes that it may be partly a reflection of the Government's policies.
The number of new businesses being set up has fallen by a third since the second quarter of 1997; as I said earlier, we had 6,600 new business start-ups in 1997 and 4,500 in the second quarter of 2000. I am not sure whether further statistics have become available since then; if they have, I have not seen them. That is not the sign of an economy cruising into a higher gear; it is the sign of a faltering economy. Unless the problems are addressed, the trends that have been apparent over the
220WH
past five or six years will be reversed, including an eventual growth in unemployment. If business start-ups are declining and receiverships are increasing, problems will start to multiply.
The Minister needs to explain why he thinks that those factors come into play but I shall highlight a number of points. First, Scotland is dependent on a number of key sectors, one of which is drink. There is no doubt that the whisky industry is a great money-spinner, not just for Scotland but, in terms of export, for the United Kingdom. Just before the Budget, I was involved in a delegation to the Financial Secretary for the Treasury on behalf of the whisky industry to raise with him that industry's concerns that they were being continuously handicapped—[Interruption.] Does the Minister wish me to give way? I thought that we were going on until 12.30 pm, Mr. Deputy Speaker.
Mr. Deputy Speaker>: Indeed, the debate is going on until 12.30 pm. There is no reason for the hon. Gentleman to hurry if he does not wish to do so.
Mr. Grieve: I am grateful, Mr. Deputy Speaker. The Minister's gesture made me think for a moment that I was lacking in courtesy by allowing him insufficient time to reply. A horrible sinking feeling came over me that we were going to finish at noon.
Mr. Foulkes: I abjectly apologise. That was not in any way my intention. I was just trying to indicate that it was the hon. Gentleman's Government that kept the duty on whisky up and our Government that have reduced it in real terms.
Mr. Grieve: Now that the Minister has interrupted me more coherently, I can say that I am prepared to accept that the level of duty, from which the Government derive a great deal of income, is difficult to fix. The fact remains that the key issue is the differential, which has been institutionalised at a European level, between the levels of duty on wine and on spirits. The Government have not taken full advantage of the opportunity that they now have to change that. I await with interest what the Minister has to say on the matter.
The whisky industry was deeply disappointed because it was hoping for a reduction in duty. The duty has been pegged, but when one considers the amount of income that can be generated, the Government seem in danger of killing the goose that lays the golden egg—or at least of not encouraging the goose to lay the golden egg. That is an example of poor fiscal management.
Mr. Malcolm Savidge: Will the hon. Gentleman tell us in which years the whisky industry thanked the previous Conservative Government for changing whisky duty in the way that he suggests?
Mr. Grieve: My research does not go back over the whole history of the whisky industry, but extends to my involvement over the past 12 months. I am trying to deal with the issues that the industry raised with me. Together with the Minister of State, Scotland Office, the hon. Member for Cunninghame, North ( Mr. Wilson), we went to discuss the issue with the industry prior to the Budget. There was disappointment that the level of duty

221WH
was not reduced. The industry sought a reduction to achieve parity, in terms of alcohol content, with the wine and spirits industry. It did not succeed, so will the Minister provide a clearer justification and explain why not?
Mr. Savidge: It is my impression that the whisky industry and the people of Scotland are in much better spirits now than during the 18 years of Conservative Government.
Mr. Grieve: I am afraid that I cannot agree with that, certainly not on the basis of the information supplied to me by the whisky industry. I leave the hon. Gentleman with that thought. Unfortunately, he was not present earlier and will not have time to make a proper contribution on that point.
Other issues go to the heart of taxation. Taxes have risen more heavily in Scotland than they have here. There is a new higher business rate, new parking taxes, new tolls on trunk roads and further projected tolls on urban roads, a new bed tax, a new sightseeing tax, a new compulsory training levy, and the Government's tax on pesticides. Nationally, the Government have raised taxes by £25 billion, of which £2 billion is being spent on Whitehall bureaucracy.
The whole picture adds up to one of increasing burdens on business, particularly small businesses. The current burden amounts to 31 hours per month of extra paperwork for a business with between 10 and 14 employees. That extra work is necessary to carry out the functions and responsibilities that the Government have placed on such businesses.
I was struck when Mr. Jackson, secretary of the AEU, was quoted as saying, in the context of the Government's fiscal policies:
"We are not against taxation, but do you really hit businesses with new taxes when industry is already under pressure from the strong pound. Business should be treated n ore fairly."
I am not sure whether that is the voice of old Labour talking to Blairite Labour across the swamp, but people in industry and business know that all is not well. It is a consistent pattern that affects Scotland along with the rest of the United Kingdom, but with the added problem that Scotland has had to face extra burdens as a result of devolution. A huge amount of extra core expenditure is spent on administration, which was an inevitable consequence of devolution. I do not complain, but an extra chunk is being taken out of the Scottish economy to provide for its administrative Framework.
In assessing the present position of the Scottish economy, current trends give serious cause for concern. Conservative policies will be put forward at the next general election, and I shall not provide a rehash of the Conservative election manifesto. However, one important and consistent theme is to target some of the projected increase in the Government's revenues, which are colossal while the economy continues to boom, at people who require encouragement We should help small businesses to be self-sufficient, encourage savers in order to become less of a burden on the welfare state and stimulate business. That will be one of the key issues at the next election. The Government cannot get away from the fact that, most worryingly the savings ratio has fallen consistently. In 1997 it stood at 10.6 per cent.
222WH
It is now under 3 per cent. Indeed, the latest figures show it to be under 2 per cent., the lowest figure for the last 40 years.
Does the Minister think we should worry about that or can we simply disregard it? Unlike in France, which some of my forebears came from, where they put gold coins in socks and hid them under the bed, people in this country have traditionally used their savings to invest. Investment is one of the key ways in which risk takers are benefited and encouraged to take risks. The savings ratio has collapsed. How does that bode for the performance of the economy over a five or 10-year period? It is a direct result of punitive and confiscatory taxation on pension funds, and the way in which the general financial and economic climate discourages people from saving. Those are key issues that the Government have failed to address.
Sir Robert Smith: The hon. Gentleman has again highlighted the problem of the exchange rate. It would be helpful if he could explain how he would tackle the exchange rate issue and the concerns that business has about it.
Mr. Grieve: I accept that the exchange rate presents challenges for business. All exchange rates always have done. I find with businesses in my constituency, and I have no reason to think that the position is different in Scotland, that if the general financial and fiscal climate encourages them to be competitive, the exchange rate is a problem that can be dealt with perfectly satisfactorily. It has to be balanced out against the problems of joining a single currency, which on current showing would have led by now to considerable inflation, as is being experienced in Ireland because we have no common economic cycle. It is all very well arguing that we should join the single currency.
Mr. Savidge rose—
Mr. Grieve: Would the hon. Gentleman bear with me a moment?
I am not even sure what the Government's policy on the single currency is. It has become so murky and unclear. One thing is certain: if we surrender control over our interest rates to a European central bank, it may be an irritant in years of plenty, but if there is a downturn in the economy it will create serious problems if we are not in a common economic cycle with our European partners. What is happening to the euro at the moment suggests that there are serious problems. Business men in my constituency—and I see no reason why their problems should be different from those in Scotland—are virtually unanimous in their hostility to the single currency. A large number of them trade in dollars anyway, including with other European countries. They much prefer to be within a competitive environment with a Government who address their concerns.
Mr. Savidge: I thank the hon. Gentleman for giving way once again. He has been very generous. He talks about the importance of the general fiscal climate. How far does he think it important that in 1997 under his Government, 42p in every £1 of tax was spent on the cost

223WH
of unemployment or debt, which has been brought down to 16p in every £1? Is that not a more favourable fiscal climate?
Mr. Grieve: I welcome that. First, it is a reflection of a booming economy and secondly, it is a reflection of the way in which those areas of expenditure have been reduced. That is why I find it so extraordinary that the overall take by the Government has risen from 35 per cent. to more than 37 per cent. of GDP. When the economy is doing well, the Government should look to cut taxes as much as possible, but there has been a complete failure to achieve that.
Mr. Savidge rose—
Mr. George Stevenson (in the Chair): Order. We cannot have two hon. Members on their feet at the same time.
Mr. Grieve: This is a high-tax Government. I shall again give way to the hon. Gentleman briefly, but I want to give the Minister time to respond.
Mr. Savidge: Is it not the case that one reason why the tax take has increased is that more people are in work and have higher earnings? The increase is therefore a reflection of a buoyant economy.
Mr. Grieve: It may be a reflection of those factors, but if the taxman is taking an increasing percentage of GDP when the economy is booming, that is a serious matter. It highlights a failure of the Government, which will translate into an inability to provide the right financial climate for business. I have spoken for far longer than I expected. I am grateful for that opportunity and I await the Minister's response. I again congratulate the hon. Member for Falkirk, West on raising those matters. The Scottish economy would be far better served by a Conservative Government at Westminster.
12.10 pm
The Minister of State, Scotland Office (Mr. George Foulkes): As you know only too well, Mr. Stevenson, this is the third Adjournment debate in about a week to which I have replied. Nevertheless, I warmly congratulate my hon. Friend the Member for Falkirk, West (Mr. Joyce) not only on obtaining his second Adjournment debate since he was elected, but on his interesting, positive and insightful introduction to this debate on the Scottish economy.
Hon. Members have mentioned the poor attendance. To be fair to the Liberal Democrats and Conservatives, they have attended all three Adjournment debates. Their spokesmen have participated well, although I do not agree with all that they have said. Given that the Tories have no MPs in Scotland, that is not a bad record. Labour Members have contributed extensively to the previous two debates and substantially to this one. I have a half-back line supporting me that is worthy of Heart of Midlothian football club. As hon. Members have pointed out, yet again the Scottish National party is not present. That is a real disgrace, and I shall return to it in a moment.
224WH
We have had a historic Budget, for which Opposition Members have not given my right hon. Friend the Chancellor of the Exchequer full credit. We must recognise that it represented the Government's policy of achieving economy stability, on which we can create opportunity and prosperity for all and improve public services. As I said in last week's debate on poverty, the best way of taking people out of poverty is to provide them with job opportunities, which is what we have been doing. At a time when the Scottish and British economies are creating jobs in record numbers, we have been focusing on I help for more disadvantaged people, so that they can share in the prosperity of our stable economy.
My hon. Friend the Member for Falkirk, West is one of the most appropriate Members to secure a debate on this topic. As he said, his constituency is a microcosm of the Scottish economy, and he has had good news on that, even since his election. Walter Alexander, the coach builder, won a £23 million contract from National Express. Since May 1997, as my hon. Friend rightly said, jobs have been created by the Telecom service centre in Larbert, Thomas Cook in Larbert and Scottish Power in Falkirk. That shows how the Scottish economy has boomed under Labour. Falkirk is a good example. Indeed, I saw another example in the Borders yesterday with a colleague of the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith). Mainetti is increasing its employment from 100 to 200. Heriot-Watt university is doing well, and Hawick Cashmere is prospering thanks to support and guidance from the Labour Government. Clearly, there has been a sea change in Scotland in the past four years compared with the previous 18 years.
We cannot talk about the Scottish economy without mentioning our partnership with the Scottish Executive, which is key. Nowhere is it more important than in respect of our economic strategy. Although we are getting the economy right and dealing with macro-economic policy at UK level, we acknowledge that the Executive are responsible for many of the micro-economic levers affecting the Scottish economy. That interdependence is recognised in their document, "A Framework for Economic Development in Scotland", which was published in June last year. The foundation must be a coherent, effective economic policy from the United Kingdom Government.
Whatever the hon. Member for Beaconsfield (Mr. Grieve) says, we inherited an economy in the United Kingdom and in Scotland in a bad state of repair, with high unemployment, high inflation and high interest rates—the most volatile in the G7 countries. The hon. Gentleman spoke about wage increases, which must be set in the context of the high level of inflation at the time.
Mr. Grieve: The economic statistics show that underlying inflation in the April quarter of 1997 was 2.5 per cent. In the October quarter of 2000 it was 2.2 per cent. That does not suggest the galloping inflation that the Minister talks about.
Mr. Foulkes: No. I am talking about what we inherited from the Tories. Under the Tory Administration, high inflation undercut wage increases and resulted in some of the wage increases that the

225WH
hon. Gentleman described. We also inherited poor skills and derisory levels of investment in the public and private sectors. I remember sitting in relative impotence on the Opposition Benches watching what the Tories were doing to destroy the British and the Scottish economy; that is why I am proud to serve in a Government that are putting it right and building a prosperous, successful, dynamic, competitive and, above all, inclusive economy.
In the past four years we have pursued a comprehensive and co-ordinated strategy and I shall set out its key elements, the first of which is to deliver macro-economic stability and to replace the boom and bust of our predecessors. As my hon. Friend the Member for Falkirk, West rightly said, it is a matter of fundamental choice, not chance, to steer a course of stability, prudence and responsibility. We have laid the foundations for a Britain where there is opportunity and security for all. We gave independence to the Bank of England, freeing interest rate decisions from political interference, which delivered the lowest inflation for 30 years, for which the hon. Member for West Aberdeenshire and Kincardine gave us credit, averaging 2.4 per cent. since 1997, the lowest in the European Union.
We have the lowest long-term interest rate for 35 years; mortgage rates that averaged 11 per cent. between 1979 and 1997 are now down to 6.75 per cent. or less. Economic growth is at 2.7 per cent. since the election and GDP in Scotland is now at its highest ever level. Employment has risen by more than 1 million in the United Kingdom and by more than 100,000 in Scotland; more people are at work than at any time in the past 40 years, but we have done even more: the Government's tough new fiscal framework has allowed us to make a record net debt repayment, as my hon. Friend rightly said, of £35 billion this year. We have cut the national debt from 44 per cent. of GDP to an estimated 31.8 per cent. That is prudence with a purpose at work, enabling the Government to release more funds for key spending priorities and public services. In Scotland, spending will be £3.4 billion higher by 2004, with an additional £200 million announced in this year's Budget.
The hon. Member for West Aberdeenshire and Kincardine, who mentioned world economic development, to which we are not immune, knows that there has again been an upturn in the stock market, but the Government's new macro-economic framework should help to continue to deliver stability, low inflation and sound public finances, which means that our policy is well placed to respond to global economic developments. While significant risks remain, especially from the United States, we have ensured that our budget forecasts take full account of the effect of slowdown in United States growth and its impact on world activity.
The hon. Member for Beaconsfield was talking Scotland down yet again, as seems to be his habit when he comes to these debates. Business investment has grown to 14 per cent. of GDP compared with 10 per cent. in 1994. Whole economy productivity grew by 2.6 per cent. in the third quarter of 2000, compared with 1997. The Economist Intelligence Unit ranked the United Kingdom first for its policies towards private
226WH
enterprise competition. That is an entirely different picture from that painted by the hon. Gentleman when he was talking Scotland and the UK down.
Mr. Grieve: Will the hon. Gentleman give way?
Mr. Foulkes: No.
The hon. Member for West Aberdeenshire and Kincardine asked whether the Scotland Office was involved in dealing with the foot and mouth outbreak. I am a member of the task force chaired by my right hon. Friend the Minister for the Environment. I also attend MAFF meetings chaired by my right hon. Friend the Minister of Agriculture, Fisheries and Food. The Government's top priority is to control and eradicate the disease. I share his concern about the tourism scares. We should make it clear that people can quite safely visit substantial areas of the United Kingdom. Local authorities are making it clear which are the no-go areas.
Information about our help for businesses with income tax and custom and excise duties has been circulated in Scotland to local authorities, MPs and MSPs. The hon. Member for Beaconsfield should know that we recognise that there is a problem for small and new businesses. The Scottish Executive are tackling that. However, the evidence of the substantial new jobs created shows that effective action is being taken. The recent data from the Scottish Council for Development and Industry show that Scottish exports are £27.8 billion, a 9.1 per cent. increase on 1998 and current prices. That is much more than the hon. Gentleman described. He also spoke about whisky and had to admit that the Conservative Government did little about that. Spirit duty has been frozen in the last four Budgets. Steps have been taken not just to help the whisky and other spirit industries, but to deal with the duty on spirits vis-à-vis the duty on wine and beer.
I turn now to absent friends.
Mr. Eric Clarke: My hon. Friend has not mentioned how the minimum wage has benefited individuals in Scotland. In Dumfries and Galloway, for example, which was a Conservative stronghold for many years, wages were well below the minimum wage.
Mr. Foulkes: My hon. Friend is right. Good employers were paying the minimum wage. The legislation ensured that the cowboys also paid it so there was no unfair competition. I did not mention it today because I mentioned it last week. I shall mention it again next week.
I hope that my hon. Friend does not mind me turning to absent friends. He will remember the events of 28 March 1979. The anniversary is just about to come up. We will never forget how nationalist Members trooped through the Lobby with Mrs. Thatcher to get rid of the Labour Government, heralding 18 years of Toryism. We remember Linwood, Corpach, Ravenscraig, Caterpillar and Invergordon. We remember the record of the Tory Government brought in by the SNP. One of my colleagues described them as Maggie's midwives. Now they are aiming to be Hague's little helpers, to ensure the return of a Tory Government.

227WH
The SNP has proposed a 45p rate of tax. That is to cover the uncosted pledges of £3 billion that the party made in the first five months of the Scottish Parliament. The setting up of separate embassies, Army, Navy and the Air Force establishments in Scotland, a separate social security system are costed at £4 billion, yet now, because of the belated recognition of the uncosted pledges and the cost of separation, the first of the SNP tax chickens is coming home to roost. It is the thin end of the wedge. If the SNP were ever to gain power, the hardworking people of Scotland would have to pay more taxes.
The SNP will go into the election saying that it will stand up for Scotland. How can it stand up for Scotland, when its Members of Parliament do not even turn up for their work here? What is happening is astonishing. Not even one of the six Scottish National party Members is here today to speak up for Scotland. Labour Benches are doing that and we shall continue to do so. The SNP deals in fantasy economics. It has been naive in its overestimation of the Scottish income tax contribution. It has ignored the share of United Kingdom national debt, which would be attributable to Scotland, and it is basing its financial plans on oil revenues that have fluctuated wildly from £12 billion in 1984–85 to £1 billion in 1991–92, then up again to £2.3 billion in 1995–96. That is putting the economy at the mercy of the world oil price and of OPEC. That is something that the Scottish people would embrace at their peril.
I hope that this message will get through to the people of Scotland. We depend on the United Kingdom single market. The importance of that to the Scottish economy is clear. More than half of all exports from Scotland go to the rest of the United Kingdom. More than two thirds of imports into Scotland come from the rest of the United Kingdom. Business organisations and employee representatives recognise that the Scottish economy draws its strength from being part of the United Kingdom. Scotland's economy under Labour is being
228WH
transformed into a modern, flexible economy, which is capable of supporting diverse industries. As well as strengthening the competitive edge of our traditional industries, we are looking increasingly at the areas of growth for the future, such as the creative and service industries and the financial sector. Manufacturing is still important to the Scottish economy. It accounts for 289,000 jobs, 14 per cent. of employment.
We must not forget that the finance and business sector now accounts for more jobs than manufacturing. Since 1991, the number of jobs lost in the manufacturing and construction sectors of the Scottish economy has been more than made up by the number of new jobs that have been created in the service sector alone. Through prudent, economic management and new measures to improve the climate of business, we have put in place in partnership with the Scottish Executive the economic conditions that encourage growth and employment. Devolution means partnership between us, and we are focusing on encouraging jobs in all sectors that add value to our economy, fostering a dynamic environment for the economy to grow and prosper.
If we are to have a successful economy, even more people need to be in work. I referred earlier to our employment record and low unemployment level. Much has been done, and we recognise that much more needs to be done. The Labour Government are committed to full employment. That is not a pipe dream; it is a realistic and achievable aim. We are determined to deliver such a goal. We have achieved the economic stability that is creating a record number of jobs. We now need to tackle the poverty of aspiration, the skills gap, discrimination and inequality of opportunity that hinder our drive towards full employment and a more fair and equal society. I am proud that the Government have made a significant start. I urge people outside the House not to put that in jeopardy. Voting nationalist or for any other party will at least allow for the possibility of returning to boom and bust and the high unemployment that existed during 18 years of Tory Governments. That would not just be bad for Scotland; it would be bad for the whole United Kingdom.

Wythenshawe Heart Transplant Centre
12.30 pm
Mr. Graham Brady: I am grateful to have the opportunity to take part in this debate. I am especially grateful to speak up for the Wythenshawe hospital transplant unit, which is a centre of excellence not only in the north-west and the United Kingdom but in western Europe. I am pleased to be able to put on record the appreciation of people across the north-west for the work done by Wythenshawe, and the Opposition's determination to ensure, that that work continues.
The background to the debate is the Government's decision to reduce the number of heart transplant centres from seven to four, and then to three, with the closure of Harefield hospital in 2006. The Government have said that it is right on clinical grounds to have fewer units carrying out more transplant operations. They have said that the poor availability of donor organs and the development of alternatives to transplantation mean that it is desirable to have fewer centres. I do not intend to question those views, or to denigrate the Northern General hospital in Sheffield or the Queen Elizabeth hospital in Birmingham. The transplant centres at both of those hospitals do excellent work. The purpose of the debate is to demonstrate that if only one of those three centres is to survive, it must be Wythenshawe.
Wythenshawe is the obvious choice on the basis of the Government's criteria. The Government want centres with high volumes of transplant surgery. Wythenshawe performs heart, lung and heart-lung transplants. The unit has performed 44 double lung transplants, 92 single lung transplants, 326 heart transplants, and 38 heart-lung transplants—a total of more than 500 transplant operations. It has had much greater experience than the other centres under consideration. Ministers want experienced surgeons. At Wythenshawe, three of the six transplant surgeons who have been in place for some time have each performed more than 100 transplant operations. The transplant team at Wythenshawe has considerable experience and expertise. In her reply to a debate on a related subject on 31 January, the Minister's departmental colleague, the hon. Member for Birmingham, Edgbaston (Ms Stuart), said that the successful centre should have an on-call rota of no more than one to four. That implies a minimum team of five surgeons. Wythenshawe has had six surgeons and has recruited a seventh, so it can meet that criterion comfortably.
The Government have said that they are worried about the decreasing availability of donor organs. Wythenshawe has an outstanding recovery system, with people on standby to ensure that no suitable organ would ever be missed because of recovery problems. The Government have said that they want efficiency in the operation of the transplant system. Wythenshawe transplant unit has the benefit of guaranteed intensive care bed provision when an organ is found. No transplant will be missed, and no organ wasted, because of a shortage of intensive care beds. The Government want to develop centres of excellence. Wythenshawe is already one. It is one of the finest centres in the United Kingdom for cardiac work, and it has the north-west lung centre and an adult cystic fibrosis unit on the same site. Many of the patients who go for lung
230WH
transplantation are cystic fibrosis sufferers. With the opening of the new, dedicated transplant ward in a few weeks' time, Wythenshawe will be the only fully comprehensive transplant centre in the United Kingdom, and possibly in western Europe. The Wythenshawe transplant unit is a magnificent achievement that has inspired great loyalty and commitment from people throughout the north-west.
Mr. Stephen O'Brien: The Wythenshawe transplant unit is indeed a centre of excellence, as is confirmed by the experience of my own constituents, who, if it were closed, would have to go to Sheffield or Birmingham, which are considerably further away. I wonder whether my hon. Friend has heard of the experience of my constituent, Sylvia Hinde, of 23 Hockenhull crescent in Tarvin, near Chester, who states:
"I have heard the government has plans to close the Heart Transplant Dept. of Wythenshawe Hospital. Please would you protest strongly against this decision.
It means a lot to my family as six years ago my nephew then"—
Mr. George Stevenson (in the Chair): Order. I believe that the hon. Gentleman has got the message.
Mr. Brady: I had got the gist of the point, as my hon. Friend expressed it so eloquently that he could convey the meaning in just a few words. The letter that he received from his constituent contains a message that I am sure is reflected in letters that hon. Members from all parties who represent the north-west have received. There has been an enormously positive response to the work that Wythenshawe has done. The furthest afield place from which I have received a letter is Dorset, which shows the extent to which the work of Wythenshawe has impacted on the lives of people throughout the country. Retaining it is vital.
Mr. Stephen Day: My hon. Friend the Member for Eddisbury (Mr. O'Brien) mentioned the fact that people from the local area, including my constituency, which is just to the east of Wythenshawe, would have to travel to Birmingham or Sheffield. Sheffield presents a great difficulty because of the physical presence of the Pennines, which in winter are impenetrable. Travelling to Sheffield is often virtually impossible. Equally, travelling to Birmingham from Manchester is, because of traffic on the congested M6, virtually impossible. Is my hon. Friend aware of the serious anxiety in my area, and that he speaks for the entire north-west, not only his constituency?
Mr. Brady: My hon. Friend makes an important point. I am pleased that some people manage to travel across the Pennines. He is a case in point, and we are pleased to have him on the right side of the Pennines. He makes an important point about the serious difficulties that would face many of our constituents in the northwest, who would have a difficult journey not only to travel for transplant surgery but, perhaps more importantly, in the post-operative period, for continuing care and assessment.
The unit has inspired tremendous loyalty and commitment from people throughout the north-west, as has been shown by the fantastic fundraising effort of the

231WH
New Heart, New Start charity, which has so far raised more than £6 million to support the transplant unit. That includes the entire £1.9 million cost of the new transplant ward. Until his death last year, New Heart, New Start benefited from the energetic chairmanship of my constituent Jim Quick, who himself benefited from 13 years of productive life post-transplant and whose name will be borne by the new transplant ward at Wythenshawe.
Like the centres at Sheffield and Birmingham, Wythenshawe has been in limbo for several months. When I expressed anxieties in this Chamber on 31 January, the Minister said that it was a close race and that no decision had been taken. Still no decision has been taken. Professor Harnden, chairman of the trust, has written:
"The uncertainty which has been caused by this long, protracted process has severely damaged the morale of our staff and is now affecting staff recruitment and retention. We really do need an answer quickly."
The Manchester Evening News has picked up the matter with its own campaign, "Keep the Heart Beating". In an open letter to the Prime Minister, the editor said:
"Dear Prime Minister, Lives are in your hands—and it is time to end the indecision."
All hon. Members can understand why the Government may wish to put off an unpopular decision until after a general election. However, any further delay is untenable, when real damage is being done to morale, to the recruitment and retention of staff, and to the unrivalled voluntary fundraising effort of New Heart, New Start, donations to which have fallen. Ministers must set out clearly their criteria for the choice of which unit will survive. They must say which unit is to be chosen, and say it now.
12.40 pm
Mr. Paul Goggins: I thank the hon. Member for Altrincham and Sale, West (Mr. Brady) for giving me the opportunity to contribute to the debate. The Wythenshawe transplant unit is in my constituency but, as he said, its future has aroused concern among hon. Members throughout the northwest, and across all parties.
I underline the impressive clinical record of the Wythenshawe transplant unit. More than 500 transplants have taken place, including double lung and heart-lung transplants. The unit is embedded in a hospital that provides first-class cardiology and thoracic services. The hon. Gentleman acknowledged the importance of the New Heart, New Start charity. It has contributed £6 million to the unit and is providing funding of £1.9 million for the new dedicated transplant ward. The charity has raised impressive amounts of cash, and just as importantly, it has won the affection and support of people throughout the north-west.
I hope that the Minister will reassure us that when a judgment is made in the review of transplant services, it will be based not merely on the record to date—which in Wythenshawe's case is very impressive—but on the physical and clinical capacity that the chosen unit has to
232WH
absorb the work of the two units that will inevitably close. I strongly believe that Wythenshawe has that capacity and I want to place on record the assurances that I have received from the chairman and chief executive of the South Manchester University Hospitals trust. They see the unit as an important part of the future of Wythenshawe hospital.
My hon. Friend the Minister will know that the £110 million redevelopment of the hospital will be completed by September. It is vital that the Wythenshawe transplant unit remains part of what will be a world-class hospital in my constituency.
12.43 pm
The Minister for Public Health (Yvette Cooper): I congratulate the hon. Member for Altrincham and Sale, West (Mr. Brady) on securing the debate. The future of our organ transplant services is important, and a matter of concern for many people. The Department has received many re presentations, not only about the future of the transplant centre in Wythenshawe hospital but about the future of the centres in Sheffield and Birmingham. As hon. Members will know, there was an earlier debate on the future of the Sheffield centre. It was right for my hon. Friend the Member for Wythenshawe and Sale, East (Mr. Goggins) and the hon. Member for Altrincham and Sale, West and others to raise the concerns of their constituents and make the case for the Manchester centre
I shall explain why the Government need to find four specialist centres for heart transplants. Clearly, it is a vital health care service. In cases of liver, cardiothoracic, heart and lung transplants, the procedure is literally life saving. In the case of kidney failure, renal dialysis can sustain people while they wait for a suitable organ to become available. Ultimately, however, we need to ensure a secure future for organ transplant services in this country. We perform approximately 3,000 transplants a year with organs from 900 donors, but more than 6,000 people remain on the transplant waiting list.
The Government's commitment to modernising organ transplant services was set out a year ago in another place by the Under-Secretary. my noble Friend Lord Hunt of Kings Heath, in response to a report from the Royal College of Surgeons on the future of the then United Kingdom Transplant Support Service Authority and an inquiry by the permanent secretary into conditional organ donation. Much progress has been made, but critical issues remain in relation to the future of organ transplant centres.
The need for change and reorganisation in cardiothoracic transplant services is determined by two key factors. The first is the number of operations that take place. Improvements in road safety and the prevention of strokes in younger people are important health gains and are very much to be welcomed, but the fact that fewer young people are admitted to hospital and subsequently die has had an inevitable effect on the supply of organs for transplant. In the past five years, the number of organ donors under 60 has fallen by 15 per cent. The fall could have been greater had it not been for the dedication of staff in intensive care units and the efforts of transplant co-ordinators and teams in identifying donors

233WH
The Government are committed to doing everything possible to maximise organ and tissue donation and maintain the very high standards of our organ transplant services. That commitment was demonstrated at an organ and tissue donation summit on 27 February, at which the Secretary of State for Health announced an NHS action plan intended to double the number of people on the organ donor register by no later than 2010. The problem is that the fall in organ donations has meant a year on year reduction in the number of cardiothoracic transplants being performed—from 423 in 1995 to 290 last year, which is a reduction of more than 30 per cent. Over the same period, heart transplants performed in the seven centres in England fell from 262 in 1995 to 172 last year.
Although there is much that we can do to boost the supply of kidney donors, the number of younger donors for heart and lung transplants is expected to continue to decline. We will have to work very hard to reach our target of a 10 per cent. increase in donors by optimising organ donation and retrieval arrangements. Even if we achieve our target, however, the current programme will be increased by only 30 transplants a year.
Hon. Members will be aware that it is vital that surgeons have sufficient expertise and experience to perform the complex operations under discussion. They must carry out sufficient operations to maintain the skills and expertise of the team, to avoid standards being jeopardised or falling. Clearly, it would be unacceptable if the standard of treatment received by patients in need of cardiothoracic transplants declined as the numbers of transplants declined.
The second important factor affecting the organisation of services is the need for proper staffing cover. In considering how best to modernise transplant services, the Government have accepted recommendations from the Royal College of Surgeons on minimum staffing levels for transplant units. As the hon. Member for Altrincham and Sale, West mentioned, it recommends that surgeons should work no more than a one in four rota for being on call out of normal working hours. That is because so much of organ transplantation takes place at night or over the weekend. Surgeons' working hours must now comply with the European Union working time directive, which means that we need teams of a minimum of five surgeons. At the time of the report, only two of the seven adult cardiothoracic transplant centres had at least five transplant surgeons.
Cardiothoracic transplantation has been a national service since 1986. A national designation prevented the proliferation of a large number of transplant centres, which happened in other countries Nevertheless, a major expansion of the service was agreed in the late 1980s in the belief that the number of organs would continue to increase. Four new adult cardiothoracic transplant centres were designated and by 1991 there were seven adult centres in England. The intention was to ensure that each centre performed at least 50 transplants a year.
Wythenshawe Hospital in Manchester is one of those new centres, and last year it carried out 36 of the 290 heart, heart-lung or lung transplants performed in English centres. Another of the new centres, St. George's hospital in London, performed only 10 transplants before its programme was suspended
234WH
following a run of poor results. That programme is currently the subject of an investigation by the Commission for Health Improvement. The other two new centres were Queen Elizabeth hospital, Birmingham and Northern General hospital in Sheffield. Last year, Birmingham performed 21 cardiothoracic transplants and Sheffield 23. The three original centres are Papworth hospital in Cambridge, which carried out 78 transplants, Freeman hospital in Newcastle, which performed 56, and perhaps the best known of all, Harefield hospital in Middlesex, which undertook 65 transplants.
Hon. Members will be aware of the need to ensure that those carrying out the transplants have sufficient expertise to perform complex operations, and the relevant skill to keep standards up. We are concerned that too few operations are being performed throughout the country. In some units, the number of transplants performed is insufficient to maintain the skills and expertise of a team of five surgeons. If that continues, transplant team members could begin to lose their skills and standards could fall. For the sake of current and future patients, we must ensure that each transplant team is well staffed and supported, and performs sufficient operations for all its members to maintain high skill levels.
Mr. Stephen O'Brien: The Minister helpfully read out statistics in which Wythenshawe ranked highly among transplant centres in terms of the total number of operations and the success rate. Given that record, would it not be an appalling shame to lose that excellence? My constituent made that point in the letter that I was unable to finish quoting earlier. The Government talk a lot about partnership, but it would be an unfortunate example if the Wythenshawe unit closed as a result of the Government's decision—yet to be confirmed—when voluntary groups have undertaken such a fantastic fundraising effort. At a time when the Government are trumpeting partnership, surely such a closure would be a kick in the teeth for those volunteers?
Yvette Cooper: I understand the points made by the hon. Gentleman, and I know of the strong feeling in the Manchester area about the importance of the organ transplant service.
The national specialist commissioning advisory group is responsible for advising on which services should be provided nationally. Last year, it recommended that the national programme should be delivered from only four centres in England. The hon. Member for Altrincham and Sale, West said that there would be only three, but I can assure him that that is not the case. Each unit would have the optimum infrastructure to support a programme of approximately 50 heart transplants.
Mr. Brady: Perhaps I am a little confused, but I understood that Harefield is due to close in 2006, leaving only three centres.
Yvette Cooper: No. Notwithstanding discussions taking place about the location of services in London, I can assure the hon. Gentleman that there will continue to be a London centre and that the Harefield transplant team will continue. In addition to the centre yet to be

235WH
decided, there will be a London centre, one at Papworth hospital in Cambridge and one at Freeman hospital in Newcastle. To minimise disruption to existing services, the advisory group advised that two units with sufficient surgical staff should continue—at Papworth and Freeman hospitals. It also recommended that the transplant services based in London should be consolidated into a single centre. We have accepted that recommendation. It further recommended that a fourth national centre be created by merging the three smaller transplant programmes that are currently provided by the Birmingham, Manchester and Sheffield centres.
Those recommendations are supported fully by many organisations, including the Royal College of Surgeons, the cardiothoracic transplant advisory group of UK Transplant and Dr. Roger Boyle, the heart services director. The Government agreed that such principles are right and that the reconfiguration is necessary if we are to maintain the high quality of one of the best cardiothoracic transplant services in the world. Agreement has already been reached on the reorganisation of the London-based service and the new arrangements will start from 1 April.
To remove uncertainty, we recognise the need to make as early a decision as possible about the siting of the fourth centre. However, it is important that we make the right decision. It is also important to ensure that the decision is based on all the available evidence, with a full assessment of the options and the capacity of the different centres. We do not want to be tempted into making a rush decision, which could be the wrong decision, which would be bad for those areas affected and for cardiothoracic patients throughout the country.
Mr. Brady: Of course, it is important that a thorough assessment is made. The Minister must accept, however, that damage is being done by the delay. When will a decision be made and when will it be announced?
Yvette Cooper: I can say a little more about the timetable for further consideration. The Birmingham, Sheffield and Manchester centres have all made persuasive cases. Understandably, and rightly, the Members of Parliament for those areas have made strong representations on their behalf. We must take into account the impact of the enlarged transplant team on other priority areas for cardiac operations as set out in the national service framework. Clearly, it would not
236WH
benefit the local population if their access to essential coronary artery bypass surgery was reduced to allow people from other areas to have a heart or lung transplant.
We must consider future capacity as well as track record. That is why the Government have asked for a more detailed study of the three sites, to enable us to assess the impact of an enlarged team on the capacity at the centres, as well as other important factors such as access for patients We recognise the importance of access and travel for patients. I assure the Chamber that, whatever decisions are made, all centres have adequate accommodation for those patients who have to travel and for their families. We shall also be looking further to improve shared care arrangements, so that travelling to distant centres is minimised.
When that further work is concluded and Ministers have all the facts, we shall issue a document setting out the proposals, to inform the public. We shall also seek comments because it is important that such a decision takes place in as transparent a manner as possible. The public and those in the areas that will be affected will be given the opportunity to comment before the final decision is made. That means that we are unlikely to reach a final decision before the summer, to give proper time for public comment on the proposals and for the facts to be assessed fully.
However, when the decision is taken we will work hard to complete the necessary changes by 1 April 2002. I understand the enthusiasm for speedy decision making and I accept that all the areas and the Members of Parliament who represent them will want to make the strongest possible representations. I assure my hon. Friend the Member for Wythenshawe and Sale, East and the hon. Member for Altrincham and Sale, West that we shall take into account the points that they raised on behalf of the Manchester centre.
I am sure that hon. Members understand that we need to recognise our responsibility to make the right decision, which means making a proper assessment of all the competing claims of the different centres to ensure that the decision is made on the basis of the facts, and to offer time for public comment and debate once those facts are known. The issue is extremely important, not simply for those areas that are affected, but for cardiothoracic patients throughout the country. It is too important for a hasty or wrong decision to be made on it; we must make the right decision in the interests of people not only in the Manchester area, but in Sheffield, Birmingham and throughout the country.

Home Care
1 pm
Ms Linda Perham: I am grateful for the opportunity to debate the Department of Health's draft guidance, "Fairer Charging Policies for Home Care and other non-residential Social Services", which was issued with a consultation paper in January 2001. I am also pleased to have secured the debate just before the consultation period ends on 30 March. The guidance is for local authorities on non-residential community care charges, such as those for home care and day services. It is due to be finalised in May and fully implemented by April 2002.
I pay tribute to the Coalition on Charging, the Leonard Cheshire Foundation and the Carers National Association, which are working with me on the issue, and to the excellent work that they carry out for people with disabilities and their carers. I have been pleased to support the Leonard Cheshire Foundation since my year as mayor of Redbridge in 1994–95, and have had the privilege of working with its head of policy, John Knight, since my election to the House.
Members of my local carers group, the Redbridge Carers Support Service, raised concerns about charges for home care when I spoke at their annual general meeting on 9 November—the same day that my right hon. Friend the Secretary of State for Social Security announced the £191 million package of extra help for carers, which was warmly welcomed. They raised the issue again during a visit to their headquarters in Ilford on 1 March by the Under-Secretary, my hon. Friend the Member for City of York (Mr. Bayley), on 1 March. Charging for services is a matter of great concern to carers, and the Carers National Association believes that the draft guidance does not pay enough attention to the impact of charging on them. That is a particularly sensitive subject because, from April, the Carers and Disabled Children Act 2000 will for the first time allow local authorities to provide services to carers, while giving them the power to charge for those services.
The Government's intention to provide a fairer means of charging for non-residential services should be welcomed. It includes the commitment to reduce the worst hardship caused by charging to the least well-off people, by proposing a minimum level below which service users' incomes cannot fall the creation of a buffer zone of 25 per cent. to protect that minimum income; the reminder that councils retain the discretion not to charge; the view that charging without taking into account a service user's means is unacceptable; the requirement that local authorities must take into account the ability to pay; and the principle that the value of a person's home may not be taken into account when assessing ability to pay.
Although the guidance will bring some real improvements, there remain areas of concern. People on income support will not automatically be exempt from charging. The draft guidance states that nobody should fall below the level of income support, which means that the most vulnerable in our society will still be hit. Income support is a breadline benefit, payable to people who would otherwise fall below the poverty line, which remains the case even where a person receives other income or benefits. Someone who is on income support
238WH
and being charged for care cannot wait a year before the charges stop. They must be stopped now. Those who are currently facing hardship because of personal care charges cannot wait until April 2002 for charges to be abolished.
Exempting people in receipt of income support is also consistent with charging systems for other comparable health and social services such as prescriptions, dental treatment and eye tests. In any case, it will be inefficient to charge those on income support, as the amount that councils have to spend in assessing that group of people, compared with the meagre sum raised, will mean little or no overall income. In the final guidance, the Government should ensure that no one on income support is charged.
Many organisations are calling for personal care services as defined by the royal commission to be available free of charge. That now looks set to happen in Scotland and is a major concern of the Coalition on Charging, a consortium of 200 national and local organisations representing disabled and older people.
The Health and Social Care Bill clearly states that those receiving care from a registered nurse will not have to pay personal care charges in any setting. That is welcome, but many older or disabled people receive a similar service from a social care worker but would have to pay charges. There is real anxiety that what is laid out in the guidance could act as a disincentive to work. The draft guidance states:
"The Government's policy is to encourage and enable those who wish to take up employment, including disabled people to do so. Charging policy should avoid creating disincentives to work."
It continues:
"Those in work should retain the majority of any benefit from entering work or from increased earnings…no more than a maximum of 55 per cent. of net earnings should be included within any calculation of total income."
It is clear that the majority of earnings will not be retained if the majority, 55 per cent., of a person's earned income is deemed available to pay for charges. Many disabled people already face barriers in their everyday lives. Those in work also contribute to the cost of non-residential social services, as well as other services essential to society, via income tax, council tax and national insurance. On top of that, up to 55 per cent. of earned income being taken away to pay charges is unacceptable to service users who work. They are being taxed four times, which is clearly unjust. If a maximum figure of earnings is to be contemplated, it needs to be much lower to tackle the issue successfully and to ensure that charging does not discourage disabled people from finding work.
The guidance suggests that partners' income can be taken into account, but that could compromise a disabled person's independence and cause tensions within a household or relationship. Section 17 of the Health and Social Services and Social Security Adjudications Act 1983 states that a service user can be charged, but not other parties. There is anxiety that the guidance does not make things clearer, and it could be a problem for local authorities and service users.
Many partners of disabled people already make many financial commitments to support their partner. They also save the local authority money by the informal support that they give. It is unfair that they are then caught in a double whammy of having to pay their partner's formal care costs.

239WH
Organisations representing disabled and older people and carers believe that, if charging continues, partners should not have to pay charges, and I seek an assurance that that will be the case. Although it is good that the value of a person's home is not taken into account when assessing the ability to pay charges, the current savings level is too low. Levels have been set at the same limit as for people living in residential accommodation. That is causing great concern to service users, as people living in their own home need extra savings to pay for the maintenance that home ownership necessitates, and they also use extra support and equipment.
The draft guidance shows that savings over £10,000 could be taken into account when charging. Service users with savings of over £18,500 could be expected to pay the full charge for a service—a limit that would leave little money to cover the costs involved if someone had a progressive condition, for example, and had to find money for a chair lift, or if a home needed repairs after flooding.
Disability-related benefits such as disability living allowance are intended to pay for the extra daily costs faced by disabled people. Those costs are well documented and are frequently substantial, ranging from paying for extra heating to paying for communication aids or adjustments to a car. When the benefits were introduced, they were not intended to pay for services provided by local authorities and the amounts involved clearly reflect that. They are not sufficient to fund or subsidise care or extra living costs.
There is a contradiction between the Government's strong record on improving civil rights for disabled people since they were elected in 1997, through such measures as the establishment of the Disability Rights Commission, and the effect that charging has on the everyday lives of disabled people. The Government's recent proposal to scrap the small employer threshold so that no small employer can discriminate against disabled people is welcome, but that positive development has less meaning if, because of the extra charges that a disabled person needs to pay to get to work in the first place, he or she is better off staying on benefits and not working.
The guidance could lead to improvements in local authorities' charging policies but I urge the Minister to consider seriously my concerns, which may be summarised as the continuation of charging for personal care if administered by a social worker but not a nurse; the disincentive to work created by the plan to take up 55 per cent. of a service user's income to pay for personal care charges; and the unfairness of charging partners for an elderly or disabled person's care. As a matter of urgency, a commitment to ensure that charging for people in receipt of income support stops immediately, rather than in April of next year, would also be warmly welcomed.
The main reason for the guidance appears to be the current variation in charging between different councils-problems that, as the consultation paper states, were identified in the "Modernising Social Services" White Paper, the report of the royal commission on long-term care, and "Charging with
240WH
Care", which was published by the Audit Commission in May 2000. However, I fear that too many charging variations will continue under the guidance.
Together with the Coalition on Charging, I believe that councils will be left with too much discretion in several key areas, such as in taking into account disability-related benefits, partners' income or capital, savings, and setting a maximum charge. Local authorities should be obliged to undertake effective consultation on charges and to take the views of service users and carers fully into account. Carers would like assurances that the Government intend to ensure that a more detailed appreciation of charging issues for carers is represented in the guidance.
I hope that the final guidance will realise the Government's genuine intention of introducing fairer charges for home care and other non-residential services. I welcome the consultation that has taken place with interested parties on the draft guidance. I am sure that the Minister welcomes the opportunity of addressing my concerns and those of the individuals and organisations who took part in the consultation.
1.13 pm
The Minister of State, Department of Health (Mr. John Hutton): I congratulate my hon. Friend the Member for Ilford, North (Ms Perham) on securing the opportunity to consider the Department's consultation paper and draft guidance on charging policies for non-residential social services.
In July last year, we took new powers to issue statutory guidance under section 7 of the Local Authority Social Services Act 1970, in relation to discretionary charges for home care. Until that time, we had no powers in that area. We identified the extent of variations in charging policies between councils as an issue needing to be tackled in our "Modernising Social Services" White Paper in December 1998. The full extent of the variations—and I must acknowledge that in some cases the charging policies are hard to defend—has been exposed n the Audit Commission's recent report, "Charging with Care", published in May last year.
My hon. Friend mentioned the royal commission's report on the funding of long-term care, published in January 1999, which recommended that personal care should be provided free wherever it was undertaken. As she knows, we had to decide how best to improve long-term care. We thought it right to spend most money on improving the general quality and range of services provided for older people. That will help individuals to regain as much independence as possible. It will support them in their own homes and enable services to be tailored to their needs, not those of the organisations providing them.
To make personal care free to everyone in every setting would cost about £1 billion a year, but that huge investment would do nothing to improve front-line services. Not one extra person would be offered help to remain independent in his or her own home. It was a hard choice, but we chose to invest most resources in changing fundamentally how our care system supports older people.
We chose to invest in the development of a new range of services to promote the independence and improve the quality of care of older people. An important part of

241WH
the investment will be used to provide a new range of intermediate care services to prevent hospital admission and to offer effective rehabilitation, both enabling prompt discharge from hospital and preventing premature admission to long-term care.
Under the NHS plan of July 2000 by 2004 there will be 5,000 extra intermediate care and 1,700 supported intermediate care places, benefiting 150,000 more older people each year; more rapid response teams and other avoidable admission prevention schemes, benefiting about 70,000 more people each year; 50,000 more people will be enabled to live at home through additional home care and other support; and further carers' respite services will be extended to benefit a further 75,000 carers and those for whom they care.
That investment will allow us t o employ more nurses, doctors and therapists, but we clearly cannot spend the same money twice, as my hon. Friend would acknowledge. It is a hard choice, but we have made the right one for our country. It is vital to achieve our ambition of having joined-up services that promote independence, choice and quality, and other non-residential services such as day care.
The extent of variations in local charging policies, which we and the Audit Commission have identified, risks inhibiting our ambitions for developing the care of people at home. Too often, local charging policies have not been related to the need to promote independence and have been exclusively budget driven, crudely designed, and insensitive to individuals' circumstances. If home care is to play its full part in helping people to live independent lives in the future—which the Government want to encourage—charging policies that are manifestly unfair and deter people from accessing care need to be tackled.
The design of charging policies is important. It would have been an important matter, even if the royal commission's recommendation to make all personal care free of charge had been implemented in full. Non-residential social services include services such as home help and community equipment, which can be vital to maintaining independence, and the royal commission recommended that such services, where they do not involve personal care, should still be subject to an assessment of ability to pay charges. We would still need to address the fairness of charging for services.
I must emphasise that the draft guidance is precisely that. It was issued with a consultation paper, seeking responses to several questions. While we have done our best to overcome the difficulties of designing good charging policies, we may not have all the answers and we welcome all responses to the consultation, including those of well-informed service users, voluntary groups and, indeed, my hon. Friend's contribution today.
Local councils will rightly retain real responsibilities and some discretion in charging policies in future. For example, it will still be open to councils not to charge and they must decide what proportion of costs to recover through charging arrangements. The draft guidance sets out essential requirements to ensure fairness in assessing ability to pay charges, and consistency with the Government's overall social care and economic objectives. The draft guidance will be issued as statutory guidance to which councils must have regard in setting their charging policies. As
242WH
councils retain substantial responsibilities, it is vital that they give proper priority to the key processes, which include consultation, communication with users and reviews of their policies. The draft guidance includes advice on all those issues, which in my view obliges councils to undertake effective consultation. I am certainly at one with my hon. Friend on the importance of that.
I am pleased that my hon. Friend welcomed a number of the main principles in the draft guidance, which include the requirement that charges should not reduce a user's net income below basic levels of income support; the view that charging all users at a flat rate, without taking account of their resources, is unacceptable; and the requirement that councils must take into account the ability to pay. I should add that it is already a legal requirement for charges to be reasonable, so that is not new.
My hon. Friend accepts that the draft guidance will mean real improvements, but she has, quite legitimately, raised concerns, to which I want to respond positively. We have proposed that councils should bring the final guidance into force during the financial year 2001–02 and no later than 1 April next year. She says that people on income support will continue to experience hardship if councils charge users on basic levels of income support and take no action until April 2002. I have some sympathy with that point, which we shall need to consider carefully. Others have made the same point in response to the consultation exercise. If I inject a note of caution, I do so only because achieving the objectives that we both want to achieve is a complex matter. We need to take into account the ability of local councils to deliver changes to their charging policies within a reasonable time.
My hon. Friend says that other charging systems such as those for prescriptions and dentistry exempt recipients of income support. That is not all that those systems do; they also protect, at income support levels, the incomes of people who are disqualified from receiving income support, such as low earners and students. To do that, they require a specific and quite complex means test under the NHS low-income scheme. We have set out our intention to provide similar protection for people liable to pay home care charges, but it will not be a simple matter for councils to achieve that quickly.
There is also an important interaction for people receiving both income support and disability benefits such as disability living allowance or attendance allowance with the way in which home care charging systems treat disability benefits. If councils take disability benefits into account as income without assessing the reasonableness of doing so, that may reduce a user's net income below income support levels. That means that it is not a straightforward matter to divorce the treatment of people receiving income support from other issues. As I have said, however, we will consider the issue carefully as we respond to the consultation.
My hon. Friend made an important point about incentives to work. I want to make it clear that our policy is to encourage those who want to take up employment, including disabled people, to do so. Charging policies should avoid creating disincentives to work. That remains our fundamental objective. Our

243WH
intention in the draft guidance was to propose that councils treat earnings more generously than other income to ensure that there are incentives for disabled people to work. We have made it clear in the draft guidance that councils already treating earnings more generously than the maximum proposed in the consultation may continue to do so. There is no reason why disabled people now in employment should lose out as a result of the draft guidance. It discusses ways in which the overall approach will help to minimise work disincentives. It proposes as a guiding principle that those in work should retain the majority of any benefit from entering work or from their increased earnings.
As my hon. Friend said, the draft guidance proposes that no more than a maximum of 55 per cent. of earnings should be included in any calculation of total income. That is not the same as saying that 55 per cent. of income is available to pay charges. That percentage will be offset against premiums at income support levels, including disability premiums, with the addition of housing costs and disability-related expenditure incurred by the service user. Much less than 55 per cent. of earnings will therefore be assessed as a maximum charge, other than for very high earners.
We have had many representations about that element of the draft guidance. I hope that my hon. Friend will be encouraged by our willingness to reconsider whether it achieves the removal of disincentives to work. If there are convincing arguments that it does not, it will be reconsidered. I can assure her that we shall not issue any final guidance that makes it harder for disabled people to enter work. That would be entirely counter to our wider objectives and will not happen. We have already proposed that earnings should be treated more generously than other income, and we will re-examine that to ensure that the maximum proposed achieves the objective that we desire.
The draft guidance reiterates the current legal position, which has previously been set out in advice from the Department, on the treatment of partners' income and savings. That is a complex issue, and I want to assess whether we can clarify the guidance further as a result of the consultation. I fully accept my hon. Friend's points about the sacrifices that many carers already make to care for their partners. The draft guidance will help such carers to some extent: for example, we know that some councils currently take account of the user's income only, but assume that it is all available for charging, even though it supports both the user and the partner. We have made it clear that that is not acceptable. In some situations, it might be fairer to the user and partner to assess their income and expenditure as a couple: for example, where a benefit is assessed and paid at the flat rate for a couple. It can be invidious to assess that as income for the user only. That can happen now, and we are clear that it is not acceptable. On the other hand, it is arguable that a couple with joint savings, or one of whom has large savings, may fairly be assessed as a couple. We will carefully review the comments that we receive about that and try to achieve greater clarity.
The proposed savings levels are similar to those that are in force in approximately three quarters of councils. The other quarter have less generous limits, sometimes
244WH
as low as £3,000, with full charges applying above that level. We will take account of the point that people living at home might need greater savings than those in residential care. That is absolutely right. However, I should mention that the draft guidance does not require users with savings above the upper limit to pay the full charge—the full cost—for a service. Councils may choose to subsidise charge payers at that level as an incentive to independent living in the community. Councils may also apply higher savings limits and set an overriding maximum charge to be paid by any service user. The draft guidance would require councils to consider setting such an overriding maximum. That would be a significant step forward.
My hon. Friend suggested that the draft guidance would leave too much discretion to councils in a number of key areas, including the treatment of disability benefits. The draft guidance proposes that disability benefits may be taken into account as income only if councils also specifically assess a user's disability-related expenditure. That, too, would be an important step forward. While I understand her point, I believe that that is a clear requirement. A number of local councils have criticised the guidance not for leaving them too much discretion but for being too prescriptive. It requires a more sensitive test of ability to pay a charge, when a council wants to take benefits such as disability living allowance and attendance allowance into account. That approach would ensure that charges do not reduce a user's net income below basic levels of income support, and would allow disability-related expenditure at level higher than the benefit concerned to be taken into account. Many users with high care needs would not pay a charge, or would pay a much lower charge.
We do not believe, as a matter of principle, that disability benefits should be entirely excluded from consideration as income. That would be wrong, for example, where a council provides a care package that meets all or most of a disabled person's care needs. The approach that we have proposed would achieve greater fairness and more sensitive assessment of a user's financial circumstances, and would increasingly be combined with better advice to ensure that unclaimed benefits, such as attendance allowance, are claimed, thus increasing the user's income and quality of life. I am sure that we will receive many comments about the treatment of disability benefits, but I have tried to set out the aims behind our proposal.
My hon. Friend cogently made the point that the draft guidance should take more specific account of the needs of carers. That is precisely the kind of comment that we want to hear during the consultation. We are willing to consider more specific guidance on the cumulative impact of charging a disabled person and a carer in the same family. I understand that following a recent meeting with the Department, the Carers National Association will make such points in a written response to the consultation, and I look forward to receiving them.
My hon. Friend has done her constituents a substantial service in raising these matters. We have an open mind on the subject and will seriously consider the many representations that we have received, not least hers.

Hillingdon
1.29 pm
Mr. John Randall: I start by registering an interest as a council tax payer in the London borough of Hillingdon. I am also a director of my family business, which pays substantial business rates in the borough.
Hillingdon is, by and large, a pleasant place to live, and I value the quality of life there. It is a diverse borough, ranging from Ruislip and Northwood in the north to West Drayton, Yiewsley and Hayes and Harlington. It encompasses many different communities, and I sometimes think that the powers in government do not understand the nature of the borough.
I apologise to the Minister. Her officials asked my office for details of what I planned to discuss today, and I did not get back to them, not because I was being awkward, although that might be a good reason sometimes, but because pressure of work in the usual channels kept me too busy.
The Minister will be pleased to know that some of the matters that I raise will not be within the competence of her office, so she will be able to bat them away relatively easily. I hope, however, that she will pass my comments to the appropriate Departments.
Despite the smell of an election in the air, there is an all-party approach in Hillingdon to the matters that I want to raise. All three Members Of Parliament for the borough—my hon. Friend the hon. Member for Ruislip-Northwood (Mr. Wilkinson) the hon. Member for Hayes and Harlington (Mr. McDonnell) and Iߞare at one on these matters. The apparent inability of Governments to fund local authorities correctly is not necessarily a new phenomenon. Similar issues arose under Conservative Governments, certainly in respect of the standard spending assessment. However, other factors affect us and I shall touch on four subjects: the problem of insufficient Government funding for unaccompanied asylum-seeking children in Hillingdon; education in the borough; major repairs allowance; and the contentious matter of the ceiling on our SSA.
On the matter of unaccompanied asylum-seeking children, hon. Members will be aware that Heathrow is in the borough of Hillingdon, which gives it more problems in that respect than many other areas. A recent assessment by the director of social services showed that Hillingdon council was providing a social service for the 11th largest population of looked-after children, yet received the 10th lowest SSA and the llth lowest quality protection grant to enable it to meet its statutory duties in that work. The mechanism used to calculate SSA takes no account of unaccompanied asylum-seeking children, and the quality protection grant is based on the same SSA formula. That compromises the local authority's ability to deliver an effective service and places an unnecessarily great financial burden on the council.
Hillingdon has a relatively high number of looked after children: it is in the top 50 per cent. of boroughs if unaccompanied asylum-seeking children are included. If those children are not included, however, it falls within the lowest 50 per cent. of boroughs. Hillingdon has the worst ratio of SSA per looked after child if
246WH
unaccompanied asylum-seeking children are included, and the second worst ratio if they are not. If the grant for unaccompanied asylum-seeking children is included, Hillingdon still has the worst ratio in London.
I will give the Minister some figures for comparison. Hounslow, for example, which is a neighbouring borough, has 257 looked-after children, including five unaccompanied asylum-seeking children. It receives an SSA of £12.3 million and a quality protection grant of £2 million. Hillingdon, on the other hand, has 384 looked-after children, including 145 unaccompanied asylum-seeking children—that is 140 more than in Hounslow—and receives an SSA of £9.5 million and a quality protection grant of £1.6 million. The quality protection grant is applied to all looked-after children equally by law, but Hillingdon receives a lower grant in spite of having more looked-after children.
We have not been inactive within the borough or in Parliament. We have been in touch with the Department of Health, which has not been completely unhelpful. It has tried to solve some of the problems, recognising that some extra costs around care leaving were not met by last year's grant. Unfortunately, that is about as far as the Department's help goes. Although a seminar on the subject was announced, I was disappointed that no one from the Department was able to meet a delegation from the London borough of Hillingdon. The letter stated:
"Given that the grant allocation for 2000-01 has been settled and the forthcoming seminar in March, I do not think a meeting would be beneficial at this stage."
That is a disappointing response. The grant was increased from £500 to £575 per child, but no allowance was made for the displacement costs that arise from providing a high-volume service. The shortfall for Hillingdon in relation to that subject is estimated at £1 million.
With regard to Hillingdon's education budget, we have been disadvantaged by the £2 million shortfall that resulted from the ceiling. A letter from the chair of education to the Secretary of State for Education and Employment emphasises the borough's disappointment that, despite pursuing the Government's objectives in putting education at the forefront, out of a budget of £52 million, our LEA would receive only £100,000, which is the lowest level of grant awarded. That happened despite the issues raised by the chair of education and the Labour lead member for education.
The letter goes on to say that the funding gap between Hillingdon's SSA increase and the actual rise in pupil numbers means that the borough might be unable to accept all of its SSA and that, even if it could, it would
"not reach the Government's target of an in crease of 5 per cent. per pupil in the total delegated and devolved funding for schools. The new grant will make a very small difference to this, raising our increase by £2.50 per pupil or 0.1 per cent…the grave, and growing, seriousness of the recruitment and retention problems of Hillingdon Schools which are exacerbated by the additional funding and greater priority for recruitment and retention initiatives awarded to neighbouring LEAs included in Excellence in Cities."
The borough is still regarded as not having the same problems as neighbouring boroughs although, in actual fact, our vacancy rates are higher and our potential

247WH
recruits—not to mention existing teachers—are being pulled away. We are not being treated fairly in comparison with neighbouring boroughs. In the words of the director of education,
"The combined effect of these two issues is to put the maintenance, let alone the raising of standards in Hillingdon at real and imminent risk."
Having been a headmaster, Mr. Philip O'Hear is a capable professional. He has been doing great things in Hillingdon, but says that the decisions of the Department for Education and Employment are likely to undermine the progress of raising standards in Hillingdon schools. A pattern is beginning to emerge. He said:
"we have not been granted a meeting and yesterday's announcement not only shows a failure to accept or understand Hillingdon's difficulties—
that is, the announcement of the grant—
but is actually going to compound them.
Mr. O'Hear said that the assessment has not met with urgent Government action and the recent effective work in Hillingdon to raise achievement is at real and imminent risk.
I have written to the Minister about the major repairs allowance in the hope that we would receive increased resources, but I have not yet received a response to my letter. As for the introduction of a ceiling on the London borough of Hillingdon's SSA, it lost £2 million of its cash settlement. That came like a bolt from the blue, and has caused great problems for people not only in my constituency, but within the borough. We are about £3 million short of Government funding. That estimate is not based on a wish list. That money is due to us. Furthermore, each person in Hillingdon will have to pay 23 per cent. more than last year, and that is just to fund the Greater London Authority. I cannot blame the Minister for the Mayor's decision, although it was her Department that set it up in the first place.
My constituents find it ironic that we are paying more, yet seeing fewer police and fire engines. An interesting comment was made at a recent council meeting. A senior Labour councillor, an ex-leader of the authority, said:
"What does it take to persuade the Government we are not a leafy suburb? We have social, economic and transportation problems that equate closely to those of an inner city borough."
It seems that the Government have it in for our borough. We have a teacher recruitment and retention problem, which is aggravated by the Government's inability to recognise it. Hillingdon ratepayers pay disproportionately more for having Heathrow in the borough. That problem is not helping community relations as people realise that part of the increase in council tax is due to unaccompanied asylum-seeking children, and that is something that worries all of us.
The Government have managed by stealth to increase taxes on my fellow residents and have tried to put the blame on local councillors. That forces local councillors of all parties to take unpopular measures. In Hillingdon, we are not quite as gullible as that. We realise that a lack of central Government funding is causing us many problems.
1.44 pm
The Minister for Local Government and the Regions (Ms Hilary Armstrong): The speech of the hon. Member for Uxbridge (Mr. Randall) was interesting. I wonder what he might have said had he been a Member during the previous Administration, when Hillingdon received substantially less Government support than it receives now.
None of us pretends that the distribution of local government finance is an exact science. We recognise the issues in Hillingdon which is why it received maximum funding this year I suspect that were the hon. Gentleman to visit my authority, or indeed yours, Mr. Stevenson, he would find a different position, with equally strong arguments about need.
The manner of distribution is not perfect, as we have admitted, and that is why we are reviewing local government finance. We have published a local government finance Green Paper and later this year we will publish a White Paper which will begin to reconsider the distribution of money.
Mr. Randall: I recognise that everyone fights their own corner, and I hope that I would fight mine regardless of which Government were in power, because that is what I was sent here to do. The right hon. Lady says that we were fully funded, but I understand that the £2 million that was taken away as part of the ceiling means that we were not.
Ms Armstrong: What I said was that Hillingdon received the maximum funding available this year, which is true. I shall explain the rationale behind the ceiling. The ceiling is rejected only if the local government distribution system is considered perfect. As we do not believe that it is, we made adjustments around it. I am aware, however, that the authority has experienced some highs and some lows in the past year, and I am sure that those involved will have been delighted to learn yesterday that the Government have withdrawn the special measures that were introduced following a poor social services inspectorate report. I congratulate the authority on its efforts to improve the service. I assure the hon. Gentleman that we want to ensure that councils have the funding necessary to enable them to improve their services in that way.
Since taking office we have provided authorities with significant increases in grant, which has meant an increase during the past four years of 14 per cent. in real terms. That compares starkly with the 7 per cent. real terms cut in the previous four years to 1997–98.
We have given priority to education and social services. Next year, provision for education spending will increase by £1.9 billion. Social services spending will increase by 8.1 per cent, which will mean an extra £576 million. We will therefore have provided an extra £6.4 billion for education and £2 billion for social services since we took office.
Hillingdon has benefited more than most from that extra money. As the hon. Gentleman said, Government grant is distributed to local authorities through the system of standard spending assessments. In the four years since we took office, Hillingdon's SSA has increased each year by 4.8 per cent. on average. Most other authorities have received much lower increases.

249WH
Compared with the previous four years, the council's average yearly increase under the Government makes it 1.6 per cent. a year better off. That is not because the council fared worse than other authorities in that time; indeed, it did relatively well. Its average yearly increase was 3.2 per cent., when for comparable outer-London boroughs it was only 1.3 per cent.
I must put the hon. Gentleman's comments in context. This year, the council received a grant increase of more than £10.1 million, an increase of 6.5 per cent., and the council is one of the main gainers from next year's settlement. The authority has received an increase in provision for spending on education and social services of £9 million and £2.5 million respectively. Although priority has been given to such provisions, funding for spending on other services has increased by more than £2 million.
In addition to that money, the Government are significantly increasing the money that they are providing to local government by way of grants for special purposes. The main ring-fenced education and social services grants that Hillingdon will receive next year have increased by about £2 million. That is an increase of almost 20 per cent. and that figure does not include grants for asylum seekers, which are yet to be announced.
The hon. Gentleman mentioned unaccompanied asylum-seeking children. The authority was eligible for higher weekly grant rates during 2000–01. although I understand that it was late in submitting the application for the money. The Minister of State, Department of Health, my hon. Friend the Member for Barrow and Furness (Mr. Hutton), none the less expedited the application and the authority was able to claim over £7.2 million. It does not have a short fall between eligible costs and the grant claimed and. according to the grant claim, Hillingdon supported an average of 387 children during the year, of whom about three quarters were 16 and 17-year-olds.
With regard to the asylum-seeking adults and families grant, Hillingdon has been paid almost £4.9 million for the first six months of the year, and a payment on account of the same sum for the second six months of the year. I appreciate the work that is being done, especially in London boroughs with asylum seekers and unaccompanied children, and I recognise the pressures on Hillingdon. However, we have consistently increased the money that is available. The average grant for the first six months allowed Hillingdon to claim £140 per week for each single adult and £300 for each family. However, it will now be able to claim £350 for each family per week. The Government are doing what they can to assist, in difficult circumstances. During our Administration, the amount given for such purposes has significantly increased.
The hon. Gentleman referred to education, and I understand that every authority wishes to do what it can to raise standards. I am confident that, with good management, Hillingdon will continue to do that. He specifically referred to teacher recruitment and retention, and I understand his concerns. We are aware of the problem, and my right hon. Friend the Secretary of State for Education and Employment is examining issues specific to Hillingdon. However, we have already taken action to tackle the problems of teacher recruitment and retention in Landon. Next year's
250WH
proposals for the teachers' pay award include a pay increase of twice the rate of inflation for newly qualified teachers, and an increase of 30 per cent. for each of the London weighting allowances.
Mr. Randall: Will the Minister give way?
Ms Armstrong: I am more than happy to give way, but I am not confident that I shall be able to finish my speech.
Mr. Randall: The point about the teachers' pay settlement is that there are insufficient funds for it. It is easy for the Government to say what they will pay the teachers, but they have not provided the funds for the education authority to do so. Therefore, the settlement takes money from its budget.
Ms Armstrong: That is a matter for debate. No Government have ever fully funded a pay settlement on their own. We did give a generous education settlement, and Hillingdon benefited from that. My right hon. Friend the Secretary of State allocated more money to the settlement to address authorities' concerns about teachers' pay, and Hillingdon received an additional £100,000, after its funding was assessed in relation to its needs. We have introduced a new recruitment and retention allowance of £5,000, and we have proposed to remove all restrictions on the right to offer it. We also plan to allow employers to offer incentives in kind, such as subsidised housing.
The hon. Gentleman mentioned the major repairs allowance. He wrote to my Department about the matter, and I understand that he received a reply from my hon. Friend the Member for Sunderland, South (Mr. Mullin), who was then an Under-Secretary at my Department but is now at the Department for International Development. I am not aware of the hon. Gentleman's subsequent letter. I apologise for that, and I will ensure that my colleagues respond to it rapidly.
It is understandable that hon. Members of all political persuasions want more money to be allocated to their local authorities, but they should recognise that we are investing much more each year in housing. In 1997, local authorities received £926 million in housing capital resource allocation, whereas the budget for 2003-04 will be £2.634 billion, and some of that money is MRA, which must be used to repair social housing.
The hon. Gentleman cannot have it both ways by asserting that taxes should not be raised but that there should be additional public investment. We are determined to maintain the right balance between those priorities. In the past, there was significant underinvestment in housing, which is now presenting us with enormous problems. That is why we are seeking annually to increase investment.
The hon. Gentleman spoke about floors and ceilings, and he mentioned that we imposed a ceiling on Hillingdon. In the current year, there were significant changes in data. They are difficult to pin down, but one of their consequences is that some areas of great need whose population has fallen are experiencing difficulties in meeting their commitments. Those areas will lose significant sums if there are a couple fewer pupils in some classes, but no schools will be closed. That is why

251WH
we believed that it was necessary to have a floor, but we also considered that it was justifiable to introduce a ceiling. Hillingdon was identified as one of the councils that would not receive a grant increase of more than 6.5 per cent. because of the ceiling, so Ministers agreed to meet its representatives.
We heard a range of views during our consultations. There was broad agreement about the concept of a floor, but not about that of a ceiling, particularly from those authorities that missed out because of it. However, we believe that a 6.5 per cent. increase in general grant should be sufficient for the authorities that were affected
252WH
by the ceiling, even after allowing for the fact that they must cater for growing populations. In each case, the increases will be topped by substantial increases in ring-fenced grant, and I have stated that Hillingdon will therefore receive an increase of 20 per cent.
There are always difficult decisions to take, but I believe that any organisation that is guaranteed a 6.5 per cent increase ought to be able to manage its budget in the following year. I believe that Hillingdon will be able to do that, and I hope that it will employ the money that it receives in the most effective ways. If—
It being Two o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.