Westminster Hall Sitting of 14 November 2001

Preamble
[SYLVIA HEAL in the Chair]

Airline Industry
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Ainger.]
9.30 am
Mr. David Wilshire: I should be grateful, Madam Deputy Speaker, if you would pass on to Mr. Speaker my thanks for being given this opportunity to raise an issue of fundamental importance to the British economy and, equally important to my constituents, Heathrow airport. I should also like to thank those involved in the aviation industry, including the airlines and the airport, who have helped me with much of the information on which I shall draw in the debate. It may be a surprise to hear a Conservative Member thank the Transport and General Workers Union for its help, but that makes the point that this is a national and local, not a party-political, issue.
Before I come to the substance of my speech, I want to make three preliminary points. First, whenever we discuss events that arise from 11 September and from Monday of this week, we must keep in mind that we are debating personal family tragedies because people have lost loved ones, and now people have loved ones at risk in Afghanistan. Whatever else we may say and however much we might argue, the foundation of the debate is personal family tragedy, and I want to add my regards to and concern for all those who have been affected by those events.
Secondly, despite what happened on 11 September and on Monday, air travel is still a safe activity. It is easy to become rapidly alarmed by such events, especially when one represents a community near an airport, as I do, and I understand those anxieties. I represent 70,000 people who live right next to Heathrow, near the boundary fence, and I live under a flight path, so I need no lectures about what that is like. The last time there was a crash at Heathrow, the Trident landed in my constituency. The community that I represent is directly involved, and the closer one gets to the airport, the more understanding and philosophical people are. It is easy to talk about the risks of living near an airport, as I heard on the media last night, but I remind everyone who becomes involved in the debate about safety that the Lockerbie crash occurred nowhere near any airport, so we must not allow ourselves to be carried away by the understandable emotion and anxiety surrounding that point.
Thirdly, my approach to the subject is not party political; I speak for all my constituents. I represent many people who use Heathrow regularly. I represent many shareholders of British Airways and the British Airports Authority. I represent many senior and middle managers—the bosses—and many people who belong to trade unions and who work at the airport. I represent 70,000 people, every one of whom is touched in some way by aviation. I speak for them all, not for any particular group.
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The British aviation industry faces a serious crisis and needs help from many sources, including the Government. I sought the debate because of my constituency connection. A growing number of my constituents face crisis and need help. The local context is that 26 per cent. of those among my constituents who are in work depend directly on Heathrow for their livelihood. In that sense, my constituency is similar to, say, a coal mining or shipbuilding community in its reliance on just one industry.
It is easy to see my part of what many people consider to be west London—I protest that it was, historically, in Middlesex and is now in Surrey—as commuter country but that is not so. I represent people inextricably linked to the airport. At least 10,000 jobs have been, or will be, lost from the major airlines, and it is impossible to predict how many more will be lost among the airport's smaller employers. It is equally impossible to derive a constituency figure for how many of those job losses will affect Spelthorne. My best guess—it is only a guess, but I think that it is not too wide of the mark—is that between 2,000 and 3,000 of my constituents must be worried about their future, and they face a bleak Christmas.
Beyond the immediate job losses, the knock-on effect will be huge and is impossible to determine. Many depend on the airport, such as freight forwarders, spare part suppliers and catering businesses around the airport. The crisis will affect them all. Many more people will be indirectly affected, such as shopkeepers and garage proprietors in Spelthorne. All of them will feel the impact of what is taking place. That is why I sought the debate.
We must understand the causes of the crisis so that we may focus our suggestions for help. Some will say that the crisis is being hyped out of proportion to reality. Everyone must accept, however, that one cause of the crisis dates from before 11 September. The downturn in the world economy had an impact on aviation and one must accept that overcapacity in the aviation industry was already resulting in a shake-out. Although those problems arose before 11 September, they are no less real and they have affected current events.
One need not stress the horror of the events of 11 September. I retain to this day an image of what seems like a Hollywood movie. I find it hard to understand the reality of what happened that day. None the less, the impact on the world aviation industry, and on the British industry in particular, was immediate and dramatic. Two months on, some may have thought that the worst was behind us, that the crisis might be bottoming out and that people might be pulling their businesses together again. Then came Monday when a tragedy that seems to have been a dreadful coincidence—I imagine that what happened then will eventually be established as having been an accident—clearly set back any bottoming out of the crisis.
One other cause of the crisis requires our understanding. The events of 11 September and of Monday were catastrophic and tragic, but they also happened in the United States. The significance of that fact is that half the world's aviation market is in the United States, which contains the world's biggest carriers. The two tragedies unsettled the world's aviation business, but had their biggest impact on the largest part of that business. For that reason, the wider impact has been all the greater.

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We must understand the nature of the crisis as well as its causes. The crisis that has hit the British aviation industry has been dramatic. There has been an instant drop in demand, with awful consequences, and an immediate increase in costs. Insurance and security costs have increased. It is easy to focus on aircraft security because people understand it. The newspapers write about it, and when people travel they witness the effects of increased security on themselves and their baggage. There are, however, other security costs. Far less known but none the less serious for constituencies such as mine and for businesses such as the aviation industry, is the dramatic extra security cost on cargo handling. That will have an effect on jobs and on British business.
Many of those costs cannot be passed on. Newspapers and television programmes usually give examples of scheduled airlines. It could be argued that those airlines are hardest hit, but there is much less debate about charter airlines, which, particularly in this country, make up a large segment of the industry. I have before me some figures from the charter holiday trade. On 1 October, there were approximately 5 million advance bookings. Those who go on package holidays know only too well that once they have paid their money and entered into the contract, they are stuck with their part of it, and the ability to pass on extra costs from the charter airline is not good. Some 5 million people are, therefore, locked into contracts, and the suppliers of the flights face insurance and security costs, which they cannot recover. The impact of that on charter airlines could be considerable.
This debate is not solely about scheduled airlines, although that is easy to forget if one represents a constituency such as mine, because there is no charter business in and out of Heathrow. However, that affects others. It is easy to consider the drop in demand and the increased costs, but there are knock-on effects, to which I have already referred. There are considerable support industries to the aviation industry. For example, we all eat airline meals. Whether or not one likes the food, providing it creates jobs around an airport, so airport communities will lose jobs as a result.
I shall refer later to the impact on Heathrow, but if there are fewer passengers and fewer flights, there is less revenue for the airports and that has an effect on them. Air traffic control is a particularly British issue, although I enter into the debate with as much care as I can, as I promised that this would not be a party political issue. We have had some debate about Railtrack, partly because of the need to invest. I will not go further than that, as I do not want to re-open that subject. Air traffic control was part privatised by the Government so that private money could be brought into air traffic control services and investment could take place. We have rapidly got to the stage where investment for future improvement of the service in Prestwick in Scotland has been pushed back, for the simple reason that air traffic control depends on the same principle of aircraft movements to generate its revenue. I simply flag up, without trying to score any points, that we need to be careful about the future of air traffic control in Britain after this crisis. I am not suggesting that what has happened will compromise
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safety, but it may compromise investment. That would lead to a diversion of world aviation business to our competitors and away from us. That is my concern, but I shall go no further than that.
The other obvious knock-on effect is on aircraft manufacturing. We note with concern that Boeing has said that it will lay off 30,000 people. What is less understood is how little of a Boeing aircraft is made directly by the company itself. All over the world businesses are making bits of Boeing and other aircraft. I do not have a figure for the total number of jobs in the United Kingdom that depend on Boeing contracts, but it looks as though the Minister does, and I am sure that he will give it to us in a moment. Nevertheless, the figure is large, as it is with the airbus. British Airways expects the delivery of 50 more airbuses during the next few years and will seek to renegotiate, cancel or delay some of those options, which conveys some sense of the impact on jobs in the manufacturing industry.
The last issue of concern is the knock-on effect on tourism. I have no figures, but it is blindingly obvious that we are suffering. At the moment, one has only to queue for the London Eye to find that no American accents are to be heard there. Indeed, there is often no queue at all. What is happening is clear from anecdotes alone.
We need to be clear about the extent of the problems that British airlines face. About 38 per cent. of British Airways' capacity worldwide is on the north Atlantic route, which has been hit hardest. Virgin Atlantic depends on the north Atlantic routes for about 60 per cent. of its passengers and is in a vulnerable position. In the first week after 11 September, British Airways experienced a 60 per cent. fall in its north Atlantic traffic. Throughout all its routes, there was a 36 per cent. decline in passenger numbers. For the longer term, British Airways anticipates between 20 and 30 per cent. fewer passengers. It does not specify for how long a period, but that is a question of how long the current crisis will last. The effects of the Gulf war seemed to last about four years. If the current crisis lasts a similar length of time, it would be big indeed. Virgin Atlantic reports a decline in north Atlantic business of 25 per cent., and the figure is higher in its business class, which is where most of its profits are made. Virgin Atlantic is finding the impact of the situation worse than that during the Gulf war—although others say that it is not as bad.
It is important to consider the question of insurance. There have been immediate cancellations of some policies, the immediate imposition of significant increases, extra payments per person, extra payments per aircraft and stringent extra conditions attached to new policies. That has been done on a take-it-or-leave-it basis, and a company can do nothing without insurance.
That is the nature of the crisis. We must also clarify the consequences for British aviation. First and foremost is the issue of cash flow. The aviation industry is not a manufacturing industry. It is not an industry in which, if times get difficult, one can sell off stock, or if times get more difficult, in which one can build up stock. Airlines cannot do that. They are service providers, and as such, they have no means of falling back on manufacturing to delay or spread the effects of a crisis. Airlines either fly today or cancel; their product is here

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and then it is gone. They are service providers and they are hardest hit in a downturn. It shows up instantly in cash flow. Without warning, British Airways and Virgin Atlantic, which depend so heavily on the north Atlantic routes, found that their entire income from those routes was closed off for four days.
If one believes the media, BA is losing something in the order of £2 million a day. That is a dramatic figure. One can speculate on what would happen if the cash flow of the four major airlines of Europe were to be switched off and they had to try to survive on reserves. According to the figures that have been calculated for me, Lufthansa would be the worst hit because it could survive for only 16 days on its cash reserves. Air France could manage for 29 days before going bankrupt. KLM could manage for 37 days and BA could survive for 40 days. We need to be honest. We are kidding ourselves if we pretend that the big European carriers are immune from bankruptcy. Some high stakes are being played for here.
Cash flow is the most obvious problem. The second most obvious problem is the cancellation of routes. British Airways has grounded 20 aircraft. Virgin Atlantic has grounded all its 747s. The only beneficiary from this exercise is the Evergreen air centre in Arizona, which provides storage space in the desert for unwanted aircraft. It is expecting well over 100 aircraft in the immediate future to join the others on their airfield. One of the most significant consequences is that whitetails—aircraft that have not even been painted in any airline's colours because they have never been used—are being mothballed. That gives some idea of the implications for airlines and manufacturers. I have not found it possible to come up with a complete list of the routes that have been suspended or cancelled but there are plenty of them. That clearly has a knock-on effect to passengers wanting to get from A to B who no longer find that possible.
Then we come to jobs. I do not know the exact figures although I know the current minimum figures for job losses. In the US alone between 20,000 and 30,000 jobs have been lost. At the last count BA had announced that it needed to shed 7,000 of its 60,000 employees. If things do not improve that figure will be bigger. British Midland, the next of the big carriers at Heathrow, has announced 600 job losses. That is more than 10 per cent. of its work force and half of the losses will be at Heathrow. Virgin Atlantic has announced 1,200 job losses. It is important to understand that when one is trying to deal with a cash flow crisis reducing staff gives no relief in the short term. Those are preliminary figures: unless action is taken or an upturn comes that is only the beginning of the job losses in the industry.
It should also be borne in mind that not only is the aviation industry suffering this immediate impact, but its long-term position is being undermined. Those aircraft that are being sent to Arizona and even some of those that are still operational were once all assets. Some are now valueless. A business that had good assets and good long-term prospects for using its aircraft suddenly finds itself having to write down its assets. In many cases those aircraft are not owned by the airlines themselves. They are leased and the banks and many others are finding that what they thought was good business may suddenly be turning into bad business. The knock-on
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effect of that is clear. The bottom line in any consideration of the effect on the aviation industry must be profit, because profit brings growth and continued employment.
The best figures that I know for the effects of the Gulf war suggest that the world aviation industry lost some $15 billion in the four years that followed. Some people suggest that the world aviation industry will lose $12 billion in the first year following 11 September. If we are to believe financial analysts, British Airways alone is set to lose £600 million this year. It lost £125 million in the month following 11 September.
We cannot consider the aviation industry without considering airports, so I shall focus on the one that I know best. Heathrow airport reports that it had 900,000 fewer passengers this October than in October last year. That is a decrease of 20 per cent. Some might say that that is good news, but that is not so for my constituents, or for the airlines, BAA or those who work in duty-free shops. Some may not like duty-free shops, but they create employment for my constituents. All those factors add up to a serious situation.
BAA has produced only one redeeming statistic: it reports that the passenger decrease is less than it was during the Gulf war. That is the opposite of what others report, so we are receiving some mixed messages. Airports suffer because of the charge levied per passenger and per aircraft. That has a knock-on effect on airport businesses.
I should like to explain why I wanted a debate on the topic, and why 1 want the Government to do something. Some might smile quietly or show surprise that a Tory Member should urge the Government to become involved and rescue a private industry, but I have good and compelling reasons for doing so, and they do not compromise my political principles. United Kingdom airlines play a vital role in the economy. They are a lynchpin in the success of UK plc, and all of us, the Government included, must take care of them.
Whether we like it or not—I do not—we must accept that the world aviation industry is hugely Government-regulated. There are frequent debates about flag carriers. Aeroplanes are not allowed to land, take off, or pick up passengers unless some Government say that they can. Whether or not we approve, such private industries are beholden to Governments all over the world to carry on their businesses, so we cannot escape discussions with Governments when considering the industry.
We must face up to the fact that foreign airlines, which are just as troubled as British airlines, receive massive amounts of Government aid to keep them afloat. If we do not take note, we will lose the most jobs, while foreign Governments support local airlines at our expense.
Mr. Geoffrey Clifton-BrownMy hon. Friend has touched on an extremely important point. Does he recognise that the Government must keep in close touch with the European Union competition authorities to see what state aid EU countries are likely to give to their flag carriers? It would be unacceptable

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for our flag carriers to compete on unequal terms with EU countries' flag carriers that have received subsidies from their Governments.
Mr. Wilshire: My hon. Friend anticipates what I was about to say, and knows that I am unlikely not to mention the EU in such a speech, although I keep it in mind that my party likes to sideline the subject. Nevertheless, we cannot escape discussing the EU, because it is a subject to which the Government must respond. We cannot leave it to the EU to respond to the crisis for reasons that I will mention in a moment. It is simply not adequate to say that it is an EU problem, not a British Government problem.
Without apology, I am advancing the argument that aviation is a special case. I know that everyone always tries that argument, but on this occasion I think that I am right to do so. Aviation as an industry is untypically vulnerable. Therefore, when a crisis arises, particularly an unexpected and instant crisis such as the present one, that industry is much more likely to need support. As I have explained, for the simple reason that airlines are service providers, the effect on them is dramatic, and they do not have time to take avoiding action.
However, in saying that the Government must take action, I would not escape with my life until lunchtime, and Michael Bishop of British Midland would not let me get away with it, if I did not add the caveat that any Government help from any country must not be an excuse to bail out uncompetitive, unprofitable airlines. There is a dividing line, and I readily acknowledge that the case for Government help can be made for genuine reasons or used as an excuse to continue some of the nonsenses of the past.
My hon. Friend touched on foreign aid, and we need to understand what we are up against and why we cannot leave the matter to the EU. Its approach—I mean this kindly—is to say that its business is to ensure a level playing field within the internal market. If that is what the treaty of Rome is all about, it is right that the EU should ensure that British Airways can compete with Iberia, Alitalia and other airlines on a level playing field. However, that is not the point, because the real competition does not come from the rest of the EU. We have to achieve a level playing field between us and the United States.
To understand why fairly urgent and radical action is required, we need only consider what the American Government are doing. They instantly gave US airlines some $5 billion in cash to see them over their difficulties and backed that up with another $10 billion worth of guarantees. The US Government are also providing several billion dollars worth of help for extra security measures and $150 million to support routes in the US, which they know as thin routes. That is what we are up against and it will hit us hard if we do not take action.
Notwithstanding the European Union, Sabena—do we not love it dearly?—is bankrupt yet again, and Belgium is bailing it out to the tune of $391 million as a straightforward internal national exercise. The French have provided $276 million in aid for its airlines, and the last I heard Italy was debating whether to waive VAT on domestic ticket sales to help its aviation industry. All
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that help is provided on a national basis. Admittedly, the EU will support some of that help, but they are not EU initiatives. The only European initiative of which I am aware is the allowing of short-term help for insurance costs.
Let me explain what I hope the Government response to the crisis will be. As I stressed initially, I am not criticising the Government: I am trying to work with them as they are working with everyone at Heathrow and elsewhere. The crisis requires all of us to work together. Immediate responses and confidence building are needed, and longer-term issues have to be considered.
Incidentally, I am aware that the Government attended a meeting at Heathrow to discuss those issues. Indeed, I am sure that the Minister will refer to it. It is sad to report, however, that no Conservative councillor or Member of Parliament was invited to that meeting. I stress that that was not the fault of the Government, who attended the meeting as the guests of its organisers.
Mr. John Wilkinson: It is interesting to note, however, that on this occasion only the Minister is present on the Labour Benches.
Mr. Wilshire: Yes. Those who set up that meeting do not want to get involved when Conservatives on the other side of the airport raise these issues. However, I will not pursue that matter.
The Government are giving short-term insurance help to the aviation industry and I urge them to make it longer term, because the effect of increased premiums will not go away within the Government's time scale. I have no quarrel with many of the necessary security requirements, but they are nationally imposed standards, not airline-imposed requirements. It is possible to go even further to reassure the travelling public, and the Government should think about making financial help available for the extra security costs.
Cash handouts are not popular in my party, but I plead for one in this case because every operator on the north Atlantic route instantly lost four days' business, without being able to take precautions. British aviation companies are having to carry losses of £48 million because of the shutdown of the north Atlantic routes, unlike those of other countries, whose Governments did something about it. There is scope for help from the Government, which they may care to consider: they raise about £1 billion a year from passenger duty, so they have a ready means of showing their support for the aviation industry in the short-to-medium term by returning some or all of the £1 billion.
The Government must make it clear immediately, notwithstanding the fact that they want to play fair by the European Union or that they are led by someone who wants to be at the heart of Europe, that on this occasion they will stand up for the national interest. They must say, "We will work with the European Union but we will not be dictated to unless and until everyone else is, and unless and until the European Union deals with the unfair competition from the United States."
It is a technical matter, but the Government should also consider giving immediate help to airports by way of indemnities against war risk.

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I have outlined what I think should be the Government's immediate responses and I shall now say what should be done to build confidence, as this is not only a factual, dull, dry economic debate, but a hearts and minds debate, too. The Government have one card that they can play with the minimum of effort to build confidence: they can take the opportunity to say, "We give permission to build terminal 5." The Minister would probably love to say so here and now, but I do not think that he will do so, and I understand why. However, it would help if he went back to the office and said, "Please, please."
The biggest single boost to the British aviation industry, especially in my constituency, would be to give T5 the go-ahead now. We need that confidence building; it would be a shot in the arm and proof that we have confidence in the future, not only of Heathrow but of British aviation, and show that we are determined to act straight away. Even if action is taken now it must be understood that the delay to the decision on terminal 5 has caused much harm—apart from utterly discrediting the British planning system with the farce and nonsense at the public inquiry. The delay in allowing T5 to go ahead has cost UK airlines dear.
A few years ago, before Heathrow became so overcrowded, passengers could be ticketed through that airport in three quarters of an hour. The process now takes an hour and a quarter and it is getting longer, which means that many people who used to use Heathrow in transit are choosing other routes. They are not going via Stansted, Gatwick, Manchester or Bristol but choosing Paris, Amsterdam or Frankfurt, thus jobs and opportunities go to other countries.
The delay in T5 has helped foreign competition. While we have dithered and listened endlessly to the head-in-the-sand brigade—who seem determined to close Heathrow and bankrupt my constituency—foreign competitors have laughed happily. Charles de Gaulle airport alone has built a terminal and a runway while we squabbled. We have undermined UK plc by undermining Heathrow. I know that the growth of an airport upsets some people, and the growth in Heathrow during the past five years has been about 14 per cent.—some say that that should not have happened, but I say that it should have—but during the same period, Charles de Gaulle in Paris has grown by 54 per cent. That is a direct threat to local jobs and UK plc. In 1990, Heathrow was the No. 1 European hub for destinations served out of that airport. Today it is fourth, after Paris, Frankfurt and Amsterdam.
One other factor that we must make clear on terminal 5, confidence building and helping the British aviation industry—I say this with feeling to the head-in-the-sand brigade who are desperately trying to wreck my constituency—is that the 15 debate is not about safety. Trying to scare people on the back of an application to build a terminal is irresponsible. The number of flights adds to the safety risk, not the number of passengers, and terminals are about passengers, not the number of flights. The T5 debate is not rendered unnecessary by the events of 11 September, because Heathrow was overcrowded anyway and, despite the 900,000 fewer passengers last month, is still overcrowded. Many of the passengers who want to use terminal 5 already use the airport and still use it, despite recent events. Even if the downturn in the aviation industry of the past few
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weeks continues for the same length of time as the Gulf war, that would not be an argument against T5. Even if the Minister were to stand up in a minute and say, "I allow it now," the terminal would not be operational until 2007. If anyone is suggesting that the crisis will last until 2007, I can say only heaven help the British aviation industry.
T5 is the confidence boost that the industry wants now, and I wish people would stop continually harping on and saying that an unbuilt terminal caused last year's flooding and led to an outbreak of ragwort on Staines moor. They say that a terminal 4 inspector, had he had a crystal ball and been able to see the future, would have taken a different decision. He would not have done. If that inspector could have seen the future, he would have backed a grand national winner and gone to live in the Bahamas. He would not have bothered to get involved in planning applications.
The Government should consider longer-term measures to help the British aviation industry. They should learn from what the United States has done to help its industry and take a far tougher line in bilateral negotiations with it. All too often, we roll over and play dead at the first shout of a threat from the USA. I am in favour of open skies across the Atlantic, but only if that is fair to both sides and not an American attempt to bankrupt us and bail out its airlines. We must take a tougher stance in negotiations.
We must take steps to help consolidation in the European aviation industry, provided that we do not damage our interests by being kinder than anyone else. One difficulty of competing with the Americans is that we have much smaller airlines. It is easy to fool ourselves and think that our big players are the biggest in the world, but they are not. They are at the top end of the medium-sized players or the bottom end of the big players, and are vulnerable. In the Brussels discussions, the Government must resist the European Union's crazy idea of imposing a tax on aviation fuel while it applies only in the EU. It will simply cripple us if we allow others to use untaxed fuel while EU airlines cannot. Having said that, I will not be party political, so I gently urge the Government to introduce an aviation policy; they have been silent for four or five years. We need to know where we are going and to take decisions about our runways and infrastructure. Information on those issues would help.
I make no apology for my long contribution, because the issue affects the whole of the United Kingdom and forms a basic part of a prosperous British economy. It fundamentally affects my constituency and others immediately around the airport. As I said at the beginning, what has happened arose from personal tragedies, mainly in the United States, and our hearts go out to all the families that have been affected. However, a serious crisis faces the British aviation industry. Problems will be experienced in the constituencies of all colleagues who represent areas immediately near airports. Whether we like it or not, whatever our party politics, the problems will be solved only by Government action, alongside the actions of the airlines. The airlines are doing everything that they possibly can to meet the crisis, which they could not have expected and for which, therefore, they could not have planned. Without Government assistance, they will be struggling.

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The issue transcends party politics. All local and national politicians of whatever political persuasion must work with the Government to meet the crisis and to ensure that our industries, people and jobs survive.
Mr. Frank Cook (in the Chair): As we are now 46 minutes into a 90-minute debate, it might be useful if I remind hon. Members, particularly the hon. Member who is about to address the House, that it is customary to start the first of the three winding-up speeches 30 minutes before termination, which will be at 11 o'clock. We will commence the winding-up speeches at 10.30 am.
10.17 am
Mr. John Wilkinson: I am grateful to my hon. Friend the Member for Spelthorne (Mr. Wilshire) for this timely debate. Like his constituents, many of mine work at Heathrow and depend for their livelihood on the vigour, strength and prosperity of the airline industry, and that is the case throughout west London. The industry is crucial to London's economy as a whole. The London airport system includes Heathrow in the west, Luton in the north, Stansted to the north-east, City, and even the two business airports at Farnborough and Biggin Hill. It is important to our country's prosperity that we develop policies that will revive the airline industry, which has suffered acutely not just from the economic downturn but from the acts of aerial terrorism on 11 September. Obviously, confidence in the industry will have been further shaken by the recent tragic accident involving an American Airlines airbus in New York.
It behoves us all to see what we can do to help the industry. I am sure that most hon. Members were deeply impressed by the lobby from airline workers last week. I addressed a huge meeting, as did other hon. Members, at which I said that the Government must introduce a policy for the air transport industry at the earliest possible date. As my hon. Friend made clear, that is overdue and now is the time to do it.
No decision would give greater confidence to the industry and the travelling public than a favourable decision on T5. The opening of that terminal as early as possible—my hon. Friend says that it could not be done before 2007—would help British Airways to consolidate its operations at Heathrow. It would also assist the smooth flow of passengers. The current terminal system was designed for a maximum of 54 million passengers a year, but around 62 million a year now use it in conditions of some discomfort. That must be rectified by the construction of the overdue fifth terminal and improvements to the surface transport system to help to bring passengers more smoothly and easily into the fifth terminal and into Heathrow for the benefit of our airlines. The airport needs railway links from Reading and Waterloo, the construction of the M25 motorway spur and, last but not least, the crossrail link. Surface transport access is an important determinant for passengers in deciding from which airport to depart.
It is noteworthy that in October passenger numbers fell by 12.7 per cent. at Gatwick and some 20 per cent. at Heathrow, but increased by 4.9 per cent. at Stansted. To a large extent, that was because north Atlantic traffic
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suffered severely after the aerial terrorism in the United States in September. Numbers fell by one third at Gatwick and Heathrow. Regional traffic and intra-European traffic has not been so adversely affected and airport passenger figures have increased not just at Stansted, but at Scottish airports. It is interesting that low-cost carriers such as easyJet, Ryanair, go and buzz and, to some degree, British Midland are weathering the storm more effectively than the high-cost flag carriers.
In the aftermath of the demise of Sabena and Swissair and, most recently, of Canada's No. 2 carrier, it is instructive to ensure that the European Commission produces measures on a European scale to allow a competitive environment to exist while tiding the industry over its current difficulties. I note that the Belgian Government are to be permitted to make a temporary loan of some 125 million euro to Delta Air Transport, Sabena's subsidiary. That may be acceptable if it is temporary, but long-term subsidies such as those described by my hon. Friend are not acceptable. The Government must either eliminate the passenger departure tax or, perhaps more intelligently, allow its revenue to be applied to airlines for the provision of the security measures necessary in the current emergency situation. It is also necessary for the Government to bear part of the burden of insurance costs on a more continuing basis and that they reimburse the revenue lost during the four days when north American airports were closed.
Last, but not least, I hope that in pursuing a competitive strategy, Her Majesty's Government will encourage the confidence necessary to get passengers back into aircraft. They have done so to some degree with the Prime Minister's flight to the United States on Concorde, and the re-establishment of the Concorde service across the Atlantic by Air France; and British Airways symbolises the determination of the European airline industry to get back in the business and not to be put off. I was pleased that the Minister for Transport also went on the inaugural restored Concorde service.
In pursuing that competitive strategy, I hope that airlines will also play their part. British Airways must not only consolidate, as Mr. Eddington wishes to do, with other European carriers, such as KLM, but move towards meeting the needs of the majority of the travelling public by attracting more passengers back into aircraft. It should not devote its attention to premium traffic, which has been its strategy in recent months.
I am pleased that my hon. Friend secured this debate and I am confident that the industry will be restored to strength, but that needs the support and encouragement of Her Majesty's Government.
10.24 am
Dr. Vincent Cable: I congratulate the hon. Member for Spelthorne (Mr. Wilshire) on securing the debate and on the forceful and articulate way in which he made his case. To add to the ideological confusion of the argument, I follow two rather right-wing Conservatives from a right-wing party who made a case for Government intervention, but I come from a party to the left of them and will argue for a liberal, competitive market and against Government intervention. However, I acknowledge that the issue is

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more subtle and the hon. Gentleman made it clear that we are discussing not just broad dogma, but specific problems concerning security costs, the insurance market and so on. Those matters must be examined individually on their merits and the outcome is not a straight yes or no.
Although I am my party's spokesman on the matter, I also represent an airport constituency. It is not as large as that of the hon. Gentleman, but several hundreds, perhaps thousands, of my constituents work at the airport and many others use it for business purposes. Its commercial and broad economic importance is understood, and many people live under the flight path, as I do, and are conscious of the environmental impact and safety implications. The debate in my constituency is better balanced than that in Spelthorne.
It is important to understand that the situation in airport-dependent constituencies is not the same as in coal mining and shipbuilding constituencies. Southwest London is part of the wider London and Surrey labour market; mining communities are not like that. A basic feature of the economy in my constituency—I am sure that this is true of Spelthorne—is a chronic labour shortage and there is a great deal of ability to absorb job losses in one area as against another for precisely that reason. The matter must be considered in its broader economic context.
The hon. Gentleman set out clearly the problems in the aviation industry: the massive loss of profitability for large carriers such as British Airways, the failure of Swissair and Sabena, and the collapse of air traffic. I want to emphasise what the hon. Gentleman said about the second round effects. It is not only the airlines that are affected, but the equipment manufacturers that supply the airlines, the aero engine industry and the tourism industry. The aviation industry, like livestock farmers, is well organised and has effective lobbies, but the tourist industry does not and its concerns are always overlooked, although it is a bigger industry. The impact of the disaster on the tourist industry has been much greater than that on the higher profile sectors.
There is a problem, but there are qualifications. As the hon. Member for Ruislip-Northwood (Mr. Wilkinson) said, some parts of the aviation industry are doing rather well. Ryanair, easyJet and other low-cost airlines are relatively flourishing because they seem to have a business model that is better suited to the current environment than some of the flag carriers. The proprietors of easyJet and Ryanair have been aggressive in arguing against Government intervention precisely because they believe that they have made good commercial judgments and that they should be rewarded for that in the market. They argue that British Airways, for example, made serious commercial errors in opting for concentration on the executive market. The executive market may have been rewarding some years ago, but it has collapsed in the short term. The low-cost airlines have opted for a different segment of the market and have done well from that. Partly for that reason, Luton and Stansted are surviving the present crisis much better than Heathrow. There is an issue of commercial judgment as well as the knock-on effects of an international crisis.
I must emphasise that some of the airlines that are crying out for help have been bleeding money for many years. Sabena has been losing money for 39 of the past
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40 years. The crisis has triggered its insolvency and subsequent rescue, but the problem is of long standing and had to be dealt with at some time.
It is dangerous to take at face value airlines' claims that they desperately need financial help. They will make claims in their own defence and argue for help, but it is clear from a superficial examination of British Airways' accounts—I have not analysed them carefully—that it is in a strong position. It has £1 billion in cash and probably £2 billion to £2.5 billion in realisable cash from disposal of property and credit lines. It must use its commercial judgment to deal with the problem and not run to the Government; it has the asset base to cope with it. That is what a commercial enterprise should do.
I want to confront the broad policy issues. Should a flag carrier go bust? Technically, it can, but there has always been an assumption that our national flag carrier and others should never be allowed to go bankrupt. I should like to pose the question why. These are privatised companies—I am in favour of the privatisation of airlines—that have assumed commercial risks. Their shareholders have done well over the years, and if they are in financial difficulties why should they not face the risk of insolvency like any other commercial operation? In extremis that should be contemplated.
There are several reasons why it is not the Government's job to protect the national flag carrier from the verdict of the market. It is unfair to other operators in the business. Ryanair and easyJet argue that they are competing with British Midland, which is now part of Lufthansa, and British Airways. If British Airways makes commercial misjudgments and suffers bad luck, that is its problem, not the Government's.
The hon. Member for Spelthorne did not touch on hidden implicit subsidies to the industry. Airlines pay passenger tax, which they argue it is an unfair and difficult imposition, but they enjoy many implicit subsidies. Until the Government began to reform the system, the airlines paid highly subsidised landing charges because of the way in which the regulatory system works—the so-called single till principle. The Government are addressing the problem, but landing charges at Heathrow are ridiculously low. Unlike United States' airlines, British airlines pay nothing for their landing slots. The slots are grandfathered and are effectively a large gift from the taxpayer. Those are hidden subsidies built into the airline business, and if airlines cannot make money in that environment, something is seriously wrong. We must question the assumption that the flag carrier must always be baled out by the Government.
A trickier argument, which must nevertheless be confronted, concerns the case made by the hon. Gentleman that if the Americans are helping their industry, we must help ours—the UK plc argument. I understand the level playing field argument, but it is not as clear cut as the hon. Gentleman implies. If one country chooses to waste its taxpayers' money, why should other countries do the same? The previous Government chose to take a firm line on industrial subsidies, and they understood this point. It used to be argued that we should subsidise the coal industry because the Germans do, but the previous Conservative Government rightly rejected the logic of that argument. People used to argue that the Koreans subsidise their

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shipbuilding industry so we must subsidise ours. Others said that the French subsidise their farmers so we must subsidise ours. That is the road to ruin, and we cannot do that on a national basis. That the Americans have done something so we should do the same is not a logical justification for industrial support.
Moreover, the American situation is different because its industry has been exposed to greater competition than the European industry. The issue of auctioning licence slots is a good example. American airlines in America pay the price of scarce landing facilities while our airlines do not. The Americans can reasonably question whether their position is exactly the same as ours.
Having made a general argument against Government intervention, I come to policy issues. There are some specific problems that must be addressed individually. I sympathise with the airlines on the compulsory four-day grounding, which resulted from a specific crisis for a specific period of time over which they had no control. The principle of compensation for that limited period, which occurred due to factors outside of the airlines' control that were induced by political circumstances, is fundamentally reasonable.
Similarly, I have some sympathy with the argument that the Government were right to help the industry with emergency insurance cover. It would have been wrong if the aviation industry had been grounded indefinitely because of a failure in a segment of the insurance market. The Government were right to act as a temporary insurer of last resort but, unlike the hon. Gentleman, I think that it is important to stick to the principle that that is temporary. Companies providing commercial insurance and reinsurance are emerging, and that market should provide for the needs of the industry. Even if that is at a relatively high cost, there is no need for an indefinite subsidy.
If there are additional security costs they should be paid for by the industry, which means that passengers will ultimately pay. That principle would apply to every other industry. However, there may be specific cases concerning security at airports, the cost of which will fall on the public.
The hon. Gentleman made a point with which I sympathise about the problems of cash flow in the industry. There may be ways in which the Government can affect the timing of payments of passenger tax. That would not represent a subsidy, but it would ease the cash flow position in the industry. I would be open to the argument that that is fundamentally reasonable. However, it is wrong to argue that the Government should provide open-ended support or large-scale assistance of the type that appears to have been provided by the US Government. The European Union is right to take a hard line on state aids—it may have relented in the case of Sabena, which would be unfortunate—and Loyola de Palacio, the European Union Transport Commissioner, has said the right things and has taken the correct view on industrial assistance.
At the end of his speech, the hon. Gentleman forcefully discussed whether the Government should give a signal of support for the industry by backing T5.
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I do not want to prejudge the argument, which we may have as early as tomorrow, about T5, but it would be wrong to decide that large, complex argument on the basis of a current crisis of confidence in the industry. There are strong long-term arguments, which we shall rehearse in due course, for and against T5, but it is wrong to argue that because there is a temporary crisis of confidence, we should give the industry a shot in the arm by giving planning approval. When the decision comes—I suspect that it will be an approval—the important issues will concern the conditions attached to it on matters such as night flights and restrictions on flights. Treating T5 in terms of a general crisis of confidence is not the way in which to approach a complex planning issue.
The Government must not be deflected from regulatory reform. As part of their aviation review, they have rightly begun to examine the system by which the aviation industry is regulated on matters such as slot allocation and landing charges. Airlines may have to pay more for landing rights because that is what the economy and the environment require. The Government must not be deflected by demands from the aviation industry.
10.38 am
Mr. Geoffrey Clifton-BrownI am grateful to catch your eye, Mr. Cook, in this, the third debate on this subject in as many weeks in this Chamber. That reflects hon. Members' concern, and I congratulate my hon. Friend the Member for Spelthorne (Mr. Wilshire) on obtaining the debate. He made a thoughtful and analytical speech on a subject of critical importance to his constituents, and to the constituents of my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) and the hon. Member for Twickenham (Dr. Cable). All three hon. Members made important points.
We must not say anything in this debate that would discourage people from continuing to travel by air. Air travel is one of the safest forms of transport in the world, despite the terrible crash of flight 587 in New York on Monday, which was a hammer blow to the American people after their experiences on 11 September. On behalf of the Opposition, I should like to send our deepest possible sympathy to those affected.
We must try to ensure that something positive comes out of recent events. We have already seen that the US Congress and Senate have stopped their bickering over the new security Bill, which they will pass in the shortest possible time. The Home Secretary has announced that the Anti-Terrorism, Crime and Security Bill will come before the House next Monday. We shall, of course, want to scrutinise that Bill, but it contains several important measures on nuclear security, aviation security and hoax calls. I hope that the Government will enable the Bill's speedy passage through the House, and where possible we will assist in that process.
It is particularly important to stress the need to update the Aviation Security Act 1982 in respect of access to our airports. Many of the constituents of my hon. Friend the Member for Spelthorne work at Heathrow. It is one of the safest airports in the world, and its workers have to be carefully screened. Given that the airline industry depends on north Atlantic trade, we

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must make it clear to the American people in particular that it is safe to travel to this country. The sooner we can return to normality, the better, and as my hon. Friend and my hon. Friend the Member for Ruislip-Northwood said, anything that we can do to engender confidence must be of benefit.
It has rightly been pointed out that the aviation industry was experiencing major problems before 11 September, and some restructuring was planned in any case. Given that we want to maintain competition where possible, I ask the Government to scrutinise carefully the proposed merger of British Airways and the American airlines. That merger would account for about 50 per cent. of all passengers on north Atlantic routes and some 85 per cent. of the market as a whole. It would lead to 100 per cent dominance of 13 routes to the United States, and more than 50 per cent. dominance of five other routes. We therefore need to look at that issue critically.
The International Air Transport Association has predicted that, as a result of the events of 11 September, the industry as a whole will lose £7 billion this year. My hon. Friend the Member for Spelthorne pointed out that many businesses and industries in his constituency that are connected with Heathrow airport will suffer, but so will the wider economy. It is estimated that for every job that depends directly on the aviation industry, another three depend on it indirectly. Many other types of business have already been affected. from a creamery in Cornwall, which has lost half its business because there is no winter market for its products, to laundries and a host of other businesses. The economy will undoubtedly suffer, and anything that the Government can do in the short term would be welcome.
It is worth reiterating one or two points that I have made in previous debates. It is part of the Opposition's duty to give credit to the Government when they do things right, and I duly give them credit for stepping in commendably quickly as the insurer of last resort for a period of one month. However, as I said the other day, they should give the industry a great boost by making it clear that they are prepared to extend that period.
Having increased the airport passenger duty rate on taking office, the Government now raise more than £1 billion from it. There is a clear case for recycling some of that tax to pay for specific security measures at airports. It is unreasonable to expect individual airlines to bear the cost of increased security measures, and the Government need to consider that issue carefully.
Time is getting on, so I shall turn to one or two other key points. The T5 announcement, which is becoming a farce, has been mentioned. Everybody in the industry believes that the Government have made up their mind, so why can they not reveal their decision to the House? That would give the industry a huge boost in the light of the haemorrhaging of business elsewhere. Reference has been made to increased capacity at Charles de Gaulle airport. Since the T5 application was made in 1993, two more runways have been built at Schipol, and capacity at Frankfurt is also being increased. As my hon. Friend said, at the moment we are simply exporting jobs to other European centres.
The new terminal would provide a great boost, and would not necessarily lead to increased flights. An extra terminal is necessary to handle existing passenger
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numbers in greater comfort, and to provide more parking room for the larger aircraft to which the airline industry is turning. There are a host of issues that airlines must plan for, and the sooner the T5 announcement is made, the better.
I want to press the Government strongly on the question of the future of the National Air Traffic Services, which I have raised in recent debates. The NATS public-private partnership was predicated on the basis that £1 billion of private capital would be injected into the industry. On 26 October, the Minister for Transport, in a written answer to a question from the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), said:
"NATS are reviewing their long-term investment plan to take account of the impact of the 11 September terrorist attacks on the aviation industry. They are due to report on the new Business Plan, which includes the long-term investment plan, in November 2001."—[Official Report, 26 October 2001; Vol. 373, c. 428W.]
Given that the plan and the entire future of air traffic control centres at Prestwick and in the south are predicated on the basis of private investment, the Government must make a clear statement on how matters will proceed. We cannot operate in a vacuum, and if the Minister cannot provide that information today, I should be grateful if he would write to me and make it available in the Library.
As time is short, and so that the Minister can respond to the many issues raised by my hon. Friend the Member for Spelthorne, I am prepared to curtail my speech. I conclude by pointing out that we need some positive proposals from the Minister today on how to build confidence in the industry. Perhaps the most important issues are competition and state aid. Some $5 billion has been made available immediately to American airlines, and a further $10 billion may be in the pipeline. I have already asked, in an intervention on my hon. Friend, about the precise nature of the Government's negotiations with European Union competition authorities. One thing is sure: if European flag carriers are subsidised, our airlines will face unfair competition. I am not necessarily saying that our own flag carriers should be subsidised, but it is incumbent on the Government to ensure that the competition that they face from Europe and from across the Atlantic is fair. Only the Government can do that.
10.48 am
The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Mr. David Jamieson): I congratulate the hon. Member for Spelthorne (Mr. Wilshire) on securing this debate, and on the measured and largely consensual way in which he conducted it. The hon. Member for Cotswold (Mr. Clifton-Brown) said that he cut short his speech, but he took longer than the allotted 10 minutes. The hon. Member for Twickenham (Dr. Cable) is smiling, but he took even longer. It seems that those who ask the questions in debates such as this have considerably more time than those who must reply to them, which I shall now attempt to do.
The hon. Member for Spelthorne rightly pointed out that the airline industry is of fundamental importance to our economy, and the Government fully recognise that fact. I agree entirely that the recent events that we are debating have in some cases resulted in personal family

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tragedies. I also want to reinforce the view that air travel is safe. During all our debates, we should bear in mind that the number of air travel-related casualties, injuries and accidents is very low compared with other forms of transport. I realise how important those issues are to the hon. Gentleman's constituency and to those of other hon. Members, and we are mindful of the jobs and associated industries involved.
I noticed that two Conservative Members talked, with some affection, of Government involvement in private industry, resonating yesterday's Railtrack debate. We are interested to see a gradual movement in policy by those hon. Gentlemen.
I shall deal with specific matters because there is little time to talk in generalities. First, the Government recognise the importance of the T5 announcement. Alas, I cannot give the hon. Gentleman a decision today—he will have to contain his disappointment for a while longer, but he may not have to wait long. I noted his comments about the planning system and the time that it has taken to be resolved. I am sure that he welcomes the Government's new approach to planning.
The hon. Gentleman referred to the issue of aid from the United States Government to the airline industry across the Atlantic. We agree on the need to prevent competitive distortion with the United States and I assure him that we are carefully watching that. The European Commission is considering drawing up a code of conduct with the US Government to prevent anticompetitive behaviour, and we are mindful of the importance of that.
The hon. Gentleman also referred to the number of jobs concerned with Boeing. I thought that I had a figure for the amount of exports from this country to Boeing but it is not precise so I shall only say that it is substantial. I met Boeing on that subject last week. He is right to say that a substantial number of jobs rely on Boeing. In response to his question on indemnities to airports for war risk, the Government have given indemnity to them and other service providers, including NATS. I hope that that satisfies him.
I know that the European Union is a somewhat sensitive point for Conservative Members. The hon. Gentleman is right to say that the solutions to the problems of the airline industry in the United Kingdom must be found in this country, but we must also find agreement in the European Union. We cannot tackle such matters alone. If we did, we might find even the 15 countries in the European Union having to compete against one another, which would offer no benefit or advantage. I take his point on not bailing out failing airlines, but sometimes our national interests are closely interwoven with those of the European Union.
National Air Traffic Services has been clearly affected by what has unfolded during the past two months because its revenue comes from airline movements, which have been substantially depleted. It now faces an extraordinary and totally unexpected situation. It asked us for a pause in the building of the new centre at Prestwick, and we sanctioned that, but we remain totally committed to the two-centre strategy. We have received no financial request from it, but are keeping the situation under close review.
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I am aware of the concern about the situation in the airline industry. The hon. Gentleman referred to last week's debate, which was fortunately extended owing to House business. A number of hon. Members whose constituencies surround the Heathrow area spoke with passion then about the issues raised today. I emphasise that the Government recognise the great importance of the aviation industry to the United Kingdom, and are paying close attention to its problems.
As pointed out—I am grateful for the comments of the hon. Member for Cotswold—we reacted quickly to the events of 11 September to counteract the failure in the aviation insurance market and enhance security measures at all United Kingdom airports. We are actively considering payment of emergency aid to airlines for the four days that United States' airspace was closed, but any decision will be in accordance with European Commission guidelines.
In addition to those measures, we are doing what we can to restore confidence in air travel. Much of the difficulty lies with that intangible thing called confidence. The airlines need not only state aid, which may help them for a while, but a return of their customer base and confidence. A fortnight ago, I made a trip to some British regional airports to encourage confidence in air travel and boost morale. Heathrow is holding up well at present, but it is important that all concerned should be in a position to react quickly to a deterioration in the situation. The job transition service is engaging with employers to ensure that those employees adversely affected by recent events have access to the fullest advice. I think that that was discussed with my right hon. Friend the Minister for Transport when he visited recently.
Despite the Government's long-standing policy not to intervene in the aviation market, the exceptional circumstances warrant Government action. As I have already said, we took immediate steps to counteract the failure in the insurance market: within a few days, and before the imminent withdrawal of cover grounded the entire UK fleet, we made the necessary third party war risks cover available to our airlines and related industry. We were so quick off the mark, and our remedy so effective, that our lead has been widely followed throughout the world. Initially, the cover was for one month, but it has recently been extended until 23 November and we are examining that almost on a daily basis.
Despite a few deplorable lapses that have been reported recently, pre-existing standards of security in the United Kingdom are among the highest in the world. None the less, we have enhanced security measures at all UK airports, and for airlines leaving this country. We are also carrying out a fundamental review of aviation security to make air travel as safe from terrorist attacks as we can, while balancing that with freedom to travel. I am sure that the hon. Members will welcome the fact that BAA estimates that it will need something like 150 extra security staff at Heathrow—it expects a good response to job adverts in the local press.
With one eye on United States Government support for its airline industry, some are calling for more generous aid for United Kingdom airlines. I stress that that is a matter for the European Community, which has exclusive competence for monitoring state aid that could distort or threaten competition in so far as it

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affects trade between member states. The European Commission acted quickly to address the repercussions of the terrorist attacks for the air transport industry and issued a communication reiterating that member states must not depart from Community rules on state aid and set out how the Commission will interpret the rules in the current situation. We will monitor how that is done with great care. The extra costs of security, together with the losses directly attributable to the closure of US airspace and the provisions of insurance cover by Governments are identified as areas where state aid would be justifiable. The Government are considering whether further aid to UK airlines should be made available, taking relevant guidelines into account.
This debate has been useful and many matters have been aired again. I have had little time to cover the enormous number of points raised by hon. Members, but they are welcome to drop me a line about anything that I have not covered, and I will endeavour to send them a full, written response.

Hepatitis C
11 am
Dr. Brian Iddon: I am pleased to have secured this important debate, in which I wish to draw the attention of Parliament and the people to hepatitis C, a serious condition that affects the health of hundreds of thousands of our fellow citizens and is likely to become at least as serious as the onset of HIV/AIDS a few years ago. The Government do not appear to regard the situation as that serious; this is an opportunity for the Minister to clarify their position.
It was not deliberately planned, but yesterday the Haemophilia Society and the all-party group on haemophilia held a reception in the House, and today they are holding a photo call on College green to mark their "carpet of lilies" campaign. That is why some of us are wearing lilies on our lapels to represent the fact that more than 1,000 haemophiliacs have died as a result of contracting the HIV and/or hepatitis C viruses, through receiving contaminated blood during national health service blood transfusions. I shall not say much about that issue, but I am sure that other hon. Members will cover it adequately.
The hepatitis C virus, HCV, was first identified as recently as 1989. It infects the liver but it can also cause damage to kidneys and white blood cells. HCV is an enveloped ribonucleic acid of the flaviviride family, which is believed to have a narrow host range. It is incredibly resilient, being capable of surviving in dried blood for long periods. The incubation period for the virus is commonly six to nine weeks, although it is frequently longer. It can lie in the body without causing obvious disease for a lifetime, and infected people can put others at risk without realising the dangers. HCV has a high mutation rate and it is thought that six common strains exist, each with many sub-strains. It is possible for a person to be infected by more than one strain at the same time. The strains have the ability to mutate spontaneously, which is partly why it has not been possible to develop vaccines to combat the virus.
The World Health Organisation estimates that about 170 million people worldwide are infected with HCV. However, the epidemic is fairly new to the United Kingdom. It probably began in the late 1960s, but a large cohort of people is believed to have become infected in the early and late 1980s before needle exchange schemes and other interventions to reduce transmission of the virus became widely available. The official figure for the number of infected people in the UK was recently given in a parliamentary answer in the other place, which stated that there were 300,000 people with chronic carriage of the virus. However, specialists working in the field believe that the true figure may be much higher—possibly 500,000. That figure was quoted in an article in The Independent in July 2000. In the same article, the former Surgeon-General of the United States, Everett Koop, said:
"We stand on the precipice of a great threat to our public health …It affects people in all walks of life, in all states, in every country …and, unless we do something soon, it will kill more people than AIDS."
HCV is a growing concern, as its transmission through contaminated blood is incredibly common. Misconceptions, rumours and misinformation are the greatest allies of HCV infection because, like the AIDS virus, it carries a stigma.

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In 1999, HCV killed 743 people in England. The provisional figure for 2000 is 1,042, but most deaths from HCV-related complications are not recorded with HCV as the cause, so the true figure for deaths caused directly or indirectly by the virus must be much higher.
In 15 per cent. of cases HCV disappears spontaneously, but the other 85 per cent. of those infected will proceed to develop a long-term chronic illness. HCV is the biggest cause of chronic liver disease in the western world and is known to exacerbate the severity of underlying liver disease when it co-exists with other hepatic conditions. Some 30 per cent. of victims will contract cirrhosis of the liver over a 30-year period, and of those some 5 per cent. every year will develop liver cancer and 2 per cent. will suffer liver failure. Even among those less severely affected the symptoms, which include fatigue, depression and lethargy, can be debilitating and all lead to a poor quality of life.
As a result of HCV infection, over the next 10 years 30,000 to 60,000 people in the UK are expected to die from cirrhosis of the liver and 15,000 to 30,000 are expected to die from primary liver cancer. Heavy drinkers, especially alcoholics, who are unaware of their HCV infection are putting themselves at particularly great risk.
HCV is incredibly difficult to treat owing to its high mutation rates. Indeed, viral infections in general are notoriously difficult to treat with known drugs. The most successful treatment that is currently available, which is approved by the National Institute for Clinical Excellence, is a combination therapy of ribavirin and alpha interferon. However, it is extremely expensive—it costs about £8,000 per patient per annum.
Until now a few, but not all, health authorities have commissioned treatment from their central budgets. Knowledge of the advent of primary care trusts in April 2002 has made specialists working in the field fearful that far fewer patients than at present will receive the combination therapy. I put it to the Minister that it might be preferable to commission expensive treatment of that sort from a centralised regional budget—after all, liver transplants are funded in that way—and I look forward to his response.
Significantly, the combination therapy, which is successful in curing approximately 40 per cent. of those infected, is cost-effective, according to consultants. Moreover, it reduces the eventual need for long-term care and the demand for liver transplants. Apart from the fact that transplant operations cost about £50,000 each, the recent organ retention scandals have severely reduced the supply of livers for such operations.
The most common cause of HCV transmission is injecting drug use—specifically, the sharing of injecting paraphernalia. It is estimated that, on average, 30 to 40 per cent. of current and former injecting drug users may have the virus, and the figure can be as high as 60 per cent. for long-term injectors. More males than females are infected because the former are more likely to inject drugs. Four out of five deaths from HCV infection may be categorised as drug-related.
It is believed that one in 11 injecting drug users who began injecting in the past three years have the hepatitis C infection. Occasional users are more likely to share
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equipment. Their drug use is often unplanned and their first experiences of injecting are nearly always with borrowed equipment. HCV can be transmitted by using any injecting equipment that has been in contact with an infected person's blood. The lending and borrowing of injecting paraphernalia is common. In 1999, direct sharing of needles and syringes was reported by 32 per cent. of drug users who had injected in the previous month.
Dangerous sharing practices include not only syringes, but spoons and other containers used for mixing drugs, water, swabs, filters, tourniquets and utensils such as lighters and knives. There is also a growing concern that sharing straws to snort cocaine may be a route of infection through weakened nasal membranes.
Although there is strong evidence that needle exchange facilities significantly reduce the incidence of HCV, no formal assessment of the availability of such schemes throughout the UK has ever been carried out. There is a wide disparity in the distribution and quality of such services.
Some 27 million syringes are distributed every year for harm reduction. Assuming that there are 100,000 regular injectors, which is probably an underestimate, that provision represents less than one clean syringe a day for each injecting drug user. No wonder injectors are forced to share syringes.
NICE and the British Society of Gastroenterology have advised treatment providers against generally giving treatment to current drug injectors. That advice is apparently based on problems of compliance and re-infection. An article in the 19 July 2001 edition of the New England Journal of Medicine examined the rationale for excluding drug users with chronic HCV from treatment and rejected the NICE advice. I hope, therefore, that the Minister will re-examine the advice.
I also draw the Minister's attention to an article that appeared recently in the 2001, volume 34, issue 1 edition of "Hepatology", beginning on page 188. It shows that prejudicial statements about poor compliance are inaccurate and that injecting drug users with chronic HCV can be treated successfully with combination therapy.
It is thought that the risk of newly acquired HCV is highest among prisoners, and that transmission in prisons occurs through not only the re-use of needles but the sharing of other items, and through piercing and tattooing. The Prison Service already has a strategy for preventing the spread of communicable diseases in prisons, involving training, education, prevention, risk reduction and harm minimisation. It is necessary for that best practice to be spread nationally throughout the community, which calls for the development of a national strategy.
My final remarks are about such a strategy. In the 1980s, the Department of Health responded to the growing threat of the HIV virus with national advertising campaigns informing the general public. They were coupled with more detailed information made available to groups at the highest risk. There is a growing concern among specialists working on HCV that if some form of information is not soon made available, it will become more widespread than HIV has ever been. Although programmes such as needle

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exchange schemes have been implemented in most parts of the country, they are patchy and the current situation is inadequate. Unfortunately, many who use needle exchanges still regularly share equipment.
Although many injecting drug users are aware of HCV, not all are familiar with the ways in which it can be contracted. A national strategy to inform and educate the public would reduce the number of people contracting it and that would reduce the money that the NHS spends on treatment. Without adequate information, HCV prevalence is likely to rise further. It is vital that those at risk are informed and helped to avoid contracting the disease. The Prison Service already has a system of education and risk reduction, but why is the giving of information confined to prison inmates? Could the DOH modify the information programme used in the Prison Service and use it to spread awareness throughout high-risk groups of the general public?
It cannot be denied that the strategy against HIV and AIDS significantly reduced the numbers becoming infected. It is hoped that a similar national strategy against HCV, if and when it is launched, will reduce the incidence of that infection in the same way. I look forward to hearing the views of my parliamentary colleagues and the Minister's response.
11.14 am
Dr. Ian GibsonI congratulate my hon. Friend the Member for Bolton, South-East (Dr. Iddon) on raising an issue that is a medical time-bomb waiting to explode, and taking on a subject that has still to penetrate the public consciousness. I shall try to cover in more detail some of the points that he raised.
I am aware of the situation because of my contact with the Bure drugs centre in Norwich, Norfolk, which has helpfully provided local information. In a quiet city, which, the newspapers tell us, is a city of the future, the problem is just as deep-seated as anywhere else in the country. The problem is worldwide and global, but it is also found in our cities—quiet, nice and productive of a good quality of life though they are—and throughout the country. I therefore congratulate my hon. Friend again on raising the issue.
The help that I received from the Bure centre came via Paul Brierley, who, as the harm minimisation nurse in the community drug team there, is at the coal face of the problems. His role at the centre is to operate a confidential advice and testing service for bloodborne viruses, including hepatitis C, hepatitis B and HIV. He participates in the surveys of the Public Health Laboratory Service, and in a 2000 survey testing for hepatitis C antibodies in individuals, from a sample base of 211 people in Norwich and Norfolk, 42 per cent. responded positively. The sample base was representative of Norwich and the old East Norfolk health authority.
There is no accurate figure for the number of individuals that that percentage would translate into in Norfolk because, as my hon. Friend pointed out, many injectors are invisible to that, or any other, form of survey. We are aware that there is in Norfolk a significant number of dependent opiate injectors who never access any form of treatment, as well as a probably larger group of non-dependent opiate and stimulant
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injectors, and several who may have injected a few times, or a long time ago. The Bure centre currently has 700 open cases and in excess of 3,000 closed cases. The vast majority of them are at some risk of infection. The medics who operate at the Bure centre think it reasonable to conclude that the numbers infected in Norfolk are in the thousands, many of them unaware of their status, or even of the existence of the virus.
On testing, there is no routine antenatal hepatitis C screening, although it is actively encouraged when a pregnant woman reports past or current intravenous drug usage. It is often available on the request of general practitioners, and some of them encourage it. It is unlikely, however, to include significant counselling before or after the test, or to alter a client's risk behaviour. All local prisons offer some access to counselling and testing, and vaccination for, at least, hepatitis B.
On prevention, there is evidence, courtesy of the local Public Health Laboratory Service, that rates of new infection have slowed during the past few years. That may reflect a growing awareness of risk. The Bure centre is often approached by statutory and non-statutory agencies seeking training for staff and service users. That reflects the level of local concern and the increasing number of people considering the risk because of their occupation or lifestyle.
All work on hepatitis C in Norfolk is conducted within existing budgets. That point is strongly made and amplified by all those who carry out front-line work.
On treatment, I am indebted to my ex-colleague Dr. Hugh Kennedy for providing information about the gastroenterology unit at Norfolk and Norwich hospital and the problems in the hospital environment. NICE guidelines recommend funding for treatment, but whether it is provided seems to vary across the country, as is the case with funding for many drugs. I shall say a little more about the NICE recommendations in a minute.
The needle and syringe exchange scheme provides comprehensive coverage of Norfolk, on a rather nine-to-five basis. With some forethought it is possible to have a clean needle and syringe for every injection, but whether that happens is another matter. In the prison in Norwich, a course of training has been run for 50 staff, including a morning on viral infection. It highlighted clients' remarks on the availability of drugs in prisons and on the lack of injecting equipment. Sharing such equipment is a widespread practice in prisons, and must play a significant part in spreading hepatitis C. The prison gives inmates access to sterilising tablets, ostensibly for disinfecting cutlery, but they have not been demonstrated to inactivate the virus, even when soaked for the recommended 30 minutes—probably considerably longer than the average user is likely to wait. If virus transmission in prisons is not addressed, the overall infection rate is expected to remain high.
There are other routes of infection, although they are perhaps not as significant. Contact with contaminated blood and blood products, and non-hygienic tattooing or body piercing are among the myriad of ways in which bloodborne viruses can infect the population. They are detected only when patients present in general practice with obvious and often advanced liver disease.

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The level of knowledge gained over the years by the Bure clinic means that most current intravenous opiate-dependent users have some idea of the risk of infection with the virus, although local myth and misinformation plays a part. The clinic also fosters knowledge among those working with or caring for intravenous drug users, although the demand for information is in danger of outstripping the supply of people to provide that information.
Confidential advice and testing is also available at the Bure centre, as advised by the young person's capacity to give informal consent—the so-called Gillick competency. Early reports that HCV infections frequently occur within the first year of injecting have been borne out only partly. Awareness of risk ordinarily postdates the commencement of injecting behaviour.
As my hon. Friend said, the true prevalence of hepatitis C in the United Kingdom is unknown and there is no accurate information about the infected population. Basic information relating to the age of those infected, the duration of the infection, the risk factors for infection and the distribution of infection in the different regions of the UK is not available. It is therefore impossible to determine what services are required, where they should be established and which client groups should be targeted. Appropriate epidemiological studies are urgently required to determine how best to tackle the hepatitis C problem.
The National Institute for Clinical Excellence reviewed drug therapy for hepatitis C in the final quarter of 2000. As my hon. Friend said, it concluded that therapy with current drugs such as interferon and ribavirin cures up to 40 per cent. of infected individuals and that, although it is expensive, it is cost-effective and should be provided. At present, therapy for the virus is funded by local health authorities. I have already pointed out that a postcode lottery operates, and I hope that the Government will address that with all the other drug problems, including cancer.
Much concern has been expressed about funding, and many centres have featured in campaigns to try to obtain sufficient money to provide effective drug treatments. It is clear that the current system for implementing the NICE guidelines for hepatitis C is unsatisfactory, and that central, ring-fenced funding will be required to allow all patients to receive appropriate therapy. That is the only conclusion that one can draw from the available information.
A targeted testing and information campaign is needed. The Department's current policy is to test only those patients who ask to be tested for hepatitis C, but hepatitis C can, for many years, be a silent disease, and probably about 500,000 people in the UK have been infected. However, they are unaware that they are at risk, and are thus unlikely to ask to be tested. If they were aware of the diagnosis, many people could limit the progression of their disease—for example, simply by stopping drinking alcohol. Others could be prevented from developing serious disease by appropriate treatment.
A public information campaign could be undertaken at a cost equal to that of treating three or four people with interferon or ribavirin. Symptomatic illness and
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liver failure could be prevented in many people. Indeed, the correlation between hepatitis C and liver cancer is well proven. Every undergraduate medical student knows that, and it is one of the few cases where a virus is involved in the development of a cancer. Targeted testing and a public information campaign are essential.
There is evidence that some groups are disadvantaged. However, the subject has not been studied in detail, and only anecdotal evidence is available. It is common in patients of non-European descent, in those who misuse drugs and among prisoners. Those vulnerable groups have poor access to healthcare, and there are no plans to facilitate treatment for them. Unless services are developed to address their healthcare needs, a substantial reservoir of untreated hepatitis C will persist, which will place an increasing demand on healthcare services and cause new infections.
As my hon. Friend said, the costs of treating individuals with chronic hepatitis C are high, and it is disappointing to note that no cohesive policy is in place to prevent transmission. There is clear evidence that effective health promotion aimed at reducing needle sharing among those who inject drugs reduces the risk of infection with HCV.
The Medical Research Council facilitates research funding for medically related problems, but its strategies document does not mention hepatitis C. Priority is given to research into spongiform encephalopathies, such as BSE. and the epidemiology of HIV. Given the size of the current hepatitis C epidemic, those research priorities seem completely out of balance.
Mention has been made of compensation for haemophiliacs who have contracted HIV. It is perverse that many patients with haemophilia who are now dying as a result of infection with hepatitis C should be denied similar compensation. I suggest a possible solution. Current systems for dealing with the problems are clearly failing. The epidemic is not being properly monitored, patients are being denied the information needed to reduce the risk of infection and those who are infected are being denied therapy.
To resolve those problems, central funding is required to provide a full range of services for people who have chronic hepatitis C or who are at risk of being infected with it. Improving services for such patients will require the co-ordinated efforts of a large group of different healthcare groups. Regional anti-viral centres that are responsible for preventing, managing and monitoring the epidemic in their area need to be set up with central funding. Without some form of centralised funding, ad hoc arrangements will persist and the epidemic will continue to absorb precious healthcare resources for many years to come. We can take action now to forestall the consequences of the disease by reducing transmission, preventing deterioration and eliminating the virus from those who are currently infected.
11.26 am
Brian CotterI shall raise the subject of those haemophiliacs who contracted hepatitis C as a result of blood transfusion and who suffer in many ways as a result. For example, they are unable to obtain life insurance, and many have had to give up their jobs. Such people require proper financial help. It is not simply a moral obligation; we have a financial obligation to

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provide for them and their families, so that they can be financially secure and enjoy as full a life as possible. In that connection, I must point out that help has been provided for HIV sufferers. Hepatitis C is just as devastating a disease and it involves just as much loss and hardship. Why should the two be treated differently?
A step has been made in the right direction. In March, in a landmark High Court case, Mr. Justice Burton found that the national health service had a legal duty to supply clean blood for transfusion. Significant compensation was awarded to 114 non-haemophiliacs who had suffered blood transfusions and who had been infected as a result. That case was brought under the Consumer Protection Act 1987, but those provisions apply only to cases that arose after the Act came into force. However, if the principle of compensation was accepted in that case, it is surely grossly unfair to deny the same rights to haemophilia sufferers who have hepatitis C.
The Government have said that they are considering the implications of that verdict, but it seems that they will not provide further compensation. However, the Health and Community Care Committee of the Scottish Parliament recently recommended that financial assistance be given to haemophilia sufferers infected with hepatitis C as a result of having been given contaminated blood. If the Scottish Executive can do it, I hope that the Government will move in the same direction.
I asked the Minister a question on that subject on Monday 12 November. His response was that he would let me have a reply as soon as possible. I hope that the reason for the delay is that the Government are considering what to do. The Scottish Executive does not provide the only example. Many other countries, such as Ireland, have accepted responsibility and provide compensation for haemophiliacs.
Arguments have been advanced against compensation or financial help; there is concern that that would open the floodgates in respect of other issues. However, I do not accept that argument. The Government have said that benefit payments are the way to help. That is not enough. I hope that they will change their mind.
The matter was raised many years ago. When he was Under-Secretary of State at the Department of Health and Social Security in 1974, David Owen—now Lord Owen—asked departmental officials to put money aside for that very purpose. It has been a tremendous shock to him and to others that that money was not, seemingly, put aside. Certainly it was not used, yet it was already an issue all those years ago.
The present and previous Labour Governments have not uniformly insisted on proof of medical negligence before compensating national health service patients. The Callaghan Government increased payments under the vaccine damage payment scheme, and payments have been increased by the present Labour Government under the Macfarlane trust fund.
Compensation is provided in other areas, such as for criminal injuries, but that is not dependent on the Government's being seen to be at fault. Financial assistance is required, and haemophilia victims want and deserve an inquiry into how their plight has been allowed to happen. There has been an internal inquiry,
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but it was not considered that it got to the root of the matter. Supporters have pointed out that haemophilia victims who received transfusions in the 1970s and 1980s did not have any of the risks that we now know exist explained to them, although scientific knowledge available to Whitehall at that time suggested that hepatitis C could be transmitted through blood. In addition, money has never been forthcoming, despite the fact that a previous Minister with responsibility for health—Lord Owen—considered the issue important enough to say that it was required.
A debate was initiated by Lord Morris in the other place. He made it clear that almost everyone with haemophilia who is now over the age of 15 was infected with HIV and HCV by unclean blood. Of some 6,000 haemophiliacs, about 1,000 have already died of one or both of those diseases. If there have been inquiries about the Marchioness and about Paddington, surely there can be one into this disaster.
I hope that this is a constructive contribution.
Dr. Iddon: The hon. Gentleman has mentioned the Scottish Parliament. Is he aware that the Haemophilia Society petitioned it? Although most of the reasons for its petitioning were rejected, the Scottish Parliament's Health and Community Care Committee reached the following conclusion:
"financial and other practical assistance, awarded on a no-fault basis, is the clearest solution to the issues raised in these petitions."
Brian Cotter: I very much appreciate that contribution, which helps to advance the case that I have been trying to make. I hope that we are not putting up the ramparts on the issue, and that the Government are considering it and will shortly come forward with what is needed: an inquiry and financial support to put right this clear injustice.
11.35 am
Mr. Neil Gerrard: I am grateful for the opportunity to contribute to the debate. It concerns a serious public health issue, on which discussion is long overdue. My hon. Friend the Member for Bolton, South-East (Dr. Iddon) has spelled out questions about the levels of infection, the consequences for the people who are infected, the costs of treatment and the need for a national strategy to deal with hepatitis C. Work is being done on that, but rather belatedly.
I agree with what the hon. Member for Weston-super-Mare (Brian Cotter) said about haemophilia. There is a need for compensation. We should recognise that need and act on it. We should also conduct an inquiry into what has gone on, so that we can be clear in our mind about the history, the causes and the problems. Without one, we can never be absolutely sure that we have dealt with all the problems, however much we might feel that we have.
The major route of transmission for hepatitis C has been injecting drugs. I suspect that that is one of the reasons why the issue has not received the attention that it should have received. Injecting drug users are not popular causes. It is not difficult to see a connection between the fact that that is the major route of transmission and the lack of attention that has been given to the subject, the feeling being perhaps that the

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victims of hepatitis C have brought it on themselves. As my hon. Friend the Member for Bolton, South-East said, the disease is transmitted not just through the sharing of syringes, but via other drug-injecting paraphernalia and possibly through household contacts such as shared razors.
There is no doubt that we are behind other countries when it comes to a national strategy to cope with hepatitis C. Most other European countries have one. The Australians have had one for several years and are on their second or third revision of it. If we do not have a national strategy, we shall not know the true prevalence of the disease, monitor the epidemic or be able to establish the most effective ways to deal with it. Nor shall we be able to ensure that all those who need treatment get it—the problem of prescription by postcode has been mentioned. There are questions about the accuracy of the data. The Advisory Council on the Misuse of Drugs said in one of its reports:
"It is regrettable that the country is encountering an immensely threatening public health problem without the data with which to monitor population trends and the effectiveness of policies."
That is the situation.
I am also concerned about treatment. What will happen when we move to commissioning by primary care trusts? My hon. Friend the Member for Bolton, South-East described clearly his views on the need for centralised funding. Two or three weeks ago, I was in this Chamber for a debate on HIV funding, and the same questions arose about what would happen when commissioning took place under primary care trusts.
Dr. Iddon: Does my hon. Friend agree that those questions apply to syringe exchange schemes, as well as to combination therapy? Such schemes would be low on the agenda of most primary care trusts.
Mr. Gerrard: I agree. There is a difference between what is happening in relation to hepatitis C and HIV. On HIV, many health authorities have a history of specialised commissioning and have people with expertise. I am worried about what will happen to that expertise when commissioning takes place at primary care trust level. On hepatitis C, we have not had specialised commissioning and no expertise has been developed in most health authorities.
Dr. Gibson: In Norfolk, money that was requested from the local health authority for a hepatitis C nurse was put towards a bowel cancer nurse. Priorities such as hepatitis C nurses are stuck low on the agenda time and again, which is why we need the money to be put towards what the Government mean it to be put towards and not diverted to other causes. Sometimes the money is even spent on car parks instead of staff to help the likes of drug abuse units.
Mr. GerrardMy hon. Friend's example illustrates the problems, which I fear will worsen when the change is made and specialised commissioning takes place at primary care trust level. What happens to public health-related work generally, as a result of the change to primary care trust commissioning, is a serious issue. In
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many health authorities, only a few people have any expertise in public health. We must ensure that they continue their work. In my area, workers in the health authorities who are unsure about their future, especially those who work on narrow and specialised subjects, are disappearing as the change to primary care trusts occurs. They are taking the opportunity to find jobs elsewhere due to their uncertainty.
We certainly should consider public information campaigns. I have no doubt that such a campaign on hepatitis C could be cost-effective. The costs of treatment are so large that the prevention of even a small number of infections represents a significant saving. We must improve accessibility to treatment—a subject that has been covered by my hon. Friends the Members for Bolton, South-East and for Norwich, North. Access to the treatment that one should receive for a hepatitis C infection must not continue to depend on where one lives. We need national guidelines for treatment and clear agreement on who should receive therapies.
We also need to tackle the subject of testing facilities. One can be tested at a drugs service or a genito-urinary medicine clinic, but many people do not like going to such places, so we must think about where testing should be provided and how people should be directed to it.
The subject is a major one in public health terms. The figures—-the number of infections, the likely number of deaths—speak for themselves about what will happen if we do not get to grips with the problem. It has been ignored for far too long. I am grateful to my hon. Friend the Member for Bolton, South-East for securing the debate. I hope that we shall hear proposals for action from the Government to start to tackle this public health issue.
11.45 am
Sandra GidleyI congratulate the hon. Member for Bolton, South-East (Dr. Iddon) on securing the debate. He has been trying to do so for a considerable time; his e-mails requesting me to try to secure a debate on this important subject might now stop. I pay tribute to his work with the Haemophilia Society. My hon. Friend the Member for Weston-super-Mare (Brian Cotter) has spoken about haemophilia.
We should take note of the interesting comments made by the hon. Member for Walthamstow (Mr. Gerrard), as he has done plenty of work on HIV. He must have learned lessons from the way in which HIV has been tackled, and must have used that knowledge to highlight many of the problems of hepatitis C.
The hon. Member for Norwich, North (Dr. Gibson) stole my opening line. I was going to start by saying that hepatitis C was a medical time-bomb, so I agreed when he said something similar.
I should like to query the figures. We do not know the number of people infected with the disease. The Department of Health estimates that 300,000 people in the United Kingdom have a chronic infection, but its figures are flawed because they are based solely on mathematical projections. Those projections are based on known prevalence rates in antenatal clinics, and that information is patchy at best. The rate varies from 0.8 per cent. to 0.2 per cent., and is regarded as 0.5 per cent. of the population overall.

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Hepatologists are concerned that that figure is falsely low. As we heard, 80 per cent. of hepatitis C transmission is associated with injecting drug use, but figures from antenatal clinics suggest that female drug users have reduced fertility. Comparison of drug users with non-drug users among females of childbearing age shows that drug users have half the normal fertility rate. That creates a significant flaw in the mathematics. Much evidence shows that fewer women inject drugs and consequently share equipment than men, so it is apparent that a sample of antenatal clinic attendees has a lower prevalence of hepatitis C than the general population.
A general population survey is urgently needed, to give us a clear idea of the scale of the problem and enable us to plan accordingly. A survey in the United States of America showed that the rate there was not 0.5 per cent., but 1.8 per cent. If the same rate occurred in the UK—there is doubt that it would— more than 1 million people would be infected, as opposed to 500,000. We urgently need information. The financial impact of the problem would differ considerably depending on whether 300,000, 500,000 or 1 million people were affected. Will the Minister, instead of relying on a poor estimate, make a commitment to fund a study so that a clear picture of prevalence is known?
A big problem of hepatitis C is that most people do not know that they have been infected until many years later—possibly, 20 or 30 years. Some people go to the doctor and their condition is diagnosed when the next step of their liver failure could be liver cancer.
Testing is not widely available in the UK. It has been said that people can go to genito-urinary medicine clinics, but they cannot always do so. Many such clinics do not regard hepatitis C as a sexually transmitted disease, so it does not fall within their remit. People have problems accessing such services. Although 80 per cent. of transmission is through injecting drug use, a significant proportion—about 15 per cent.—of those infected have probably acquired the infection via sexual intercourse, and they still cannot get tested. Many drug services are not allowed or cannot afford to provide testing, and accessibility varies widely around the country. The postcode element of testing has been mentioned many times.
Figures from the Public Health Laboratory Service show that in 1999, 13,272 cases were diagnosed. That shows that at least 95 per cent. of the people in this country who already carry the hepatitis C virus are unaware that they have the disease and that they are sitting on a medical time-bomb. I want to reaffirm that a widely publicised campaign is needed to make people aware of the issue. If they find that they are potentially at risk, they can be tested. We also need to make testing easier and more available, so that appropriate early treatment can be given. Will the Government commit to providing such testing? People may take the view that if they do not know that they are ill, they have no reason to worry, but I shall explain later why it is important to know.
Many people who suddenly find that they are living with the hepatitis C virus are from a generation who probably dabbled briefly with injecting drugs in their teenage years. Some 20 or 30 years ago, the need for clean needles and the dangers of sharing were still not widely known or acknowledged. If the problem was
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known, it was not being tackled. Injecting drug use was rare before the late 1960s but has increased steadily ever since. That is why the full effects of the epidemic have yet to hit us. Most people with hepatitis C have probably forgotten that they ever took drugs.
Needle exchange schemes have probably helped to reduce the incidence of infection, which probably accounts for the fact that the UK incidence will be lower than that of the United States. Such schemes are designed to limit the spread of HIV. However, HIV prevention advice is confined to not sharing needles and syringes. For HIV that is good enough, but for HCV it is not because, as has been outlined, there is much evidence to show that the sharing of other drug paraphernalia such as spoons and filters may ease transmission. It is thought that although people do not share syringes they do re-use their own syringe, and when they do so the contaminated blood is transferred to the paraphernalia, which may be used by someone else.
In Holland, needle exchange kits include single-use filters such as steri-cups. That would be a good move in the UK if we had the funding. However, it is currently illegal to supply such paraphernalia. Will the Minister consult the Home Secretary and push for the repeal of section 9 of the Misuse of Drugs Act 1971? That would go a long way to help with HCV strategy. That simple act would save lives, as studies have shown that sharing spoons and filters causes a fourfold increase in the risk of infection.
Dr. Iddon: Does not section 9 of that Act also preclude the provision of syringes with sterilising liquids of any kind, and would it not be sensible to provide the two things together in one pack?
Sandra Gridley: The hon. Gentleman is right. Also, sterilising liquids are currently prescription-only medicines, which is another problem that needs to be solved urgently.
To return to the disease itself, 85 per cent. of those infected develop chronic disease. If they remain untreated, 30 per cent. will die from the disease in 30 years. During the chronic phase, many people suffer from depression and fatigue. That has a significant impact on what society has to pay out—people may be unable to work, increasing the strain on the benefits system. There is a stage when drug treatment is appropriate. If people are tested at the right time, drug treatment can be given. As has been pointed out, the next step is a liver transplant. The difference in costs is clear. The drug costs vary from £12,000 to £15,000 a year, but a liver transplant costs roughly £36,000, so there are cost savings to be made by identifying the problem early.
I support the views expressed by the hon. Member for Bolton, South-East. He has pointed out that the system discriminates against infected current drug users, who are simply denied treatment. There is now evidence that the exclusion of injecting drug users from treatment is ill-founded. There is no evidence that they go on to re-infect if a proper education programme is supplied.
As usual, Britain appears to be lagging behind the rest of the world. In the USA, concerted efforts are being made to highlight the problem. Information campaigns

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are being targeted at the casual drug users of the 1960s, so that those people can be tested and treated at the optimum stage. There are numerous websites and charities highlighting the issue, and activities include awareness rallies and something called a hepfest—I hate to think what that was, but it received a lot of publicity. A large quantity of public awareness material and plenty of medical information is being distributed, because parts of the medical profession are still not up to speed with the full implications of hepatitis C.
Prisons were mentioned. More prisoners are injecting drug users than are not. Will the Minister consult with the Home Secretary so that we have a proper trial of needle exchange facilities? Some things are being done on an ad hoc basis, but provision is patchy around the country. Pilots have been tried in Switzerland, Germany and Spain and many of the fears, such as the fear that inmates would tackle prison officers with syringes, have proved to be unfounded, provided an education programme is in place.
The problem is real and it is no good to adopt an ostrich-like stance—we must face reality. Will the Minister establish the true prevalence of HCV, monitor the epidemic and plan for the future, establish ways of preventing further infections—such as the repeal of the drug paraphernalia laws—and ensure timely, appropriate treatment for all? Like many hon. Members in the Chamber today, I am suggesting a national strategy.
11.58 am
Mr. Simon BurnsI add my congratulations to the hon. Member for Bolton, South-East (Dr. Iddon) on securing this debate and on choosing this important subject. Almost every hon. Member who has taken part has described the problems facing us with regard to hepatitis C as a time-bomb ticking away. That is the most accurate description, given that hundreds of thousands of people in the country may carry the disease without even knowing it. No one quite knows how many people in the community are carrying the disease undiagnosed. It is clear from a number of contributions made this morning that there have been guesstimates and estimates, but the bottom line is that we do not know the exact or even the semi-precise figures on the extent of the problem, particularly as the incubation period of the disease is so long—in many cases up to 20 years.
We can expect an explosion in newly identified cases in the forthcoming decade. Even if all the routes of transmission were somehow blocked or closed today, there is still the prospect of a very large number of cases emerging over the next 10 to 20 years. Some medical authorities have suggested that hepatitis C has the potential to be an even greater killer in the long term than AIDS. That is extremely alarming. The fact that so many people are undiagnosed and unaware of the disease that they carry makes it even more alarming. Of the 80 per cent. of cases in which the virus makes itself felt, the vast majority will develop into a chronic illness. Some 20 per cent. of the people concerned will contract cirrhosis of the liver, and of those half will develop liver cancer.
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Even among those less severely affected, the disease can be debilitating, with symptoms that include fatigue, depression, lethargy and a resultant poor quality of life. Furthermore, if as many people develop the illness as has been predicted, the number needing treatment for HCV in the next decade will dramatically increase. That will impose significant costs on the national health service. As several other hon. Members have pointed out, planning and preparation are necessary, so that the national health service will be able to do what is needed in the coming decade.
I would like reassurance from the Minister that the Government are prepared to tackle several issues that are significant for people suffering from the disease. The current lottery for treatment, dependent on where one lives, which has been mentioned by hon. Members on both sides of the Chamber, must be grappled with and ended immediately. It is unacceptable that one's postcode or address should determine the standard of treatment that one receives.
Treatment for hepatitis C, a combination therapy involving interferon and ribavirin, costs £9,600 per annum per patient. However, although it can cure up to 40 per cent. of patients with HCV, the majority of health authorities either do not provide it or provide it on a limited and inadequate scale. In a survey conducted by the British Liver Trust in 1998, it was found that only a fifth of health authorities had any sort of strategy for tackling HCV and that fewer than one third had a budget for treating it.
Although the National Institute for Clinical Excellence recommended in October 2000 that patients suffering from moderate or severe hepatitis C should be given combination therapy—interferon alpha and ribavirin—I fear that that will not be enough to solve the postcode lottery. Health authorities will still have to prioritise funding to meet the cost of treatment. The costs have been estimated by NICE at £18 million per annum initially, yet that figure excludes the associated costs of pathology, virology, radiology and specialist nursing.
The verdict of every reputable HCV specialist is that spending money early will save a great deal of money later. However, it is questionable what incentive health authorities have to invest those considerable sums. I believe that the barrier to funding relatively expensive drug therapies such as the combination therapy in question could be largely eliminated by the creation of a central funding mechanism for such exceptional medicines, separate from health authority budgets. Such an initiative would go a long way towards ending the lottery that is blighting the distribution of treatment for those suffering from hepatitis C.
As many other hon. Members have mentioned, another fundamental problem is the lack of proper facilities in many areas for the testing and counselling of HCV patients. Moreover, there is no common protocol to which health authorities work in looking after and managing such patients, before and after testing. The way in which patients are presented with their test results is too often insensitive and ill thought out in the extreme. A great many receive no advance preparation for what they are to hear, and no advice about it afterwards.

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According to a recommendation by NICE:
"Confidential HCV testing and counselling should be made available whether or not treatment is initiated."
The Government should urgently heed that advice. Confidential testing facilities of the type that exist for HIV would encourage many to undergo an HCV test. Presently, many people are deterred, partly through ignorance, but also, more worryingly and sadly, from fear that the information will feature on their medical records and, in turn, have a stigmatising effect on their prospects of obtaining employment, life insurance or a mortgage. It could also affect personal relationships. As a result, it is likely that many people whose condition could otherwise be treated are not even being diagnosed.
The far-reaching effects of stigmatisation of the disease are particularly worrying. Miss Sharon Moore is a constituent of my hon. Friend the Member for South-West Bedfordshire (Andrew Selous), who wanted to attend the debate but was prevented from doing so by his duties as a member of the Select Committee on Work and Pensions. The tragedy for Miss Moore is not confined to the problems of suffering from the illness; it extends to problems in seeking employment. She applied for a job with Bedfordshire police, and when it became known to them that she suffered from hepatitis C they refused to employ her. Those attitudes should not be acceptable among employers and in society today.
More needs to be done to provide funding for research. Much about hepatitis C remains unknown. The hon. Member for Norwich, North (Dr. Gibson) mentioned how he tried to discover the priorities in research into hepatitis. He was dismayed at the lack of such research. Sadly, he is right. We need more research to help us to cope with the problem. It is crucial, as there are apparently at least six strains of the virus, each with about 40 sub-strains. Over time those strains may change spontaneously. It is partly for that reason that no vaccine for hepatitis C has yet been developed.
Some aspects of the pathogenesis of HCV are still hidden and the precise mechanisms by which HCV causes liver cancer have not yet been identified. We therefore need a simple, cost-effective and reliable diagnostic test, both for the initial detection of HCV and for monitoring the disease as it progresses. There are still no firm data on the susceptibility of HCV to disinfecting agents, which is important bearing it in mind that the virus, unlike HIV, for example, can survive for many hours outside the body.
It is not only the treatment of hepatitis C that is a matter of concern. More needs to be done to tackle some of the problems of sufferers—not just haemophiliacs, although it is indeed tragic and appalling that those people have contracted HCV, but people who are not haemophiliacs and who have contracted it. I naturally feel deep horror at the fact that far too many people have been infected by the disease while giving medical treatment.
I urge the Minister to attend carefully to points that have been made repeatedly in this debate by hon. Members on both sides of the Chamber. Unanimity strengthens the case that has been put. I ask the Minister to take positive action to enhance and improve research, diagnosis and treatment, and to attend to the ancillary issues such as needle exchange that hon. Members have eloquently explained.
12.9 pm
The Minister of State, Department of Health (Mr. John Hutton): I join hon. Members in congratulating my hon. Friend the Member for Bolton, South-East (Dr. Iddon) on giving us the opportunity to discuss what are by common consent important public health issues, which affect many thousands of people. Like many hon. Members, I have constituents who have been caught up in this terrible tragedy. I am always struck by the dignity and forcefulness of the arguments that they present to me about how we can move on from the present situation.
This morning's contributions have been carefully presented and the arguments well marshalled. As the hon. Member for West Chelmsford (Mr. Burns) said, there is substantial consensus about some of the major issues with which the Government must deal. In the course of my remarks, I shall mention what the Government are doing to deal with some of the concerns that have been voiced. The hon. Member for Romsey (Sandra Gidley) accused the Government of taking an ostrich-like stance over hepatitis C, but that is absolutely untrue, and I shall explain why in a second.
My hon. Friend the Member for Bolton, South-East spoke eloquently about the scale of the problem that we must deal with, and I shall spell out precisely how we intend to take our work forward. I strongly agree with my hon. Friend the Member for Norwich, North (Dr. Gibson) that we need to penetrate public consciousness as regards the danger of hepatitis C. I shall set out how we shall do that in a minute.
Hon. Members have referred to the problems of postcode prescribing. It is important that the Government tackle that issue, and we now have the means in place to do so. The National Institute for Clinical Excellence is the first body in the world to advise advanced health care systems about the cost-effectiveness and value of new drug treatments. That approach is being widely mirrored, and many other countries are, as we speak, examining how to tackle such issues. Extra investment is going into the NHS to allow health authorities to take important steps in procuring new drug treatments, which are expensive, as all hon. Members have acknowledged.
It is entirely reasonable to express concern about postcode prescribing, but we should not lose sight of or fail to chalk up our successes in the battle against that problem. We tend to discount our successes as we move on to the next set of issues that hon. Members and people outside the House want us to deal with. It is important that we take stock of some of our successes, such as the availability of taxanes, of new drugs to treat Alzheimer's and of statins, the anti-cholesterol drugs.
We are ma king progress, although there is more to do. However, it ill behoves hon. Members—particularly those who were once responsible for dealing with such issues—to draw a polite veil over their record. The hon. Member for West Chelmsford conveniently failed to describe the measures that the last Conservative Government put in place to deal with the postcode prescribing against which he railed today. Perhaps other hon. Members share my impression that there is a dangerous tendency among some to suggest that the postcode prescribing that we are tackling appeared only on 1 May 1997 and that there was no such thing in the

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NHS before then. I was a Member of Parliament during the last Conservative Administration and for the life of me I cannot remember them taking a single opportunity to outline a coherent strategy for dealing with the issue. We are putting a strategy in place.
The hon. Member for West Chelmsford made some important points, and I shall deal with them. I strongly agree with my hon. Friend the Member for Walthamstow (Mr. Gerrard) that hepatitis C is a serious public health issue, which we must urgently address. I also agree with him that we need a national strategy, and I shall say more about our work to prepare and develop one in a second.
The hon. Member for Romsey wanted me to open a relationship with my right hon. Friend the Home Secretary to discuss several issues. I have a very good relationship with him. She asked me specifically about section 9 of the Misuse of Drugs Act 1971, as did my hon. Friend the Member for Bolton, South-East. She will be aware that the Advisory Council on the Misuse of Drugs has been considering the relevance of section 9 and is advising us on possible changes to deal with the concerns. She will understand that I cannot make a definitive statement about the future of section 9 today, but it is certainly being considered.
Dr. Iddon: Is the Minister prepared to ask NICE to reconsider its advice not to give injecting drug users combination therapy because of the problems of reinfection and compliance that I mentioned?
Mr. Hutton: I shall certainly deal with the issue, if my hon. Friend will be patient. The problem is that there has been some misunderstanding about NICE's recommendations, but it is the institute's job to deal with those, not mine. There is an appeals process, and decisions are subject to judicial review. There has, however, been a problem understanding NICE's comments on the issue, and I want to clear that up.
Hon. Members have referred throughout to three common elements: better prevention, better testing and better treatment for those who carry the virus. Those form the core of the Government's approach.
The virus was first identified in 1989, but the significance of its association with chronic liver disease and the number of people infected were not initially appreciated. As my hon. Friend the Member for Bolton, South-East rightly said, hepatitis C is now justly recognised as a global public health issue. As he and others said, the World Health Organisation estimates that there might be as many as 170 mill ion chronic carriers around the world. Subject to the caveats that must be made about such data, studies suggest that England has a relatively low prevalence of hepatitis C. The best estimate of the number likely to have been infected and become chronic carriers is about 250,000. I accept what the hon. Member for Romsey said about the accuracy of that data, but it is a fact of life that we must work on the basis of best estimates. I shall say in a second how we might improve data collection systems.
I accept, as the hon. Member for West Chelmsford said, that there is likely to be an increase in the diagnosis of hepatitis C in the next 10 years as individuals who
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have carried the virus for some time without symptoms are identified through wider testing of groups that have been at risk. It is worth bearing it in mind that the figure is nearly 10 times that for people who have been infected with HIV. In contrast with HIV, however, we have an effective drug treatment for hepatitis C in many cases of infection. There is, however, no room for complacency.
In most cases, hepatitis C is spread by contact with the blood of someone who is infected. Injecting drug misusers and those who received blood transfusions or blood products before screening and viral inactivation processes were introduced have been the main at-risk groups. Data from the unlinked anonymous surveys show that the prevalence among injecting drug users in contact with treatment and support agencies is about 33 per cent. Hepatitis C may be spread to a much lesser extent between sexual partners and from mother to baby. As many hon. Members said, health care workers are at particular risk from occupational exposure.
Once transmitted, the virus can quickly cause inflammation of the liver. That may become apparent as jaundice, which is an acute illness, but, fortunately, one from which people recover. For about 80 per cent. of people, however, the infection becomes chronic and has longer-term health implications.
Unfortunately, there is evidence that some people with hepatitis C experience social prejudice and discrimination; the hon. Member for West Chelmsford referred to a particularly shocking case. It is not easy to deal with that issue, and I look forward to receiving advice about how we might do so from the national steering group that we set up. In part, such behaviour may represent a lack of public knowledge about the disease. It must be tackled as we improve patient care. The group that we set up earlier this year to develop a national strategy for hepatitis C will discuss the problem.
People with chronic HCV infection can remain virtually symptomless for many years. However, individuals may suffer more general debilitating effects that can affect their quality of life and, in a proportion of cases, the liver may become progressively inflamed and damaged. If not treated, that may eventually progress, over a number of years, to severe liver disease. Routine death statistics are difficult to interpret, and we have had some discussion about how many people are dying from hepatitis C.
Hepatitis C has been identified by the Public Health Laboratory Service as the contributory cause of around 200 deaths every year in the United Kingdom, so I cannot confirm the statistics given by my hon. Friend the Member for Bolton, South-East. It is clear that hepatitis C infection contributes to deaths from the complications of chronic liver disease, including cirrhosis and hepatocellular cancer. I accept that there is likely to be some under-reporting—that is obviously the case. We need to improve the surveillance of serious liver disease associated with hepatitis C. I will say more about that in a moment.
Many hon. Members have referred to the National Institute for Clinical Excellence, which assessed the use of a drug combination therapy involving ribavirin and interferon for treating hepatitis C and published its recommendations last October. The therapy has been shown to be twice as effective as any previous treatment.

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NICE's recommendations provide clear and authoritative advice for clinicians and health care providers, which should ensure that patients receive effective treatment, and were welcomed by patient groups, including the Haemophilia Society.
Sandra Gidley: The problem is not so much with NICE, whose guidance one may or may not question. We are all agreed that its guidance is timely, but the local health authorities are not given extra funding to afford those guidelines, and are forced to make decisions to stop giving other treatments. Authorities may have to ration patients on the basis that they can afford to take on only 10 a year for a particular treatment. Some hon. Members have called for a central budget. Would that not be a better way of tackling the problem, when we know the extent of it?
Mr. Hutton: I was just coming to that. The hon. Lady is not right in saying that health authorities and trusts are not given additional resources to manage the additional costs associated with implementing NICE recommendations. It is true that there is no dedicated pot of money for that, but we must bear in mind the unprecedented increase in overall NHS resources that has taken place this year and will take place in the next two years. In this financial year, for example, health authorities received an 8.9 per cent. increase in resources. Of course, decisions must then be made, and no one is disputing that authorities may have to make hard judgment calls.
Others have suggested that we should have a ring-fenced budget for hepatitis C treatment. I am not convinced about that, although I understand the view of my hon. Friend the Member for Bolton, South-East and others. We all want patients to be properly supported and provided for, but the mainstreaming of funding ensures that local providers of care have more say in the priorities that they fix for their local populations. That is the underlying principle behind shifting the balance of power. Hypothecating funding for this treatment would raise obvious questions about consistency in the way we provide for people with other illnesses.
My hon. Friend the Member for Bolton, South-East asked me to consider the question of specialised commissioning of services for people with hepatitis C. I will come back to that question in a moment.
There are grounds for optimism that further improvements in treatment will follow. The modified slow-release form of interferon—pegylated interferon—became available this year and appears to be more effective than conventional interferon. I understand that NICE is considering that new drug as a topic of future appraisal. The Department is funding research to establish the effectiveness of the early treatment of chronic hepatitis C with interferon alpha, or a combination of interferon and ribavirin.
Several hon. Members referred generally to the issue of research; the hon. Member for West Chelmsford called for more research, as did others. I agree that that is necessary, which is why, last November, the Medical Research Council spent £1.8 million in developing new and further research proposals for hepatitis C. In the past four years, the Department has spent a further £1.5 million on hepatitis C research.
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Concern has been expressed that NICE guidelines seem to exclude injecting drug users from hepatitis C treatment, but that is not the case. General advice recognises potential difficulties in treating injecting drug misusers, but NICE recommends that, if a prescribing clinician is reliably assured that reinfection, compliance and drug interactions pose no problems, a person in that group should be considered for combination therapy. In line with good medical practice, the emphasis should be on the clinician assessing each case in conjunction with the patient. As my hon. Friend the Member for Bolton, South-East said, some evidence exists that injecting drug users may be successfully treated for hepatitis C.
We also heard calls for new guidelines for hepatitis C treatment, to which we have tried to respond. The Royal College of Physicians, the British Society of Gastroenterology and the British Association for the Study of the Liver published evidence-based clinical guidelines in July that will provide a framework for patients with hepatitis C to receive high-quality treatment and care. That work has the full support of the Department of Health.
We recognise, too, the increasing importance of hepatology, not only for patients with hepatitis C but for those with other complex liver diseases, who should have access to specialist hepatology units with the necessary knowledge and expertise. We have worked on a commissioning framework to ensure that specialised hepatology services are developed to uniform standards throughout the country. That may go some way to meeting the concerns expressed by my hon. Friend the Member for Bolton, South-East. The Department is due to publish the national specialised services definition set later this month, which will be used as the basis for identifying those specialised services that require some form of collaborative commissioning. Hepatology, which includes specialised services for the treatment of patients with viral hepatitis, is part of that set. I will ensure that my hon. Friend and other hon. Members who have taken part in the debate are kept fully informed of developments.
Unfortunately, time always runs out during debates such as this. Hon. Members asked me to respond to several issues, which I will try to move on to quickly because time is of the essence.
The issue of compensation was raised. I, personally, found that the most difficult decision of all. We have listened carefully to arguments for a special payments scheme for people with haemophilia and hepatitis C similar to that in place for HIV. After a long and difficult consideration, we came to the same conclusion as the previous Government, that such a scheme should not be established. That was not a view we came to lightly. I assure my hon. Friend the Member for Bolton, South-East that every one of my colleagues who considered the issue and met individuals affected by this tragedy found it a difficult decision to make. As I said earlier, as soon as technology became available to render blood products safe, it was introduced. The policy of successive Governments has been that compensation, or other financial help to patients, is paid only when the NHS or individuals working in it are at fault. I do not believe that the NHS has been at fault in this case.
Brian Cotter: Will the Minister give way?
Mr. Hutton: With great respect, I will not, as I have only a couple more minutes left and want to respond to all the points that were made.
The issue of compensation has been widely debated in the House. I know that some hon. Members take a different view, which I respect, but it is not the view that the Government have come to. However, we intend to develop options for reforming the system for dealing with clinical negligence claims. As my right hon. Friend the Secretary of State for Health announced on 10 July, we will produce a White Paper on that subject early next year. The chief medical officer is chairing an expert advisory committee to explore the issues and options, one of which is whether no-fault compensation for NHS patients may be appropriate in future.
The other issue that was discussed at some length today was the need for a national strategy, which I agree is necessary. We fully recognise the importance of hepatitis C as a public health issue and the need to have in place effective prevention, testing and treatment services. To assist us in developing our strategy, we recently established a multi-disciplinary steering group to consider the issues. The steering group is chaired by Professor Howard Thomas of Imperial College School of Medicine, who is a world authority in the field, and comprises health professionals, academics and voluntary and community sector members. I hope that hon. Members are reassured by the fact that the group not only is a collection of experienced medical practitioners but has a strong lay involvement, including Manlio Fahrni, chair of Re-act and vice-chair of the recently launched national forum, the UK Assembly on Hepatitis C; Lorraine Hewitt from Action on Hepatitis C and a member of the Advisory Council on the Misuse of Drugs; Tania Machell, head of the National Hepatitis C Resource Centre and Grant McNally of the National Drug Users Development Agency.
The steering group is considering the scope and effectiveness of current measures to tackle hepatitis C in several different settings, including he prison environment. It will advise us on any gaps or areas for improvement, including prevention activities and provision of needle exchange schemes—issues that were widely discussed today. The group has already identified that improvements in surveillance are necessary, which was a concern of the hon. Member for Romsey. It is also necessary to raise awareness for health professionals in general and to inform the public about hepatitis C.
Mr. Nicholas Winterton (in the Chair): Order. I regret that time is up. I thank the Minister for his reply.

Water Supply (Ceredigion)
12.30 pm
Mr. Simon ThomasI begin by seeking agreement with the Minister. We do not always see eye to eye on Welsh issues, but I should like his agreement regarding one basic fact. I do not want him to misinterpret what I am going to say. I hope that he will agree, without any caveats, that Wales is a wet country, and I will rest my case on that.
Mr. Nigel Evans: Even on Sundays.
Mr. Thomas: Yes, even on Sundays.
According to the excellent institute of geography and earth sciences at Aberystwyth university, the typical rainfall in Ceredigion varies from less than 1,000 mm per annum on the coast to 1,600 mm on the uplands. That compares with approximately 3,000 mm in Snowdonia. In the Welsh context, Ceredigion is not as wet as one might suppose. It is an excellent tourist destination, especially on the coast. The Minister may be aware that the coast receives considerable sunshine. Nevertheless, Ceredigion's rainfall is greater than the England and Wales average.
When I initiated the debate, I half expected a Minister from the Department of the Environment, Food and Regional Affairs to respond. I am, of course, pleased that the Under-Secretary of State for Wales is present. When I tabled several questions on this matter, they were also transferred to the Wales Office, but I have not received a reply from the Minister. I am sure that I will soon. I thought that DEFRA might be responsible because the subject impacts on a whole range of environmental considerations about the public water supply, particularly the role of the Environment Agency.
In the context of the rainfall in Ceredigion and of Wales' reputation as a land of rain and reservoirs—though most of those do not provide water for Wales' needs—one can imagine the incredulity earlier this year when the Environment Agency announced that it would oppose Ceredigion county council's unitary development plan on grounds of insufficient water resources in the south of the county.
There are some good reasons for opposing Ceredigion county council's unitary development plan, not least the fact that 6,500 new homes—far too many for such a rural county—are proposed in it. Also contained within the plan are essential economic development projects, such as the Aberporth technology park, an objective 1 strategic site approved by the National Assembly for Wales, for which £2 million has already been topsliced in principle. When the Environment Agency made it clear that because of the lack of water it would oppose not only such large-scale developments but individual dwelling houses or infill developments in the planning process, the people of Ceredigion realised that there was a serious problem with the public water supply in the south of the county. Such a state of affairs in a water-rich county cannot be tolerated.
When I examined the background, it became clear that many agencies had been aware of this problem for several years. It had simply not been brought to the

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public's attention, which is one of my reasons for initiating this debate. These matters must be out in the open and discussed. I understand from other sources that 17 other areas of Wales will shortly face similar problems to south Ceredigion, which is one of the two or three worst affected in Wales at present. One of the difficulties in Wales is that the water-zone areas are smaller than in England, which brings the problems to the fore more clearly than in other parts of the United Kingdom.
In the previous periodic review, Dwr Cymru, as it then was, approached the Office of Water Services with a view to including plans to remedy the problem in the next five-year period. To be fair to Dwr Cymru, it was aware of the problem a couple of years ago and came forward with plans to deal with it. Unfortunately, those plans were refused and it is interesting to reflect on the Ofwat response:
"While close attention has been paid to the detailed zonal analysis provided with your business plan …the Director does not believe that your plan demonstrated either a need, or customer support for this enhancement"—
the extra water into south Ceredigion.
"No allowance has been made in the Draft Determination."
It is not surprising that there was no customer support: customers did not know about it. I shall demonstrate, however, that the need is undoubtedly there. The refusal by Ofwat is driven by Government determination to cut prices to water consumers rather than to make environmental enhancements and it threatens to hold back economic development and environmental protection in south Ceredigion.
I shall briefly outline the current problems with water supply in the south of the county. No large-scale reservoirs provide for Ceredigion. Only 2 per cent. of the rainfall used in south Ceredigion can be stored in the Teifi pools—man-made and natural. Therefore, 98 per cent. of the water is extracted from the River Teifi at either Ystrad Fflur or Llechryd. That serves a huge area from the south of the river to Llanrhystud and includes some areas of north Caernarfonshire and even Pembrokeshire. Altogether that zonal area supplies 55,000 persons.
Ministerial guidance on maintaining public water supplies, issued in January 1999, requires that each water supply zone, such as south Ceredigion, have sufficient headroom between water availability and the projected demands based on critical dry years. No such headroom currently exists in Ceredigion and has not existed for several years. The existing deficit is projected to grow significantly over the next five to 25 years. In making those determinations, Ofwat may have observed those ministerial guidelines in the breach.
What is the size of the current deficit in the water-rich county of Ceredigion? Presently, the deficit between available supply and demand for water is 1.7 million litres a day—the equivalent of water for 2,800 domestic properties. One can well imagine what happens in the summer with the influx of tourists to caravan parks. Most caravans these days have plumbed-in water: their residents no longer go to a standpipe in the middle of the field. Dairy farms also take from the public water supply rather than from their own in the summer, so the increase in the deficit has grown—so much so that in 1995, water had to be tankered into south Ceredigion. That was probably when the deficit first became widely known.
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It gets worse because the projected deficit by 2004–05 is 3.4 million litres a day, the equivalent of water for 5,600 domestic properties, and by 2025 8.5 million litres a day, the equivalent of water for 14,000 domestic properties. Those projections are based on past performance and do not take new developments, such as the Aberporth technology park or any other developments that objective 1 brings to the area, into account.
Remedies to date have been the traditional ones: reduce leakage, a new bore hole in the middle of the county in Aeron valley and water efficiency projects initiated by the Environment Agency and Glas Cymru. We are exploring objective 1's potential for water as well as energy efficiency projects on farms. Tankering contingency plans have also been considered, though it is odd to be tankering water to a place such as south Ceredigion. The abstraction licence at Llechryd on the lower Teifi has been extended to 2005—temporarily, at least.
I have serious environmental concerns about the increase in abstraction from the River Teifi. The Teifi is a glorious fishing river, which attracts huge tourism, as does Llandysul, the centre of excellence associated with white-water canoeing in Wales. The Teifi is an environmental treasure. It is a historical river with many castles and scenes of great interest along its banks. It is to become a special area of conservation. Plainly it would not be acceptable under European guidelines to continue to extract more and more water from the Teifi and not to remedy the deficit of water provision in the south of the county.
Taking more water from the Teifi would be disastrous for fishing, tourism and the ecology of the river. However, as the Minister no doubt recognises, it will be disastrous for the economy and social well-being of Ceredigion if we cannot get more water into the south of the county to support the need there. Although I cannot understand Ofwat's initial refusal, I appreciate that it had some concerns about the fact that Glas Cymru does not have a policy on hosepipe bans, for example. That may have coloured Ofwat's decision. We should not bring water in tankers to the south of the county again.
There is a way forward. Glas Cymru, the new Welsh water body, has considered 26 different options for increasing the water supply to the south of the county. Its favoured option, which it has now decided upon, is a water transfer from the Claerwen water shed directly to the water extraction facility in Ystrad Fflur, which is on the opposite side of the mountain.
That is a direct water transfer from one storage facility to an extraction facility. It will not transfer the water of one river to another river, which might cause ecological and environmental concerns. As a Plaid Cymru Member, I might be expected to look forward to water that was once flowing into England flowing once more into Wales, but there is a sad side to this, which the Minister may know about. The ability to extract more from the Wye valley is partly due to the run-down of Corns in Llanwern, which has lessened water need in the lower Wye valley considerably.
The cost of the pipeline would not be huge when one considers that it would serve 55,000 people; it is in the order of £8 million to £9 million. Funding has been difficult because the initial refusal by Ofwat to put the

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project in the approved programme meant that Glas Cymru would find it difficult to recoup the investment. There has been intensive lobbying over the past few weeks by Glas Cymru, Welsh Assembly Member Elin Jones and me. At a recent meeting, Ofwat's director general, Philip Fletcher, confirmed that Glas Cymru would be able to move ahead with that investment if it can be seen to deliver
"demonstrable outputs that are valued by customers".
I hope that the Minister will agree that that output would be valued by customers in south Ceredigion and should therefore be taken into consideration as an investment for the next periodic review. That investment by Glas Cymru can be recouped. The Minister will be aware that the new arrangements with Glas Cymru mean that it needs that security to show its bondholders that they can get their money back. The new model for Glas Cymru, which the Government are looking at for Railtrack, is one that we want to see working in Wales. I am sure that the Government agree that we need that underpinning.
Following a board meeting yesterday, Glas Cymru announced that it would move on with the new project in Ceredigion. I congratulate it on that. It will still be looking for partnership funding from bodies such as the Environment Agency, Ceredigion county council and the National Assembly for Wales, but it is a lesser issue than when I first applied for this debate. Yesterday's announcement has moved things along.
A couple of environmental concerns remain. The plan to transfer the water from the Claerwen water shed to the extraction at Ystrad Fflur has not yet been approved. It will need the approval of several different agencies: the Environment Agency, the Countryside Council for Wales and English Nature, because, of course, the River Wye runs into England and affects the English as well as the Welsh ecology. All those organisations need to approve the plans of Glas Cymru.
I do not want to see any degradation of the environment on the uplands of Ceredigion, and we cannot continue to extract directly from the River Teifi at the same level. We must consider further water conservation measures, particularly in respect of farming, industry and caravan parks along the coast. It is not sustainable either to take in water in tankers, which has a huge environmental cost—one should consider fuel consumption, for example—or to thwart economic opportunities in south Ceredigion when water resources are not scarce.
Will the Minister monitor the progress of Glas Cymru in its negotiations with Ofwat, to ensure that the public concerns and values that Ofwat represents come across clearly to the company? That will mean that Glas Cymru will be able to make available finance that can be recouped in the next periodic review. I would be grateful if the Minister talked to the various agencies, because he is in an excellent position to do so. There is a unique mixture of devolved, non-devolved and English bodies, which must come together and realise the importance of the project for the economic and social future and viability of south Ceredigion. He should also ensure that environmental concerns are met, and that progress is
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made to ensure that sufficient water is available to meet not only present needs, on which there is a deficit, but future needs, such as the Aberporth technology park.
I am sure that the Minister will join me in wishing that technology park every success. It is a vital objective 1 project, as the National Assembly has recognised. It will have to go through the planning process and meet all environmental guidelines, but a simple lack of water cannot be allowed to hold it back. I hope that, having brought the problem into the open and engaged the public in the issue of the lack of water supply in a water-rich environment such as Ceredigion, there will be much more urgent action to secure investment in time. Water delivery takes time to provide and if we are to meet the 2004–05 target, we must start now. Ofwat gave Glas Cymru the amber light this week. I want Glas Cymru to be given the green light on the environmental concerns. I would like the Minister to help me to achieve that.
12.47 pm
The Parliamentary Under-Secretary of State for Wales (Mr. Don Touhig): I congratulate the hon. Member for Ceredigion (Mr. Thomas) on securing the debate. He asked me at the outset to agree that Wales is wet. In all truth, I must do that, but it has shattered one of my attempts over the past six years to persuade my English colleagues that we have less rain in Wales because we are closer to the Caribbean. I pay tribute to his efforts as the hon. Member for Ceredigion, which is a beautiful county. It is a wonderful place in which to live and to visit, and has some fine wine produced around Aberaeron. I have tasted the wine and certainly found it wet and welcoming.
Outside Cardiff, Ceredigion has been the fastest growing county in Wales. In the past 10 years, the population has increased by about 8 per cent. As the hon. Gentleman knows, Ceredigion county council predicts that if that trends continues, a further 5,000 to 6,500 homes will be needed during the next 15 years. That will affect the water supply and provision, particularly in mid and south Ceredigion. It will be necessary to provide high-quality employment sites to sustain that growth and to support a viable local community. The Aberporth project is a positive and sympathetic way in which to introduce job and new skill opportunities into a community that would not perhaps have attracted them otherwise. Clearly, such a development will require a reliable water supply if it is to progress.
I am sure that the hon. Gentleman will join me in welcoming the recent decision on water supply to Ceredigion by means of a pipeline. I pay tribute to his efforts in securing that advance on behalf of his constituents. There has been debate on the way forward for water supply in mid and south Ceredigion, and concern has been expressed about increased abstraction from the River Teifi, which already provides some 98 per cent. of the water supply to that area.
I share the hon. Gentleman's concerns about the impact that greater abstraction would have on the environment and the river. The alternative, to which he has referred, is to transport water by pipeline from the Claerwen reservoir in the Elan valley. Dwr Cymru discussed that with Ofwat, the Environment Agency, and the Welsh Assembly. The pipeline will cost between £8 million and £9 million.

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On 2 November, Ofwat's director general met representatives of Dwr Cymru, and told the company that Ofwat would agree to the proposed development, which would bring water from Elan valley to Ceredigion, if agreed outputs were met. The pipeline would be Dwr Cymru's concern, not Ofwat's. Ofwat has confirmed that the investment will be included in the company's regulatory capital value, so the investment will not be discounted at the next periodical review of water charges. Dwr Cymru is prepared to go ahead with the scheme on those conditions.
The Environment Agency supports the proposed pipeline transfer on water resource grounds. The hon. Gentleman mentioned the environment. The pipeline will cross or go under three sites of special scientific interest, although most of the land is owned by Dwr Cymru already. That may smooth discussions on how to proceed.
It will take time to construct a scheme on such a scale. Other factors, apart from the SSSIs that the pipeline will pass through, must be accounted for. Severn Trent Water and Dwr Cymru must agree on what additional water can be taken from the Claerwen reservoir. Dwr Cymru must obtain an abstraction licence from the Environment Agency, and may also need planning permission for a pumping station and an extension to the Strata Florida water treatment works. Those must all be in place before the scheme can go ahead.
I am pleased that the scheme has not been ruled out, although many steps have yet to be taken. We are making welcome progress on the solution. The hon. Gentleman asks me to continue to take an interest in the matter; I assure him that I shall. I will do all that I can to bring pressure on the agencies and other bodies involved in the scheme in order to bring about a favourable outcome. We have the opportunity for a sympathetic development scheme that will have a major impact on Ceredigion's economy in the early part of the century. That economy must not be stymied by problems with the water supply. We have a solution at hand. I hope that we pull together to ensure that it is realised.
Mr. Nicholas Winterton (in the Chair): The hon. Member who has secured the next debate is present, but unfortunately the Minister is not, so I shall suspend the sitting until 1 o'clock.
12.53 pm
Sitting suspended.

Dormant Bank Accounts
1 pm
Mr. Martyn Jones: I am delighted to have an opportunity to raise this issue. Right hon. and hon. Members may know that there are two types of dormant bank account. The British Bankers Association defines a dormant account as an account where
"there have been no transactions (withdrawals or deposits) on it, other than transactions initiated by the bank (such as interest and charges), for a set period (usually at least a year…)"
and where
"the bank hasn't heard from the customer during that time."
If both criteria apply, the bank may write to ask whether the customer wishes to keep the account open. If the bank does not receive a reply, the account may be considered dormant.
The second type of dormant account has its origins at the start of the second world war, when the Government introduced legislation that froze the bank accounts of residents from enemy countries to prevent the enemy from benefiting from any assets held in this country. After the war, when the accounts were unfrozen, some were, not surprisingly, never reclaimed by their owners, which remains the case even today.
I became interested in the subject because I decided to check my standing orders and direct debits, as a routine exercise. I discovered that one standing order was paying the Nationwide building society the princely sum of £1 a month and had been for years. I thought that that was for an insurance policy or something similar, but when I went to the building society, I discovered that the money was going to a fund-raising account for Wrexham Labour party, in a neighbouring constituency where I had lived 20 years previously. The party had benefited for all that time; except that it had not, because it did not know that the account existed. I had the delight of telling my hon. Friend the Member for Wrexham (Ian Lucas) that he would inherit some of my money.
I wondered what would happen if I stopped paying that pound. The Nationwide building society would be sitting on a couple of hundred pounds that did not belong to it, and no one would know where the money was. I thought that there must be many such accounts and decided to look into the issue.
Obviously, no one knows the exact amount of money residing in dormant accounts, but there are various estimates, ranging from a conservative £5 billion to the huge sum of £20 billion. When the Irish Government introduced legislation to deal with the problem, they found that the estimates were half the amount that turned up, so we are actually talking about £10 billion to £80 billion. I will be delighted if my hon. Friend the Minister has any figures on that.
Whatever the exact figure, that vast amount of money has become the focus of consumer watchdog and media interest over the years. It has also provoked criticism about the commitment of, and efforts made by, high street banks to marry up dormant account holders with their money. In fairness to banks and building societies, I should point out that they have speeded up their efforts

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lately. The schemes run by the BBA and the Building Societies Association have made improvements, but things are still fairly laissez-faire.
I am concerned today about dormant accounts that are not married up with their owners and those instances in which the money remains the legal property of the account holder but the banks and building societies are entitled to use the funds for their own benefit. If the account appears to have been forgotten, does not receive interest and is unlikely to be withdrawn, it becomes in effect an asset of the bank and, therefore, part of its capital.
If the estimates that I have given are accurate, it is obvious that banks and building societies are sitting pretty with huge sums of money that do not belong to them at their disposal. I want the Government to pursue the progressive approach adopted by other countries in recent years and ensure that money from such accounts is used for the greater good, and not for the sole, and extremely profitable, benefit of the host bank or financial institution. The time has come for the Government to be empowered to take custody of dormant bank and building society accounts, and put the huge sums of money to good use throughout the UK.
A successful scheme is in operation not far away; in July, the Irish Parliament enacted the Dormant Accounts Act 2001, which provided for the transfer of money from dormant accounts and intestate estates to the newly established and independently managed dormant accounts fund. The Act stated that dormant deposits, share and current accounts, deposit receipts, petty balance accounts, savings certificates and savings bonds would be transferred to the new dormant accounts fund. I do not suggest to my hon. Friend that we set up a dormant accounts fund, as we already have one; the National Lottery Commission. The money could be put into the lottery system for the benefit of the good causes.
The Irish legislation stipulates that if owners of accounts that have been dormant for 15 years or more do not come forward to reclaim their moneys, the balance of those accounts will be transferred directly to the dormant accounts fund, which is managed by a Government-appointed board of trustees who distribute the money to local community and charitable groups and societal initiatives.
The legislation also places a statutory onus on banks, building societies, credit unions and the post office to try to contact dormant account owners. Following a 16-month investigation by the financial institution concerned, if the account and account holder are not matched-up, the money is transferred to the dormant accounts fund. Under the legislation, the financial institutions are required to maintain registers of dormant accounts, including owner name, address, the date on which the account was considered dormant, the date of transfer to the dormant accounts fund and the date of repayment if the owner is traced.
Irish legislation does not at any stage preclude dormant accounts being married up to their rightful owners. If the transfer of a dormant account to the fund has already taken place, the money can be returned to
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the rightful account holder if ownership is proven. The fund keeps some money back for that eventuality, which is eminently sensible. There has been a great deal of publicity about the legislation in Ireland, and many people have received surprise windfalls from accounts that they had forgotten about. I forgot about mine, but, unfortunately, I did not receive a windfall; Wrexham Labour party did.
The legislation prompted the banks to re-double their efforts to trace account holders in fear of losing the money to the dormant account fund. It gave the banks, building societies and financial institutions an incentive to trace owners of whom they had lost track. Those people may want to keep their money where it is, but the owners can have confidence that their money will not be lost.
Prior to the legislation, the Irish Government undertook a consultative process with the financial institutions to establish agreement about precisely which accounts would be seized. During that process, the Irish Bankers Federation participated actively and welcomed the Government's plan, I think belatedly. However, that was understandable in the circumstances.
The time has come for the Government to consider seriously how other countries have tackled the issue and to consider putting the huge sums of money currently sitting idly in dormant bank accounts to good use, rather than leaving it for the benefit of the banks' profits.
A recent development has been the creation of a new type of dormant account; those previously held by terrorist groups in the UK and elsewhere. Tens of millions of pounds are now effectively dormant because of my right hon. Friend the Chancellor's swift and decisive action following the attacks in the United States. Legislation on the issue would also have a deterrent effect in preventing those funds from being set up in the first place, because terrorist funds placed in sleeper accounts would be brought to light.
The Government should initiate and publish a consultation paper on the issue of dormant accounts with a view to introducing a progressive and innovative scheme for the UK to redistribute this huge amount of money for the benefit of the wider community and not to boost the profits of the high street bank. An initiative by the Government to add into the equation the newly acquired money seized from terrorist networks operating in the UK would be extremely popular among the public.
I sincerely hope that the Minister and Government will look favourably on my suggestion. I believe that it would work successfully, as it has in other countries; not just Ireland, but the United States as well. Such legislation would benefit many people, both directly—through help for those who have forgotten about their bank accounts—and indirectly, through good causes.
1.10 pm
The Economic Secretary to the Treasury (Ruth Kelly): It is a pleasure to serve under your chairmanship. Mr. Winterton. I wish to congratulate my hon. Friend the Member for Clwyd, South (Mr. Jones) on securing the debate. He highlights an issue that is often overlooked by those who are dealing with the many other changes that are taking place in the financial sector. Clearly, the subject is interesting.

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The United Kingdom has one of the most successful financial services industries in the world. The industry plays a significant role in our economy; London is by far Europe's largest international financial centre, and Scotland is one of the world's major fund management centres, with over £250 billion under management. It is vital that both domestic and international consumers and businesses have confidence in UK financial institutions.
The issue of dormant bank accounts is a relevant factor in building such confidence. Consumers need assurances that they can have access to their assets, even if they have not been in contact with the deposit-taking institution for some time. That is why the Government believe that there should be appropriate resources available to help reunite customers with their assets. My hon. Friend spoke from personal experience; I found his anecdote very interesting indeed. Not long ago, my husband learned that he had a similar standing order, dating back many years, which was going to a constituency Labour party of which he is no longer a member. Thus, I share my hon. Friend's experience.
However, not only my hon. Friend and I have had such experiences. Customers or benefactors of deceased customers can find it difficult to track down funds in accounts that have been left inactive for some time. Institutions may change their corporate name after a merger or after a conversion; for example, from a building society to a bank. In the meantime, the customer may move or lose their account details and. in the process, lose contact with the institution at which they have money deposited. If a bank is unable to contact a customer, it will eventually cease sending correspondence. The account is classed as dormant, although the money in the account will always remain the property of the account holder or, if the account holder has died, his or her legal heirs.
Until this year, customers who did not know the name of the institution that held their account had to complete a separate claim form and send it to each bank or building society at which the account might possibly be held. That was often time consuming, and it was more difficult if the customer had relatively little information about his or her account. However, several important initiatives to improve the process of reuniting customers with their deposits were launched this year.
In May, the British Bankers Association and the Building Societies Association each launched a new scheme to help customers trace old accounts, which involved establishing a dedicated dormant accounts unit to handle enquiries, and producing and making widely available one standard claim form. Under the British Bankers Association system, customers can get advice from the central unit and, if they wish, make a claim electronically. Their point of contact will remain with the unit. Information is then provided to the banks, and the unit will advise the customer on the outcome of the claim. Information on mergers is also available on the British Bankers Association website to help customers identify the bank that holds their account.
Since the launch of the centralised service in M ay, the British Bankers Association has received over 1,000 claims. So far, 200 claims have been fully processed, with nearly a quarter of those resulting in customers being reunited with their deposits.
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The Building Societies Association also launched its own central tracing service, in which all building societies participate. The claim form used is similar to that of the British Bankers Association, so that information can be transferred more easily between the two schemes. Since the start of the building societies scheme, there have been about 10 inquiries each week for claim forms.
It is not just in the private sector that the Government believe that facilities should be available to help customers locate their deposits. The registrar's department at the Bank of England operates a system for searching the records of Government stock. I am pleased that, this week, the National Savings bank was able to announce the launch of its new tracing service. National Savings undertakes about 75,000 traces a year. Under the previous system, customers were asked to write to the particular National Savings office that administered the product type for which the search was required. National Savings has launched a more comprehensive and transparent system that will be easier to use. Customers will be able to track down more than one product at a time because they can use one standard form for all bonds, certificates and accounts, and deal with a single contact office.
I welcome those initiatives, which remain free and offer a better service to customers. I hope that over time, through publicity and word of mouth, customers will become increasingly willing and able to use those schemes and reconnect to the products that are rightly theirs.
My hon. Friend raised points concerning the size of assets placed in dormant accounts. As he mentioned, many figures have been quoted in the media; sometimes amounts as much as £20 billion or even £40 billion. Those figures exaggerate the real size of the issue. Although the Government do not have complete figures, an Inland Revenue study in 1997 suggested that the total amount could be between £2 billion and £4 billion. That is still a sizeable amount, but not as large as the figures that have been suggested. It is not possible to calculate an exact figure, because different institutions use their own definitions of dormant funds.
The example of the Irish system is interesting, as it includes a statutory duty for financial institutions to contact dormant account owners. However, it would be unfair to say that UK banks and building societies do not try and investigate dormant bank accounts. Once an account has been identified as inactive, banks will write to the customer to locate them. If the bank or building society believes it has lost contact, it will no longer send correspondence to the customer. That is sensible; it is important that searches for customers do not break customer confidentiality and do not allow account details to become public. That could lead to financial crime and attempts to defraud the banks.
Providing that confidentiality is not breached, I am willing to consider different ways to facilitate customers becoming reunited with their accounts. When considering the Irish system, we must be wary of the potential regulatory burdens that a statutory approach could place on institutions. We would need to define in law what constituted an effective search for dormant bank account owners and to design a system that was sensitive to the relative sums involved and the pertinent circumstances for each account. There are merits in

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considering solutions that need no recourse to legal action, such as centralised tracing services, for which we have yet to evaluate the impact.
My hon. Friend's proposals would entail the removal of dormant funds from banks and their use for charitable purposes or the national lottery. Those proposals raise practical issues; the biggest difficulty would be the liquidity issue for the banking sector, which would have to be handled extremely carefully. Across the financial sector, there is no uniform definition about what constitutes dormant funds. Safeguards are needed when people come forward to claim assets that were removed from the institution in which they were deposited.
We must also consider issues of principle. The funds are the property of the original depositor, not of the banks; nor are they the property of the Government or of charitable causes. We should first put the emphasis on reuniting customers with the assets that are rightfully theirs, and focus on promoting the schemes that were put into operation earlier this year, which I have outlined. The more successful those schemes are, the more customers will be reunited with their deposits. I will consider with interest the take-up of the schemes and the success of tracing them in the future.
Mr. Martyn Jones: I agree with everything that the Minister said about finding ways of uniting people with their dormant bank accounts. The one flaw, of course, is that if someone is dead, or does not know that a bank account exists, he or she will not put in a claim form.
Ruth Kelly: My hon. Friend makes an important point; the property still rightfully belongs to the deceased person's heirs, and it would be desirable in the first instance to reunite them with the funds if at all possible.
At this stage, however, it is probably too early to consider legislative changes when new procedures have just been put in place to help owners of dormant accounts to find their assets. We do not have any plans to introduce legislation to take dormant assets from banks, but we will keep the situation under review. I thank my hon. Friend for bringing to my attention the model that Ireland provides.
I am pleased that my hon. Friend recognises the urgent action that the Government are taking to ensure that terrorist assets have no safe haven in the United Kingdom. To date, we have frozen some £70 million in 38 bank accounts. However, these are not dormant accounts in any usual sense, nor would it be appropriate for the Government to redistribute such funds. Our powers of restraint come from the UN Security Council resolutions under the United Nations Act 1946, which imposes sanctions on individuals and organisations suspected of involvement with the Taliban and Osama bin Laden. We implement the UN sanctions regime with authority to freeze the funds of listed terrorist suspects. We have no powers of confiscation. If the United Nations eventually decided to remove a name from its list, we would release any funds held under that name.
In the wake of the tragic events of 11 September, international co-operation has taken on a more serious complexion, and the financial services industry has a
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role to play. Stable, efficient markets are the drivers of growth and productivity; they are not the playground for funding terrorists. The action that Britain has already taken under the UN sanctions regimes, and the further measures announced by the Chancellor a few weeks ago, mark our determination to block the funding streams that sustain terrorism.
We propose further powers to enhance anti-terrorism measures: legislation that will allow swifter, more targeted freezing of terrorist assets; a new regulatory regime for bureaux de change, which came into force on 12 November; the strengthening of the obligation on the regulated sector to report suspicions that funds are destined for terrorism; police powers to monitor accounts that may be used to facilitate terrorism; and law enforcement powers to seize terrorist cash anywhere in the UK. We are also working to establish new international standards on measures to combat terrorist financing. By working with the financial services industry and the international community, we can help to counter the threat from terrorists by cutting off their access to funds.
The Government want to get a fair deal for all consumers. That means that we must ensure that there is effective competition in the financial services industry. Don Cruickshank's report on banking suggested that there was a lack of competition and that consumers—businesses and individuals—were getting a raw deal. We are acting on his recommendations to reform the regulation of payment systems. Such a reform could lead to savings of £1 billion a year for businesses and consumers. Many will be aware that we have already consulted on our proposals for reform and that we are committed to legislate as soon as parliamentary time allows.
We are also acting on Don Cruickshank's recommendation to investigate possible competition problems in the banking markets for small and medium-sized enterprises. The Competition Commission is due to report shortly. We have reviewed the voluntary codes of banking and mortgage services. We reported in July 2001 and made a number of important recommendations, aimed at improving competition significantly and increasing the levels of customer service in banking. The Government have asked the financial services industry to respond positively to those challenges.
Work in other areas of the financial services industry is part of the same piece. Following the review carried out by Paul Myners, the Chancellor has asked Ron Sandler to investigate the efficiency and flexibility of the savings and investment industry. Ron Sandler is working closely with the FSA to investigate whether the £1.5 trillion of assets that the industry controls are being allocated efficiently and whether consumers are being well served.
We are working to obtain the right framework in the United Kingdom; that means the right framework for consumers and competition. We believe that competition decisions should be taken by strong, proactive and independent competition authorities, free from political influence. To that end, the Government have announced that they will legislate to modernise the mergers regime and remove Ministers from the decision-making process in all cases, except when there are clearly defined exceptional public interest issues, such as

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national security. More effective competition can only be good for all parties. Consumers will see costs fall and returns rise, and the industry will become leaner, meaner and better able to operate in the global marketplace.
I again thank my hon. Friend for instigating this debate and for raising an important issue that touches on the banking system and its liquidity, and the need to recognise the interests of consumers, charities and good causes in general. I note my hon. Friend's valuable points about intervention to help customers to locate dormant bank accounts and to transfer remaining dormant assets away from the banks. Important initiatives have been instigated this year to promote awareness of dormant bank accounts and to help customers to be reunited with their assets. I welcome those initiatives and encourage the finance industry to continue to find innovative and efficient ways to facilitate account-holders to find their dormant assets.
We should wait to see how, efficient and effective the measures are before considering whether further changes are necessary, but we shall keep the situation under review. I thank my hon. Friend for bring to my attention the examples from other countries, such as the interesting example of Ireland where action has been taken already on these matters.

Gitanjali Shrestha
1.27 pm
Sir John Stanley: Would you guide me, Mr. Winterton, on whether the debate may continue until 2 o'clock, notwithstanding that it is starting early?
Mr. Nicholas Winterton (in the Chair): I am happy to help the right hon. Gentleman. We may continue until 2 o'clock, so the right hon. Gentleman has achieved extra time for his Adjournment debate.
Sir John Stanley: I am grateful, Mr. Winterton.
I want to make it clear that, although I am chairman of the Britain-Nepal all-party parliamentary group, I am initiating this debate solely in my constituency capacity.
In 1997, my constituents, Mr. and Mrs. Davey, were in Pokhara, Nepal, where Mr. Davey was taking part in the excellent British Executive Services Overseas scheme, under which retired business executives give their expertise and skills free to developing countries. During the course of that assignment, Mrs. Davey received an invitation to go to a nearby primary school to give the children some practice in speaking the English language. When she went there on the first day, she broke the ice by asking each child in the class what they wanted to do when they grew up. One boy wanted to be an airline pilot, a girl wanted to be a nurse, others wanted to be doctors and so on. She went round the class until she came to a very small girl in the front row. When Mrs. Davey asked that small girl what she wanted to be when she grew up, she replied that she wanted to grow like the other children. When the class ended and the children got up to go out, Mrs. Davey could see that this child was much smaller than the other children.
The little girl's name was Gitanjali Shrestha. At that time, she was aged 10 and had ceased growing at the age of five. I am glad to say that she is listening to this afternoon's debate, as are Mr. and Mrs. Davey. Mr. and Mrs. Davey made inquiries in Nepal with the school, with Gitanjali's parents and with local doctors, which revealed that there was no medical treatment available in Nepal for a child with Gitanjali's condition. Indeed, there was no possibility of making an accurate diagnosis in Nepal. If Gitanjali remained untreated, she would suffer serious social disadvantages as an adult in Nepal. Those disadvantages were already appearing in her relations with other children at her school.
Mr. and Mrs. Davey returned to the United Kingdom, where they got in touch with Great Ormond street hospital for sick children. They were referred to a leading British expert in the field, Professor Brook, who pointed out that under NHS provision rules, it would be impossible to provide free treatment for Gitanjali as a child citizen in Nepal. However, he said that if Gitanjali were brought to this country, he would make a diagnosis.
Mr. and Mrs. Davey, entirely at their own expense and with the full support of Gitanjali's family, brought Gitanjali to this country on a two-month medical visa in May 1998. Professor Brook saw her and diagnosed Turner syndrome, which is a growth-retarding disorder. He prescribed a complex medical regimen of tablets in a

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particular combination and dosage. The regimen required careful and accurate monitoring in the interests of the child. Mr. and Mrs. Davey initially thought and hoped that it would be possible for Gitanjali to return to Nepal with a suitable long-term dosage of tablets where she could continue with Professor Brook's regimen under medical supervision.
Gitanjali returned to Nepal but sadly the arrangements that Mr. and Mrs. Davey had carefully put in place to ensure that Gitanjali had the correct medical supervision broke down. The medication was not administered correctly and Professor Brook's good work was reversed. Mr. and Mrs. Davey concluded that if Gitanjali were to get the medical treatment she required, the only place she would get it was the United Kingdom. They brought Gitanjali back to the United Kingdom on a six-month medical visa in December 1998 at their own expense.
Since Gitanjali has been back in this country—her stay has not been entirely continuous for reasons to which I shall come in a moment—her care, treatment and education have cost the British taxpayer not one penny. Gitanjali's board and lodging is provided entirely by Mr. and Mrs. Davey, who are her adopted grandparents with the full knowledge and appreciation of her family back home. Her medication is financed partly by Mr. and Mrs. Davey and partly by a generous contribution from the Kadoorie Charitable Foundation in Hong Kong. Mr. and Mrs. Davey pay for all Gitanjali's education at the Beechwood Sacred Heart school in Tunbridge Wells. As hon. Members will understand, Mr. and Mrs. Davey are not people of limitless resources by any manner of means, but they are people of magnificent generosity and wonderful compassion.
Professor Brook informed the Home Office at an early stage that it was essential that Gitanjali's medical treatment was made continuous. In a letter dated 7 October 2000, he wrote:
"The patient returned to this country for further assessment and reinstitution of a proper medical regimen, which is now in place. It would be in her interest for this status to be maintained for the foreseeable future."
Despite the fact that Gitanjali has cost the British taxpayer not one penny, and despite the fact that there is the clearest possible medical advice that it is in her medical interest to remain in this country, the six-monthly medical visa renewal process in which Mr. and Mrs. Davey have been engaged with the Home Office has been an absolute nightmare. Home Office officials advised them that the visa would not be renewed, but it subsequently was renewed. Officials delayed issuing the renewal visas; so much so that, on two occasions, Mr. and Mrs. Davey had no alternative but to return Gitanjali to Nepal to enable it to be renewed there, causing stress and anxiety to Gitanjali and incurring hundreds of pounds of additional expenditure for no needful reason.
In desperation, Mr. and Mrs. Davey came to see me. On 9 February this year I took up Gitanjali's case in strong terms with the hon. Member for Hornsey and
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Wood Green (Mrs. Roche), who was then a Home Office Minister. I subsequently received two letters from another former Minister, Lord Bassam, the second of which, dated 31 May, suggested that we were finding a way out of the nightmare of the six-monthly visa renewal. It stated:
"Further extensions of stay for private medical treatment will normally be granted provided the requirements of the Immigration Rules, which were outlined in my previous letter, continue to be met."
That was extremely helpful. Equally helpfully, he went on to point out that it was open to Mr. and Mrs. Davey to make a special application to the Secretary of State for Gitanjali to remain in the United Kingdom for longer than six months outside the immigration rules.
When Gitanjali's last medical six-monthly visa came up for renewal—the one that expired on the 30 June this year—Mrs. Davey sensibly applied for both the renewal of the visa and for the Secretary of State to exercise his discretion, under the circumstances, for Gitanjali to remain in the United Kingdom for longer. In her letter of 18 June, which I have with me today, Mrs. Davey made it absolutely clear in the final paragraph that if the application to the Secretary of State for leave to remain outside immigration rules was turned down, the application for the renewal of the six-monthly medical visa still stood and was definitely required.
The Parliamentary Under-Secretary of State for the Home Department (Angela Eagle): Did the application to remain outside immigration rules take the form of an application to stay for reasons of study, or was it in the form of another application?
Sir John Stanley: So that there is no misunderstanding between us, let me make it plain that the terms of the application are as set out in Mrs. Davey's letter of 18 June this year to the Minister's Department. I refer to the wording that is contained in that letter.
From my standpoint, and that of Mr. and Mrs. Davey and Gitanjali, the Home Office's handling of that double application was frankly shocking. Lord Bassam gave me a clear undertaking that the medical renewal visa would normally be granted, but we still await a decision from the Home Office on the application for renewal almost five months after the date of Mrs. Davey's letter.
Not only was the decision to turn down the application for leave to remain outside the immigration rules disappointing, but the terms in which it was explained, in a personally addressed letter to Gintanjali Strestha, were shameful. The final paragraph of the decision letter of 9 October reads as follows:
"You should leave the United Kingdom at the end of 10 working days from the date when you received this notice. If you fail to leave you may be prosecuted for an offence under the Immigration Act, the penalty for which is a fine of up to £2,500 and up to 6 months imprisonment and you will also be liable to be removed from the United Kingdom."
I must say to the Minister that to address a letter containing threats of fining and imprisonment to a 13-year-old girl who is suffering from a serious medical

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disorder, has been in this country since December 1998 and is from Nepal—a country with which we have a special relationship—is scandalously and outrageously insensitive. I urge the Minister to review the practices of her Department when addressing such letters to children of Gitanjali's age.
I have two specific requests to put to the Minister. First, I hope that she will, perhaps in today's answer to the debate, state that the application for the renewal of the medical visa has been granted in accordance with the undertaking, given to me by Lord Bassam, that it would normally be granted given the medical circumstances. Secondly, I make a clear request to the Minister—I would like her complete attention because these points are profoundly important—that she and her right hon. Friend the Home Secretary give further consideration to putting aside immigration rules and enabling Gitanjali Shrestha to remain in this country for longer than six months. I do so on two grounds that have not been considered before by Ministers at least, and perhaps not even by officials.
The first ground is medically and personally sensitive, but I have the assent of Gitanjali and Mr. and Mrs. Davey to refer to it. As a result of Turner syndrome, Gitanjali will be unable to bear children. In Nepalese terms, she will therefore almost certainly be unable to marry and have a husband to support her financially through her adult life. The employment and financial security that she subsequently obtains in Nepal will depend wholly on the level of education she secures in this country while undergoing medical treatment. I put that key consideration in the Minister's mind as she contemplates whether the Secretary of State should grant, as I hope he will, Gitanjali leave to remain outside the immigration rules. That decision is fundamental to Gitanjali's educational opportunities and level of attainment, which will in turn be vital to her adult life in Nepal.
I turn to the second ground for the Minister's close consideration. Gitanjali now requires growth hormone treatment, and Professor Brook has confirmed that it will cost up to £50,000. As I have said, such treatment is not available to Gitanjali through the NHS. Mr. and Mr. Davey are trying to raise the money by approaching charities in the UK and elsewhere. However, the charities, understandably, will not contemplate making available such a sum unless they can be sure that Gitanjali will remain in the UK to receive treatment during the next few years; the period in which it must be administered. Gitanjali's visa status will prove critical in obtaining funding for growth hormone treatment through the charitable sector.
I ask the Minister to give the most careful consideration to the points that I have made. At certain times, and with some justification, my remarks have been somewhat critical of her Department's handling of a case in which she may be personally involved for the first time. I hope that she will bring a new look, a new sensitivity and a new compassion to the matter, and that she and her right hon. Friend the Home Secretary will agree to my requests concerning visas for Gitanjali Shrestha.
1.49 pm
The Parliamentary Under-Secretary of State for the Home Department (Angela Eagle): First, I congratulate the right hon. Member for Tonbridge and Mailing (Sir John Stanley) on securing this debate. This is a very difficult subject that has caused great distress to those who have acted with enormous generosity in assisting a little girl desperately in need of help when she was discovered in Nepal.
Miss Shrestha, who is only 12 years old and a national of Nepal, suffers from Turner syndrome, as the right hon. Gentleman said. He has given in great detail its effects on her and the medical treatment that she needs. I accept that she needs to remain in the United Kingdom for private medical treatment, under the supervision of Professor Brook at the Middlesex hospital, where the growth hormone that she needs can be properly monitored and the dose adjusted until she stops growing in a few years' time.
The right hon. Gentleman is correct in saying that a dual application was made, but only one aspect was determined; the application for student status, rather than the application to stay for medical treatment. I was, therefore, slightly puzzled when he said that an application had been made for leave to remain further, outside the immigration rules. I wonder whether there is a mix-up between the application for student status, which would grant a much longer-term right to stay, and a formal application outside the immigration rules. It will probably be better for the right hon. Gentleman and me to chat about that after the debate.
One part of the application was, in error, determined separately from the other by a caseworker who made a mistake that should not have been made. A standard letter is sent to people who have come into Britain under one regime and wish to switch to student status in order to stay. There is no leeway under immigration rules for that switch to be made in this country; the person must return to their country of origin and re-apply. I can understand the distress that receiving that letter caused.
I apologise on behalf of the caseworker, who saw the application, on an initial reading, as an application for student switching, came to an erroneous decision and sent the standard letter, which is clearly not meant for children. I take the opportunity to apologise publicly for that error, and let the right hon. Gentleman know that the caseworker concerned is distressed also by the mistake, and is being guided by retraining to ensure that such an error does not occur again.
Sir John Stanley: Would the Minister clarify the position? If I have understood her correctly, is it now open to Mr. and Mrs. Davey to make a new application to the Secretary of State, outside the immigration rules, for Gitanjali to remain in this country for longer than six months?
Angela Eagle: We have still not determined the medical application. The immigration rules in that area are strict, and we may need to examine the process; the right hon. Gentleman has certainly got me thinking about that. Under the way in which the rules work for medical applications, we must have re-confirmation that

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the condition is persisting for the six-month visa to be reissued. There is no reason why that should not happen as soon as we get that confirmation, perhaps in another letter from Dr. Brook.
The answer to the right hon. Gentleman's more important question is that yes, it is in order for an application outside the immigration rules to be made for Miss Shrestha to be allowed to remain in Britain for a period longer then six months. Unfortunately, we do not have a record of such an application being made, and I have been trying to clarify that point during the debate. I wonder if there has been a misunderstanding over the
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application made for student status, and that it has been assumed that the dual application was an application outside immigration rules. With a little liaison, the right hon. Gentleman and I should be able to sort the matter out. I am happy to confirm that it is possible for such an application to be made outside the immigration rules and looked at on compassionate grounds.
I hope that, with those clarifications, the right hon. Gentleman and I can work together to ensure that, in the future, we can do better than Mr. and Mrs. Davey's experience of the process as he described it.
Question put and agreed to.
Adjourned accordingly at five minutes to Two o'clock.