Westminster Hall Sitting of 24 October 2001

Preamble
[SYLVIA HEAL in the Chair]

Manufacturing Industry
Motion made, and Question proposed, That the sitting be now adjourned.—[Angela Smith.]
9.30 am
Mrs. Claire Curtis-Thomas: Good morning, Madam Deputy Speaker, how nice to see you in the Chair today.
I am pleased to have been given the opportunity to talk about the manufacturing industry for various obvious reasons, so I had better declare my interests now. I am a senator on the board of the Engineering Council, which regulates the engineering profession in the United Kingdom and has about 250,000 members. I sit on the board of the Institution of Mechanical Engineers, which has a membership of about 150,000. I am an adviser for the Institution of Electrical Engineers, which is the largest engineering institution in the UK, and I also advise and support my colleagues in the other 37 engineering institutions that manage the engineering industry in its broadest context in the UK.
You must forgive me, Madam Deputy Speaker, for my indulgence and for the terms that I use to refer to my industry, which I love with a great passion. These are difficult times for us. On Friday last week, most people probably would not have heard that Rolls-Royce announced approximately 5,000 job losses. For those of us who are interested in the business, it was 5,000 more job losses in what has been an exceptionally difficult year.
In addition, last week, the World Economic Forum announced in its annual survey that Finland is now top of the league as the world's most competitive economy, a fact that was validated even after the awful events of 11 September. It was intriguing that such a small country could do so well. The fall of the United States from the top spot, which it shared with Singapore for the past few years, is blamed partly on the collapse of high-tech shares and the resulting slow-down. Much to my dismay, guess where we appeared—it was not fifth and it was not eighth. Both Ireland and the UK have now slumped out of the top 10. The World Economic Forum says that that is a result of slow economic growth.
Those of us who have a passionate interest in manufacturing want to know why that has happened. More importantly, we want to know what is going on in Finland, as it has achieved a great prize. Over the past 10 years, Finland has become not only the world's most effective technology-driven economy, but has invested effort and money into social policy. I wonder, as do most of my colleagues, whether Finland has developed a new paradigm that produces outstanding competitive advantage and whether it is, therefore, a country to which we should turn for some valuable lessons.
A significant indicator in Finland is the long-term plan—the "Finland 2015 plan"—which aims
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"to improve the knowledge, skills, resources and networks of top-level Finnish decision-makers in matters concerning the future of Finland".
Many of the institutions that I have the privilege to work with and represent have set about producing similar plans that need Government assistance if they are to realise their objectives on our behalf. I do not believe in propping up industries that are badly managed and that do not hunger to be the best in their field. My colleagues however, are grappling with multiple—not single—complexities.
After my short foray into the European continent, I turn to the United Kingdom. I want, specifically, to examine how our manufacturing industry—and our mutual passion—is faring. We have been given the impression, particularly by the media, of a manufacturing industry that is in terminal decline and on the road to becoming an ever-decreasing proportion of the UK's economy.
I shall list some of the job losses that we have experienced since last October. For instance, at Vauxhall—there are colleagues present who are interested in the car industry—2,000 jobs were lost. The reason for that was over-capacity in Europe—nothing to do with monetary policy. At Cammel Laird, 189 jobs were lost in a contractual dispute. At British Aerospace Systems 3.500 jobs—perhaps 4,000—were lost. It has experienced losses and orders are down; we can expect more bad news from that sector.
However, do these figures really matter in the greater economy, which is a mixed and diverse economy? How serious are they for the current and future successes of our world as a whole? Is it time for us to forget manufacturing and rely on the service economy? The answer must be an emphatic no. No one present will forget the MacGregor days—I certainly will not because I come from south Wales—when, under the direction of Margaret Thatcher, he stepped into south Wales and devastated entire industries without any thought of the impact that such action would have. Those of us who work in that wonderfully creative world were constantly derided. Although others insisted on consigning us to the bin, we understood the value of manufacturing to the gross domestic product. We also understood that we needed and could nourish the culture and intellectual activity of the UK.
Let us consider a few facts. First, manufacturing is still very important in international trade. In 2000, manufacturing industry contributed £156 billion to UK exports, which is a remarkable 59 per cent. of the total of all exported goods and services. The truth is, although it may be unpalatable to some, that output has risen in the long term. In 1961, the index of manufacturing output was nearly 63. By 1995, that figure had increased to 100—a rise of nearly 60 per cent. The effects of recessions were felt in the early 1980s and 1990s and there was a further decline in 1998 in the wake of the south-east Asian crisis. By 2000, the index recovered to 105, which is very encouraging. However, I fear that there will be another decline this year after the events at ground zero.
The second fact is that productivity has risen in recent years. It rose by 3.5 per cent. in 1999 and by a further 5.5 per cent. in 2000. Those of us who are critical and realistic about our colleagues who work in

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manufacturing know that we desperately needed to improve our productivity if we were to remain competitive in the market for low-value technologies.
Mr. Philip Hammond: Would the hon. Lady acknowledge that that increase in productivity over the two years that she has cited has been achieved by a reduction in the numbers employed in manufacturing industry, rather than by the preferable route of greater investment?
Mrs. Curtis-Thomas: Yes. That is an extremely valid point. I would not deny the mix of downsizing and the acquisition of new technology. Those factors were essential. Some industries were over-staffed, and I think that a number of industries have failed to develop their asset base.
I shall turn to that very point. Slightly more than 5.8 million people were employed in manufacturing industry in 1982, and the figure fell to 4.8 million in 1987 and to 3.9 million in 1994. By May 2001, the figure was about 3.8 million. The number of people working in manufacturing has reduced dramatically. However, that does not demonstrate the current diversity of the business compared with its nature in the past. It used to rely on heavy utilisation of individuals rather than technology.
Mr. David Drew: My hon. Friend makes a cogent and interesting case. Does she accept that one of the problems is that employment in manufacturing is often hidden? In the rural economy, that is more important than people would have us believe. I would not belittle in any way the impact of foot and mouth disease on agriculture and farming, but the loss of manufacturing jobs in my constituency in recent years has been much more devastating.
Mrs. Curtis-Thomas: Yes. Later, I shall come to the pithy issue of the limited definition of manufacturing. The manufacturing that my hon. Friend referred to could be collated under the title of agricultural activities, which need not include manufacturing. As long as agricultural activities are outside of manufacturing, they do not receive the support or recognition that they deserve.
The proportion of GDP accounted for by manufacturing has declined in the past century. In 1990, manufacturing represented 23 per cent. of GDP, but by 1999 it had fallen to 19 per cent.—if we use the Government's definition of manufacturing. Manufacturing has not been so unprofitable since 1992, and the Chartered Institute of Purchasing and Supply's index on manufacturing business activity is below 50 per cent. for its seventh consecutive month. August's reading was the lowest since 1999.
The Engineering Employers Federation, which is a difficult organisation to deal with, although its strength is in its valid statistics, declared when it released its quarterly survey that the manufacturing sectors were almost certainly in recession. I lament that, because it is a source of great concern to those of my colleagues who work in these sectors. The EEF has called for monetary easing, as have many other organisations, including the Confederation of British Industry.
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Manufacturing and engineering are in recession. They have suffered two consecutive quarters of negative growth. The contraction in manufacturing output—about 4 per cent. in manufacturing and 9 per cent. in engineering between December 2000 and July 2001—suggests that negative growth will soon stretch to double figures, and beat the decline seen throughout the 1992 recession.
These are grim times for our engineering industry, but we should not be perturbed by facts alone. After all, the picture is the same across most of the developed world. In a successful modern economy, our challenges and priorities will vary. We must ask where those lost to manufacturing have gone. One of them is standing in front of us today.
Mr. Graham Brady: The hon. Lady is right to say that we face the common challenge of loss of employment in the manufacturing sector. Is she not concerned that Britain adds disproportionate costs to our manufacturing sector? I speak particularly of the climate change levy, which is a higher cost than that faced by competitors in, for example, Germany.
Mrs. Curtis-Thomas: I wish it were that easy; I wish that it were just one tax structure, such as the climate change levy, that prevented us from having a level playing field. I know many engineers who work in Germany who talk about the myriad initiatives of ours that they do not have. They envy us the research and development investment that we have introduced in the past few years. They realise that although it does not bring us short-term gains, we will reap long-term benefits.
Some of my fellow engineering colleagues are in the House; we appear everywhere, much to the betterment of other Members. By and large, we are straight, factual people, not given to the fantasies that sometimes infiltrate such a political environment. That does not necessarily make us good politicians, but it makes us a safe pair of hands.
Some of us engineers, and some businesses, have transferred to growth areas in manufacturing which, until recently, included electronics, aerospace, machine tools and motor vehicles. In these areas, inward investment and growing global markets have played a major role. Engineering and technical skills are in great demand, but unfortunately there are too few of us to satisfy the diversity of that demand. There has been an increase in employment in the construction industry in recent years; for that, we must thank God for the Labour Government and their commitment to rebuilding our dilapidated transport and health infrastructures, which employ many of my erstwhile colleagues and fuel their innovative and practical skills.
The losses have been felt mainly in the country's old industrial heartland, and it is here that we start to unravel the story.
Mr. Hammond: To pick up on the hon. Lady's last comment, which related more to the construction than the manufacturing industry, what impact does she believe sustainability in public spending will have on the viability and competitiveness of the manufacturing

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sector? The rebuilding that she mentioned implies a level of public spending that many in the manufacturing industry fear will impact negatively on the environment that it faces.
Mrs. Curtis-Thomas: The hon. Gentleman will recall that in the 1980s and early 1990s his party introduced several environmental-led pieces of legislation—for example, the Environment and Safety Information Act 1988 and the Control of Substances Hazardous to Health, or COSHH, Regulations 1988. For someone working in the chemical industry, the COSHH regulations were extremely onerous. As someone responsible for undertaking audits and compliance with the environmental legislation passed by that Government, my experience was that it was not only an arduous task to comply, but hellishly expensive. For example, when I worked for Shell Chemicals, we did not discuss whether it was morally right to comply with good environmental policy, but whether we could afford it. The answer was no, so we had to shut down previously profitable activities.
If I were asked whether that was the correct thing to do in the long term, I would say yes. It forced my colleagues in the R and D department to work out how to create a clean and sustainable production environment while still making a profit. If we step outside the UK, we see that we have engendered respect for our environmental competence. I will speak later about the money that engineering companies are making from consultancy, which is partly because of the legislation passed by the previous Government. They said that certain changes had to be made for good reason. That was done at a short-term cost, but the long-term gain was the development of world-leading technologies and intellectual capacity. Under the Kyoto agreement, which I hope will resurface, there is a worldwide requirement to produce in a sustainable way, which looks damn good for my colleagues in environmental and sustainable consultancies.
Until recently, the high sector growth, to which I referred, has been growing dramatically. Between 1990 and 1998, output in the electronics sector grew by 60 per cent., and the sector is worth about £30 billion. During the same period, manufacturing output fell by 4 per cent. After its peak in December 2000, the high-tech sector has fallen—tell me about it, for those with shares in the businesses have suffered the consequences—by almost 14 per cent. in five months, but the structural impact is unlikely to have a long-term effect in that consumer-driven market.
It must surely be time to rethink radically our definition of the manufacturing industry, using the interventions that have been made today and the comments that I have already made. We should have a more inclusive definition, which would assist policy makers in understanding the kaleidoscopic nature of a sector that requires essentially a common skill base and managerial and operational structures. We have all witnessed the shift in the UK and industrialised world to a service-based economy, so let us understand what that means for UK manufacturing.
Earlier this year, Warwick university's Institute for Employment Research forecast a net fall of 315,000 jobs in engineering manufacturing between 1998 and 2009, a drop of 17 per cent. with the bulk of it taking place between 1998 and 2004.
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However, it says that that drop contrasts with growth of 8 per cent. in employment in the economy as a whole, so overall the picture is robust. Once again, the sectors bearing the brunt are likely to be the traditional areas of mechanical engineering and base metals. Geographically, most regions of the UK are forecasting a decline until 2004, although the decline will be only marginal in the south-west, Wales and Northern Ireland.
The paradox in the success story that manufacturing is today is that employment reductions will be due mainly to technology change, which brings about improvements in productivity through the more flexible use of labour and changes in working practices and organisation. Changes in markets and the effects of price competition will encourage such trends.
When I worked for Shell, I visited a factory that employed about 150 people. By the time I had traversed the length of the factory, I had estimated that 140 staff could be laid off without any loss in productivity. That was tremendously sad, because those people were using skills and doing work that they clearly enjoyed. However, we cannot ignore developments in technology and the opportunity to improve profits, because we all benefit from that.
Mr. Hammond: Is not the challenge to ensure that manufacturing industry grows, as well as productivity, so that employment remains stable while becoming more productive?
Mrs. Curtis-Thomas: Yes, it is. However, I said earlier that people leaving a particular business—the factory to which I referred manufactured lost-wax metal components; a great process, fantastically fiddly and marvellous—leave with a certain skill mix. All the employees at that factory were men, I am sad to say. I told the managing director that he could lose 140 of his employees, get money at preferential interest rates and make a good return on his capital investment. However, what do we do with the people who have gone, bearing in mind that they support families? What was missing in the past was an opportunity to retrain; I am pleased to say that it now exists.
The parlance and curricula in further education suit old and not new industries. That is largely because we underpay staff in that sector and do not provide them with the investment in their asset base to allow them to produce the type of services that their clients need. Many of them know what the demands are, but they are simply not equipped to meet those demands.
Future economic success will be based increasingly on quality of labour, and we in the engineering community are acutely aware of that. We have rested on our laurels for years. We were shocked to learn from a study that we undertook that UK engineers were not rated the best in the world; unfortunately, our colleagues in Germany were. I do not wish to involve the House in the tribal warfare that exists between engineering communities of both a professional and a craft nature. However, it does not sit terribly well with British engineers to find that, in world opinion, we lag somewhat behind our German colleagues. Therefore, the race is on to try to improve the ability base, not of our academic engineers only but of our skilled technicians as well.

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There is a plethora of academic engineers in the UK, but they cannot translate dreams into reality; only a good technician can do that. I ask those who are interested in house renovation to try to find a good electrician. It is very difficult to find a good, reputable electrician, in whom one can have confidence. Such people are not easily to be found because we as a society do not sufficiently reward them, not in a material or financial sense but in acknowledging that they are important to our infrastructure.
I have lost count of the number of undergraduates that I have heard of who were keen to study law or work in the media. The number of graduates in the media in the north-east last year was 30,000 whereas the number of individuals doing engineering had declined to approximately 1,000. There is a complete mismatch between graduates and the demands of the local economy, which leads to industries moving away. In the north-west we have low-level technology activities, and the strength of the pound is forcing some of those businesses out of business. In other parts of the world, salaries are £1 an hour or, worse still, £1 a week. We cannot continue to engage in low-value technology activities, but we do not have a sufficient skill base in the north-west to underpin the development of alternative high-value technologies. Such assets are the product of years of sustained investment by a Government who are committed to diversity within the economy but who understand that diversity requires money at the front end, with very little return in the short term.
I took great pleasure in being a member of the Select Committee on Science and Technology, which considered the UK R and D budget. It was appalling when we took power in 1997, I suppose because the previous Government did not understand the relationship between R and D investment today, bottom line return tomorrow. We have put £1.4 billion into the R and D infrastructure in the UK's academic provision. We will not get a return on it immediately, but we are sitting on an enormous asset base that will be realised in 10 years' time. I say to the Minister that in these difficult times we should not forget the long-term impact of R and D investment. We must continue to invest at that level if we are to resume our dominant world position in productivity and innovation.
I shall now bring my remarks to a close, sparing hon. Members another 10 pages of statistics and interesting facts. I make no excuse for being well prepared, as I represent a wonderful business that is keen to do its best but which needs our assistance.
The Secretary of State for Trade and Industry has announced several new initiatives and is committed to taking full advantage of the fact that the UK has some of the best scientific and academic brains, and the best practical skills, in the world. My right hon. Friend said that she is committed to ensuring that "invented in Britain" becomes "made in Britain", which is fantastic. At a manufacturing summit in November, she will unveil plans to help to build a manufacturing industry of the future and I am glad that I will be part of those discussions
I want to take this opportunity to tell my manufacturing colleagues that it is time for them to put up or shut up. They must be prepared to sit down and
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articulate their vision for the future and to seek out those who are charged with managing the environment in which they work. I say to my engineering colleagues that no comment means no future. I have lost count of the number of institutional meetings I have attended where there was a great deal of pontification about what was going wrong but an absolute failure to articulate those concerns and to make them known to the people who matter.
I am wedded to a Government who want us to do well and to support industries in our environment to help them to achieve their best. They cannot do so in a vacuum of silence. We are a capable group of individuals, but we are not yet telepathic. We need to make our views known in writing at the very least but even more by our physical presence.
Investment in R and D and capital is essential. I shall leave my hon. Friends to talk about R and D investment and the tax incentives that are needed to make investment in capital more realistic for those who are struggling and having to reduce margins to remain viable. When the Chancellor announced R and D tax breaks for small companies in the 1999 Budget, I was the only Member in the House to jump up and shout. I thought it was absolutely fantastic. I have run a small, struggling business and the notion that one has money to do anything other than the job one is doing is farcical. One wants to do more, but needs an incentive to do so.
The tax incentive for development is extremely important, but let us not limit it to small companies. Large companies now need tax breaks for development. I want to see products developed in this country, not in other countries. It is essential to keep innovation here. Let us export the operational sectors if we must, but let us keep the R and D function here. High value means high returns means better profit margins.
I look forward to hearing the Minister, who has a difficult job. Manufacturing in its broadest context falls under many Departments and Ministers, not him alone. I mentioned that I have worked with the Engineering Council and other organisations, and they are keen to hear what he has to say. We want to hear him acknowledge the benefits that engineering and manufacturing bring to our economy and the value that they constantly bring to our gross domestic product. We also want him to acknowledge their contribution to the cultural development and intellectual capacity of this country. We want him to support us in these difficult times. We are the innovators and the doers. We remain a prized and coveted commodity, worthy of this Government's great protection and support.
10.1 am
Mr. Kelvin Hopkins: I am pleased to contribute to this debate and I congratulate my hon. Friend the Member for Crosby (Mrs. Curtis-Thomas) on her excellent introduction. I have a great interest in manufacturing and believe that it is a vital component of our economy, which has been sorely abused over the past several decades.
In my first year as a Member of Parliament my constituency was hit by the closure of Electrolux with the loss of 700 jobs. More recently, Vauxhall has announced a plant closure with several thousand jobs lost. Our problems go back much further. My first

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temporary job as a student was working for a company making high-quality microscopes. That company has now gone. Recently, I attended a conference on the health service. The conference centre was built on what used to be an aerodrome—previously owned by a manufacturing company for which I had worked. It is now a conference centre, not a manufacturing plant.
We have serious problems in Luton. The small firms in the supply chain for the motor manufacturing industry, especially those dedicated entirely to providing for Vauxhall Motors, are in serious trouble. These are desperately hard times for such firms.
I want to focus on the main problem faced by manufacturing in Britain at present: the high pound. I have some trade statistics relating to trade deficits in finished manufactures, at current prices. Between 1991 and 1993 the trade deficit rose from £2.5 billion to £9 billion. Between 1993 and 1995 it fell from £9 billion to £6.2 billion. Between 1995 and 2000 the deficit rose from £6.3 billion to £23 billion and it is continuing to worsen. The first two quarters of 2001 has seen an annualised extrapolation of a deficit of £27 billion or £28 billion in finished manufactures. Our trade problem is serious.
To explain the significance of those dates, from 1991 to 1993 we were suffering from the delayed inertia J-curve effects of the exchange rate mechanism disaster, the overvaluation of the pound, which caused desperate problems for our manufacturing. Unemployment rose and large sections of our manufacturing industry closed down. From 1993 to 1995 we had the benefits of the substantial depreciation of nearly 30 per cent, which gave a tremendous boost to our manufacturing and improved our trade deficit. That meant that we reduced the problem of our deficit in respect of manufactures. After 1995, however, the pound started to appreciate rapidly and strongly against other currencies, particularly those of the euro zone. During that period, the desperate trade balance and much more serious difficulties for our manufacturing sector emerged.
There is no sign yet that the pound will reduce, although we have yet to see what happens when the euro really gets started next year. I suspect that there might be a change then. The parity of the pound is critical for the UK's competitiveness. We constantly talk about the need for education and training, investment and consideration of our skills base and supply side components, but we always seem to ignore the desperate problems faced by manufacturing when the pound appreciates, especially by more than 40 per cent.—a stunning figure.
If a company is trying to export motor cars, as Vauxhall was from Luton, and over a few years there is a 40 per cent. appreciation in the currency relative to those of our major competitors, that company has desperate problems. Indeed, Vauxhall had a wobble three years ago, when there was a possibility of its closing. Many Labour Members and one or two Opposition Members lobbied the Government, manufacturers and General Motors, and we managed to save Vauxhall.
During those discussions, I told Nick Reilly, Vauxhall's then managing director, that there was a problem with the strong pound, and he agreed. I said that it could not stay like that for ever because it was obvious that it was massively overvalued and that it
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would soon fall. Mr. Reilly thought that a reasonable point. Indeed, it may have been a factor in Vauxhall's deciding to stay in business at least for the time being. It reached an agreement with the work force that was beneficial for the company, and it stayed for another two years until announcing its closure suddenly and unacceptably. Nevertheless, the strong pound was a major factor if not the major factor.
It is much cheaper to manufacture General Motors cars, which are called Opel on the continent and Vauxhall here, on the continent and export them here. The cars are identical. We are talking not about second or third world countries, but about Belgium and Germany—plants in other prosperous, developed countries.
With the all-party rail freight group, I recently visited the SNCF in France, where we looked at rail freight facilities and investment. With a straight face, the French told us that they had a little problem with their rail freight going to Britain, because all the trucks were full of goods going into Britain but empty coming out, which was not good for their business. The reason is obvious: we do not export enough and we import too much.
When we talk about trade, we should not focus only on exports. They can increase over a period, perhaps slowly or too slowly, but imports are the problem. We have an enormous propensity for importing too much, because our currency's value is too high. Foreign goods are cheap and domestically produced goods are expensive, whatever we do in other respects. Adjusting the pound downwards to a sensible level would overcome that problem and at least give manufacturing a fair chance.
Mr. Hammond: I have listened carefully to the hon. Gentleman. Given his clear view of what is needed, what are his recommendations for the Chancellor of the Exchequer and Prime Minister on future public spending plans if the objective is to bring down the value of the pound?
Mr. Hopkins: As the hon. Gentleman will know, managing the macro-economic economy depends on monetary and fiscal factors. If we need a fiscal stimulus in a recession, I am happy with that. However, if there is a fiscal stimulus when the value of the currency is too high, it will draw in imports but not promote development of the domestic economy. Therefore the two go together.
I would focus on getting the pound down to a sensible level first. Indeed, I have said this publicly and written to my right hon. Friend the Chancellor several times, saying what I think we should do. The Government must intervene in the currency markets and the long-term bond market. Others have proposed a technique for bringing down the value of the pound relative to the euro zone currencies in particular, where we have a false parity.
My hon. Friend the Minister cannot answer for the Treasury, but I ask that he speak to my right hon. Friend the Chancellor about the problem of the pound and press him to do something about it. The value of the pound is far too high and is causing desperate damage to our manufacturing industry. We must address that before we can start to win.

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I live in a town that was built on manufacturing and where relative living standards have fallen over recent decades. We are a great manufacturing nation with a great tradition of manufacturing, which is a vital component of our history. If we do not do something about the macro-economic environment in which manufacturing now struggles, we will do serious damage to our economy and future generations.
10.10 am
Adam Price: I am grateful to the hon. Member for Crosby (Mrs. Curtis-Thomas) for initiating the debate at a time that is critical for manufacturing industry, right across the United Kingdom. As is apparent from my accent, I, like her, am from south Wales. I echo many of the points that she made.
We heard last night a slightly complacent passing comment from the Government on the resilience of the UK economy. I look forward to their considered approach. The Government seem unable to grasp or even admit the gravity of the current crisis. We have heard examples of some of the problems that we are facing across the UK. The British Chambers of Commerce this month warned that manufacturing was in a critical condition, with domestic orders and export sales down, further job cuts in the pipeline and confidence ebbing away. Last month there was a 0.2 per cent. decline in factory prices, which is the largest since records began in 1958. This is a serious crisis.
Professor Steven Nickell, a member of the Monetary Policy Committee, has talked about the dangers of a two-speed economy. Of the 300,000-plus manufacturing jobs lost since the Government came to office, almost two thirds have been the wrong side of the north-south divide, in the most disadvantaged regions of the United Kingdom. Scotland has reported the largest fall in business confidence since 1980 and in Wales more than 25,000 jobs have been lost in manufacturing since the Government came to office—an average of just under 23 jobs per day. Another estimated 20,000 jobs are at risk because of deteriorating economic conditions. I shall listen intently to the Minister's response.
The global economic slowdown is certainly a factor in the deepening problems of the sector, but it is important to recognise that, as has been said by the hon. Member for Luton, North (Mr. Hopkins), manufacturing has been in crisis for many years. Indeed, in the second half of the 1990s, manufacturing output hardly grew at all. At the heart of that failure has been the Government's inaction on the key question of the exchange rate. For the third time in 20 years, the high pound is decimating our manufacturing base.
One of the fallacies that cloud the debate is that it is about not the strength of the pound but the weakness of the euro. I remind hon. Members that the biggest rise, in the exchange rate, pre-dated the launch of the euro, so the issue is clearly more structural.
Mr. Hopkins: Does the hon. Gentleman agree that that appreciation was at least partly to do with an
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anticipation of the euro? Those who knew it was coming started to get out of euro zone currencies and into other currencies, particularly the dollar and sterling.
Mr. Frank Cook: Order. I should have informed hon. Members earlier that by convention we commence winding-up speeches, of which there are usually three, 30 minutes before termination of the debate. That means that, in order to get everyone in, right hon. and hon. Members must take account of the need to be concise and clear and for any interventions to he brief.
Adam Price: I am grateful, Mr. Cook.
Anticipation plays an important part in the action of currency markets. Rationality unfortunately plays a far lesser role. The hon. Member for Luton, North pointed out that a remedy to the problem of the high pound is available to the Government. It has been pointed out by a fairly distinguished list of economists, including Roger Bootle and Gerry Holtham, former director of the Institute for Public Policy Research, who is now the head of Britain's largest investment fund, Morley Fund Management.
The Government could lower the pound by buying euro-denominated Government bonds, which would offset the pressure on sterling to appreciate. They could do that in a way that was at least neutral in terms of its costs to the Exchequer, and they could even make a small profit. The notion that the Government should never intervene, regardless of the market rate, is bizarre. The tools are there. It could be done overnight. It would have a marked impact the viability of manufacturing business across the length and breadth of the UK. The Government's stubborn refusal to do that has led to the loss of more than 100,000 saveable manufacturing jobs this year alone.
The Treasury and the Bank of England have shied away from currency market intervention, in part because of the debacle of 1992, when the Government intervened to prop up sterling by using, or indeed losing, all our foreign exchange reserves. As a general rule, it is easier to temper a rising currency than to prop up a falling one. There is a precedent, of which I am sure the Minister will be aware, of the United States in September 1985, when the G7 Finance Ministers approved the Plaza agreement to puncture the dollar bubble. A fortnight later the dollar had fallen by 10 per cent. against the yen.
We have heard two propositions against those arguments from the Bank of England and the Government. Sir Edward George has consistently said that interest rates would be significantly higher were it not for the high level of the pound. A strong pound keeps import prices down and depresses borrowing costs. A weak pound necessarily imports inflation and, other things being equal, forces interest rates to rise. The key phrase is "other things being equal". The Government could change their fiscal stance and use fiscal rather than monetary measures to stave off inflationary pressures. That would allow the Bank to set lower rates than it otherwise could.
Another argument is that the problems of manufacturing are principally due not to the high exchange rate but to the persistent problem of low productivity.

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Over the summer, the Chancellor claimed that higher productivity in competitive firms would help offset the impact of an adverse exchange rate. There is almost a Thatcherite feel to this: the medicine might not taste nice but it is doing good. The problem here of course is that higher productivity is essentially a long-term policy. Welsh manufacturing firms are being hit in the here and now, and simply may not be around to enjoy the benefits of higher productivity, higher research spending and better skills in the future. Even for those that survive, the high pound will wipe out productivity gains and prevent the investment needed to improve their competitiveness.
There is a deep-rooted historical problem of lower productivity in British industry linked to lower skills and under-investment, but productivity growth for most of the past 20 years in the UK has been quite impressive; it has been similar to that of the US and other advanced economies. It is output growth that has been negligible. That is the key point. Since 1970, manufacturing output per head of population in the US has risen by 108 per cent., whereas the UK figure is 15 per cent.
The greatest weakness of the UK economy has been the failure to translate productivity growth in manufacturing into output growth. One of the main reasons for that has been the poor macro-economic environment. During the crises of the early 1980s and 1990s, and now in the millennium, we have seen wave after wave of gradual de-industrialisation of Britain. As the hon. Member for Luton, North said, our manufacturing trade balance has deteriorated massively, which has been hidden to some extent by the high exchange rate. We have ceased to be a manufacturing economy. There is an inherent danger in that because many of the higher value-added services in the so-called knowledge economy are embodied within manufactured goods. For example, I draw the attention of hon. Members to design and its relationship with manufacturing.
The long American boom of the 1990s was as much a manufacturing-based phenomenon as a service-based phenomenon. We can ill afford to lose our manufacturing industry. Such matters are particularly worrying for us in Wales because manufacturing industry represents 27 per cent. of our economy compared with 20 per cent. for the United Kingdom as a whole. In the past five years, the strong pound has caused much damage to our economy. It may become a handicap in the difficult times that could lie ahead. The Government need to accept their responsibilities and to take action. The tools are there to enable them to intervene in the currency market. There are undoubtedly risks involved in taking such action, but doing nothing will incur incomparable greater danger.
10.21 am
Mr. David Chidgey: For the best part of a decade I have attended debates on the decline of the manufacturing industry. The arguments about the lack of investment, loss of market share and employment have been well rehearsed yet again today. I shall not dwell on them because time is short. However, Governments come and they go, and whenever they are forced to deal with the decline in the manufacturing industry, they come up with a five or 10-year plan that
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they can kick into touch so that what is happening is not their problem. I do not expect the Government to come up with an instant panacea to resolve the ills of manufacturing. The problems are far too well-embedded for there to be an instant solution. However, I expect them to apply their policies in a manner that will support manufacturing, not add to its burden.
I shall cite two examples to show how the Government's actions are threatening yet more manufacturing jobs in aerospace and railway engineering in my constituency of Eastleigh. This month, about 100 skilled craftsmen have lost their jobs at Hamble Aerostructures—a firm that I have known well for many years and which is a major supplier to Boeing for its 737s. As a direct result of the atrocities of 11 September, the firm's order book has been slashed from 17 aircraft a month to eight, and 25 per cent. of its export sales are now going at a stroke. The Government are not to blame, but they are failing to ensure that Hamble can compete successfully under their programme to secure future work.
I turn now to the A380 airbus. Hon. Members will know that the Government have provided £530 million of assistance to Airbus Industries UK on a preferential loans basis. Airbus Industries UK is now placing invitations to tender on that programme throughout Europe, the far east and elsewhere. However, the rub is that Airbus Industries UK is expecting its suppliers to finance the upfront, non-recurring development costs. That will increase the tender costs and prices of Hamble and other United Kingdom firms and make them less competitive. Their competitors in Italy, Belgium and Holland do not have the same problem. In Italy, the Government's assistance to the A380 programme has been split; 50 per cent. goes to the prime contractor and 50 per cent. to the subcontractor and the supply chain. Hamble Aerostructures is competing against suppliers in Italy that have the benefit of direct Government assistance. That cannot be sensible and it is a direct result of the Government's policy.
If the UK's aerospace firms such as Hamble are to receive their fair share of the programme, the Government must change their policy and either restructure the assistance to Airbus Industries so that 50 per cent. of it goes to the supply chain and 50 per cent. to the main contractor, or insist that Airbus Industries absorbs the upfront, non-recurring costs itself. After all, it is taxpayers' money.
My final point, in the short time that I have, is about the rail industry. The Government have appointed the Strategic Rail Authority, which is charged with increasing rail-rider numbers and improving and expanding our rail industry. However, at the same time, the Government have decided not to proceed with renewing 20-year franchises but, instead, to extend them for two years. That has an enormous impact on the rail industry. Nobody has the confidence to invest or to confirm orders for new rolling stock or for renovation. That has a direct effect on my constituency and Alstom's railway works, on which Eastleigh was built, which is waiting more than six months for confirmed orders while jobs are shed week after week. There is an answer. The SRA has the power—under section 54 of the Railways Act 1993—to underwrite investment that is required to give clients the protection to make orders firm and, simultaneously, to stop jobs leaching from my constituency month after month.
10.26 am
Andy Burnham: I congratulate my hon. Friend the Member for Crosby (Mrs. Curtis-Thomas) on securing the debate and on her thoughtful and convincing speech. This is a time of great change in the United Kingdom's manufacturing base, and the human cost of that is sharply felt in the communities that we represent. I wish to put on record the experiences of my constituents who work at the Ingersoll-Rand portable compressor plant at Hindley Green. I shall draw out two lessons from them, which I ask the Minister to address.
Four weeks ago, Ingersoll-Rand announced that it was to move the manufacture of compressors from Hindley Green to the Czech Republic, thereby breaking a long-standing association with my constituency. Two hundred and fifty jobs are expected to be lost over next year and in the early part of 2003. The factory is based at the heart of a former coalfield area, and it is a tragedy that many of the people who will lose their jobs were previously employed at local pits. It must be extremely difficult for such people to face the situation and to try to find new employment.
The work force mounted a magnificent campaign to try to save the jobs, and I pay particular tribute to the union convenors, Ian Bryant and Mike Hughes, for their leadership, energy and resourcefulness in trying circumstances. I also thank the Minister for Employment and the Regions for his work to try to keep the jobs. Negotiations continue to keep an after-sales centre on the site.
I raise two points after having gone through all the stages of the campaign and reflecting on it. Do we need greater protection of existing employment in this country? I realise that there are two sides to the coin, and the last thing that we would want is an environment that does not encourage companies to invest here. However, I ask Ministers to examine the matter again and to ascertain whether more can be done to tie companies more firmly to the UK after they have located here. That occurs in other European countries.
I turn to the impact that the enlargement of the European Union may have on some of the oldest industrial areas in Europe. During the period of job losses at Ingersoll-Rand, it was suggested that the removal of trade tariffs for the developing economies of Europe, as part of the Nice treaty, makes it more attractive for companies to locate in countries in eastern Europe and to move away from countries such as ours. I know that labour costs are the main economic driver for the decisions, but I would be interested to hear from the Minister the extent to which the removal of the tariffs contributes to the problems suffered by British manufacturing.
Few people—if any—in Hindley Green would oppose the development of a strong and united European Union, and they would not question the need to help developing economies in Europe. However, they would reasonably ask why they have to pay the price for that.
I would like to see more debate at the European level about how the EU can help some of the oldest economies in Europe to make the transition into a new era.
10.29 am
Dr. Vincent Cable: I congratulate the hon. Member for Crosby (Mrs. Curtis-Thomas) on animating the debate with her clear personal commitment and experience. I think that we crossed paths in industry without having been aware of it.
The remarks of the hon. Member for East Carmarthen and Dinefwr (Adam Price) were a useful point of departure, which brought us up to date with the painful reality that manufacturing is in a severe and critical state. Reports are coming in more or less daily illustrating the seriousness of the situation. The most recent CBI study suggested that there is more spare capacity in the manufacturing industry than at any time since the early 1990s. A report published a few days ago by the Machinery and Metal Trades Federation argued on the basis of a survey of its members that investment is likely to fall by 40 per cent. over the next 12 months. In addition, a recent survey by the Item Club, which is one of the more reputable mainstream forecasting outfits, suggested, on the basis of an optimistic picture of the British economy—about 2 per cent. growth—that manufacturing industry would decline by about 1.5 per cent. this year and next year, with much greater falls in employment.
The outlook in the short run is therefore difficult. There are two basic reasons for that, which have been touched on at various points in the debate. As the hon. Member for Luton, North (Mr. Hopkins) expressed clearly, manufacturing industry has been struggling with a seriously overvalued exchange rate. The figures are all too clear. The key measure is called the real effective exchange rate, which is the overall measure of competitiveness of the UK economy as against other economies, given relative inflation. That suggests that the competitiveness of the UK economy, because of the exchange rate problem, has declined by about 30 per cent. since 1996. It has remained at roughly that level ever since.
Over the past two or three years, manufacturing industry has got by, essentially by accepting low profit margins but keeping the volumes going. That has been stopped because of the incipient global economic recession, which predated the events of 11 September. There are plenty of signs that east Asia, the United States and parts of western Europe are in serious economic trouble. As my hon. Friend the Member for Eastleigh (Mr. Chidgey) described in relation to the aerospace industry, that is compounded by all the special problems arising from events in September. British manufacturing industry is being hit by the double whammy of an overvalued exchange rate, which has existed for three or four years, combined with serious problems on the international front. All that is superimposed on the long-term problem of relative decline in British manufacturing. Those of us who are a bit long in the tooth will remember the 1950s and 1960s, when endless tracts and books about the problems of British manufacturing industry were written. Similar tracts were written in the 19th century. We have therefore been living with the problem for a very long time.
How much does the relative decline in manufacturing industry matter? One can be philosophical about it—in all industrial or developed countries, manufacturing is in relative decline. In developed countries as a whole, the

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share of GDP represented by manufacturing has fallen from about 30 per cent. in the 1960s to about 20 per cent. today. The problem with Britain is that the decline has happened much faster and gone much further than elsewhere. That is why it is worrying.
Manufacturing industry is important, although probably for more subtle reasons than is often acknowledged. One of the most important reasons is that manufacturing industry is the best source of productivity growth. In an ideal world, one would have lots of productivity growth combined with stable employment. I listened with interest to the interventions of the hon. Member for Runnymede and Weybridge (Mr. Hammond), who was trying to make that point. There may have been a way of achieving that, but the Conservative Government whom he supported did not discover it. I concede that their productivity performance in manufacturing was exceptionally good—between 1980 and 1995, productivity growth in manufacturing was about 4 per cent., as opposed to 2 per cent. in the rest of the economy. On the other hand, manufacturing employment collapsed from 6.8 million to 4.1 million. Therefore, there was growth in productivity without employment stability—it is very difficult to get both.
Looking to the future, what could the Government usefully do? I shall make three points in that regard. First, it is important that the Government do not rush into all sorts of clumsy and unhelpful forms of intervention. We went round that circuit in the 1960s and 1970s. The Minister of State recently made the unfortunate remark—I hope that I quote him correctly—that any half-decent bird watcher can tell the difference between a lame duck and a bird that can fly, heralding a much more active process of subsidising and bailing out failing enterprises.
I suspect that all Governments experience that state of hubris in which they imagine themselves to be entrepreneurs. If that is the Government's new policy, I fear that their public expenditure priorities will be badly distorted in the next year or so, with no obvious benefit. Perhaps the Minister will make it clear what his Department intends to achieve at the proposed manufacturing summit. It could be an exercise simply in hot air and public relations, or a serious process of examining what the Government should and should not be doing in this context. It would be helpful to hear a little more about what they have in mind.
The second aspect in which the Government's role is relevant is tax policy. Everyone to whom I have spoken in the various manufacturing federations always starts with the climate change levy. They, and I, object not to the principle of environmental taxation or of it being used to curb carbon emissions, but to the extraordinarily complicated, cumbersome and abrupt way in which it has been introduced. Manufacturing industry has been hit up front with a large levy with numerous and rather arbitrary exemptions. It could have lived with a form of climate change levy bearing on carbon emissions throughout the economy, phased in gradually, but being hit with the tax in the way that it has, and at the time that it has, has been extraordinarily onerous.
To some extent, the climate change levy is water under the bridge, but I fear that the Government may repeat exactly the same mistake with the proposed
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research and development tax incentives. The principle behind them is admirable. R and D is clearly important, and if the Government can envisage a way of encouraging them, I am sure that we would be all in favour of it. I understand that the proposal is for all companies to have to distinguish between new R and D and the R and D that they were already doing. I am not sure how that is done, but they will be required to do so, and will be given a generous tax break for the new R and D, and nothing for the R and D that they were doing anyway. That is a complicated and distorting way of intervening in manufacturing industry. A much simpler way of dealing with the matter, which the various industry federations are trying to press on the Department of Trade and Industry and the Treasury, would be to spread R and D tax credit evenly across all R and D activity, with the same revenue implications. That would be a much more efficient approach.
Mr. Hopkins: The hon. Gentleman is talking about the tax environment in which companies operate, but is that not relatively small beer compared with the massive overvaluation of the pound? Given a correct valuation for the pound in competitive terms, could we not live with the tax changes and might we not need support such as we had in the past when we had similar problems with an overvalued pound?
Dr. Cable: I do not disagree. The complaints that industry has had about tax measures such as the climate change levy and the framing of R and D tax incentives are that they are irritants. The hon. Gentleman is right that, compared with a 30 per cent. change in the real value of the exchange rate, the matter is indeed rather small beer.
The central role of the Government in the matter is to get the basic macroeconomics right and achieve stability. In terms of monetary policy, interest rates and basic fiscal policy, they have done that to a remarkable extent. However, the big lacuna at the heart of the matter is the exchange rate, as the hon. Member for Luton, North suggests. Having said that, I recognise that these are not easy matters. In the current world of floating exchange rates it is not possible to decide arbitrarily to have an exchange rate that is 10 per cent. or 15 per cent. lower. It does not work like that. Intervention is not easy to secure, which is why my colleagues and I have always argued that it must be done in the context of a big long-term decision about euro entry. It is significant that a few weeks ago the Prime Minister chose, even in the midst of the present crisis, to make it clear that that big choice must be faced, and probably soon. That can be done in a way that secures a stable, sustainable, long-term exchange rate.
Adam Price: Will the hon. Gentleman give way?
Dr. Cable: I would have been happy to take an intervention, but that was my last point. I will draw my conclusions to a close.
10.39 am
Mr. Philip Hammond: I, too, congratulate the hon. Member for Crosby (Mrs. Curtis-Thomas) on securing this debate. As we have learned this morning, she is eminently well qualified to speak on these matters.

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All hon. Members will agree that changes in the shape of a dynamic economy are inevitable and, indeed, welcome. Equally, however, a healthy economy is a balanced one. The sometimes dramatic growth and spectacular successes of parts of the service sector have appeared to be at the expense of our manufacturing base. Despite some of the Labour party's rhetoric in opposition, the Government appear not to have reversed the cultural bias against manufacturing, but often to be obsessed with the so-called new economy.
Most people agree that our manufacturing competitiveness in 1979 was at a pretty low ebb. A high price was paid in the early 1980s for achieving a leaner and more competitive industrial base. That was essential, but I agree with the hon. Member for Twickenham (Dr. Cable) that we did not go far enough. We failed to achieve the holy grail of improving productivity not only absolutely, but enough to ensure that the employment growth that resulted from the expansion of the manufacturing base outweighed inevitable employment losses. The US manufacturing economy has managed that, but we have not.
Put bluntly, the debate must, when taken in the context of anything but the shortest term, be about productivity. All other things being equal, our manufacturing industry will grow in the long term if our productivity increases faster than that of our competitors; however, our manufacturing base will shrink if productivity increases more slowly. We are talking about a relative gain, not an absolute one; the issue is how we perform in relation to our competitors. This might not have been apparent in the past, but it is now recognised across the political spectrum that the long-term issue is how we ensure that British productivity gains are in line with, or better than, those of our competitors.
Our manufacturing industry finds itself in condition red. I will not repeat the data that the hon. Member for Crosby outlined in some detail, but historic data tell only part of the story. Anyone who is in touch with manufacturing industry and the associations that represent it understands that many businesses are clinging on by their finger nails. If the situation does not improve in the relatively near future, we shall see a step change in the rate of decline in our manufacturing base. Confidence is at an all-time low, projections for inward investment are dramatically down, uncertainty pervades industry, our international competitiveness is falling, we have a huge and rising trade deficit and crucially, profitability in manufacturing industry is at a record low. The CBI quarterly trends report will come out later this morning. I do not know what it will say, but I confidently expect it to show that demand is weakening further.
The Chancellor has recognised that the issue is one of competitiveness. Government support for improved competitiveness in the manufacturing industry can be effective, but I caution the Minister that it is likely to be only an expensive short-term palliative measure if it is not targeted at improving competitiveness over the longer term. Budget after Budget, we have heard the Chancellor pay lip service to improving Britain's productivity and closing the productivity gap. However,
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Budget after Budget, we have seen measures that have damaged productivity further and led to the widening US-UK productivity gap.
Manufacturing is on the rack. High exchange rates, weak world demand, a faltering domestic economy and loss of confidence by the manufacturing sector, as well as heavy burdens of taxation and regulation, have hammered the competitiveness of our manufacturing businesses, and have led to a squeeze on margins that will inevitably lead to abandonment of investment plans.
The situation that we face demands a short-term response from the Government, but also action to prevent long-term damage to our future productivity growth caused by the reaction that business inevitably makes to short-term problems. To put it bluntly, we must not allow the margin squeeze faced by business to become the seeds of a downturn in the next economic cycle due to cancellation of investment, as that will translate into failure to maintain productivity in the next cycle. The Minister must stand up to the Treasury and insist that no more tax burdens are piled on business. He must stand up to Brussels, which has a not-so-secret agenda of costly burdens on British business that will erode our competitiveness further.
In the long-term, competitiveness is the key issue, and it can be achieved in several ways. Low wages are not desirable and not possible in an economy in which manufacturing makes up less than 20 per cent. of the total. Low profits are not desirable either, as they inevitably lead to low investment and the lack of a future for our manufacturing industry. Artificially set exchange rates are also not a long-term sustainable solution, although I agreed with hon. Members who emphasised the need for macroeconomic management to ensure a realistic exchange rate, so that manufacturing industry was not unfairly and inappropriately disadvantaged.
Growth of productivity is essentially an enterprise-level issue, a business management issue, but one in which the Government have a large role to play. Investment—bringing the capital-labour ratio of British Industry up to the levels of its international competitors—is crucial. It is self-evident, to me at least, that the Government's piling of burdens, expenses and taxes on business takes money away from investment that would improve the competitiveness and productivity of British industry.
The Government have a large role to play in flexibility and rapid responses to changes in demand through alterations to the labour-output mix. They must ensure that regulation is not over-prescriptive and that regulations intended to protect employment and employees do not have the perverse effect of preventing employment growth. The Government must also foster innovative research and development; other hon. Members have spoken about the relevant tax credit proposals and I share the concerns about the mechanics of the project, but its objectives are clearly positive.
One of the Government's most important roles—industry alone cannot take responsibility for it—may be in skills and education. We hear much about the knowledge-based economy, but manufacturing is a knowledge-based economy as well. The Government

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have so far failed to translate their rhetoric into a real move away from the bias against engineering and manufacturing skills in our education system.
Before 11 September, manufacturing was already in recession. The tax burden was rising on the economy as a whole, and certainly on the manufacturing sector. The climate change levy was introduced at the worst possible time, with a hugely disproportionate burden on the manufacturing sector. Manufacturing needs a breathing space, a chance to regroup to recover from the burdens that it faces as a result of what the Government have imposed on it and what is happening in the world. We need not more summits and tsars, but solid policies that will allow manufacturing businesses to ride out the storm and ensure that they continue to grow and improve their productivity in the future. The real danger for our manufacturing economy is that the squeeze on margins today will jeopardise investment in capital equipment, training and innovation and will undermine future productivity growth in the next economic cycle. It is only by maintaining that investment that manufacturing industry will maintain its competitiveness and stabilise its share of overall output in the next cycle.
I hope to hear the Minister's proposals for tackling the immediate needs of manufacturing industry, including lightening the burden of regulation, and in due course I hope to hear from the Chancellor what he intends to do in his next Budget to underpin the future growth in productivity and competitiveness of the manufacturing sector.
10.50 am
The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): I congratulate my hon. Friend the Member for Crosby (Mrs. Curtis-Thomas) on securing this debate on manufacturing, which is the bedrock of our economy. Manufacturing and engineering matter. They matter to the Government, to our economy and our people, to those who work in them and to all of us who enjoy their products.
I do have a cultural bias in favour of manufacturing, which accounts for more than a fifth of our national income and almost £150 billion of output every year. The sector employs about 4 million people directly, and millions more depend on manufacturing for their livelihood, including 2.5 million people in the service sector. A strong manufacturing sector is the backbone of our economy, and the manufacturing summit will reinforce that message.
As the Minister with responsibility for small and medium-sized enterprises, I have visited manufacturers whose forebears were pioneers 200 years ago. These manufacturers are innovators, at the cutting edge of competition. Manufacturing is led by some of our most innovative businesses, which invest heavily in research and development. It drives innovation in the rest of the economy and creates jobs and prosperity. It is the crucible for production improvements across the economy through advances in technology and new goods and processes, but most of all through a highly skilled, highly flexible and dedicated work force.
In the past four years we have helped 3,000 businesses and supported £6 billion of investment and 135,000 jobs, most of them in manufacturing. These challenging
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circumstances make it all the more important that we adopt strategies that allow us to be successful in the global economy. We can no longer compete on labour costs and raw materials alone. Globalisation means that low value added goods can be produced more cheaply elsewhere.
In the past month I have visited factories in Norfolk and the east midlands, where new technologies are transforming every product and service in every part of the production process and in every sector of the economy. The companies that I visit and the directors and the workers who I meet tell me that the challenge for the UK is to shift the focus from competing on the basis of cost alone towards high skill, high value added products and processes based on quality, innovation and know-how.
Many of our manufacturing companies in the textiles sector, for example, are responding to that challenge. Leading textiles firms have transformed themselves from companies making traditional textiles into leading-edge manufacturers of technical textiles and engineering materials. Brintons began in 1820 and is now the largest yarn manufacturer in the northern hemisphere. Based in Telford, the company is the world's largest manufacturer of woven axminster. Hamilton's paintbrushes and Hudson's whistles span three centuries of manufacturing in Britain. Both are leaders in their sectors in the new century.
That is the direction of manufacturing in this country, but it does not mean that we will lose our traditional industries. Investments in the UK by Jaguar, BMW and Nissan demonstrate our continuing strength in global industries such as vehicle manufacture. Component suppliers are equally important. By investing in technology and most of all by creating the most highly skilled work force, HR Adcock of Loughborough, employing 50 people, has beat off the world and supplies the suspension components for all Ford Focuses.
The Government have a clear role to play in helping companies face the challenges of globalisation, technology and varying states in the business cycle. That can be achieved by helping businesses to become more productive, to innovate and to cope with change successfully, by helping people when changes of jobs are required.
Change is inevitable, driven by technological innovation and globalisation, and the Government can help UK industry to manage that change. We are investing £15 million in a new manufacturing advisory service to spread best practice, which will include a centre for manufacturing excellence in every region. The new manufacturing advisory service and centres of excellence will provide the main point of contact for manufacturers who want to raise their game.
Our Faraday partnerships initiative is helping innovative companies to turn research into new products and services for British industry. We are enabling firms to access high-quality research and the expertise of industrial research organisations. We are helping established industries to modernise and compete in new markets. Faraday is helping the United Kingdom textiles industry to exploit the growing market of technical textile products in the medical, automotive, construction and defence industries.

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We can support manufacture by encouraging sustained investment in research and development. Industries need to keep ahead of the game. Even during a slowdown, companies must maintain research and development investment. When the world economy picks up, those who have invested in R and D will be ready to succeed.
I assure the hon. Members who have raised the matter today that the Government know the importance of R and D, which is why we are introducing a new R and D tax credit for industry. We are supporting the manufacturing jobs of the future by strengthening our science base and ensuring that the knowledge and technology coming out of our universities goes into our industries. That is why we are putting more than £1 billion into sciences in addition to the £1.4 billion that we have already invested in partnership with the Wellcome Trust. We are providing new incentives for commercial application of research, with a fund of £140 million to get more of that science and technology out of the labs and into the factories.
We can support the manufacturing jobs of the future by creating strong regional economies. That is why we pledged £1.2 billion, rising to £1.7 billion, to our regional development agencies to support innovation and enterprise. In raising the game of every region, RDAs are working in partnership with the public and private sectors, with businesses, universities and local authorities. We support manufacturing jobs of the future by investing in a skilled work force, and are investing in the skills people need—in schools, the university for industry, the learning and skills councils and the technology institutes.
My hon. Friend the Member for Leigh (Andy Burnham) spoke with knowledge and feeling about the recent job losses in his constituency. I acknowledge that
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our manufacturing industry is feeling real pain and that workers with 10, 20 or 30 years of skills and experience face redundancy. When jobs are threatened and businesses need support, we do everything in our power to save jobs and find new ones. In the past four years, we have helped more than 3,000 businesses, supported £6 billion of investment and ensured that 135,000 jobs—most of them in manufacturing—were safeguarded or created. We are investing £40 million in Jaguar, saving 2,900 jobs and creating another 500. When redundancies are inevitable, we will not walk away, but do everything we can to help people to find new jobs and, if necessary—and it is necessary—learn new skills. We are doing that for the workers at Corus.
The job transition service and the rapid response units will provide an intensive and personalised response to large-scale redundancies. At Fujitsu in County Durham, a rapid response unit helped to ensure that about 94 per cent. of the work force found new jobs in 12 months. At Siemens in north Tyneside, the Employment Service played a major role in helping about 90 per cent. of the work force to find new employment. In future, instead of providing retraining when people lose their jobs, we shall retrain them while they are still in work, so that they can move straight into new, higher quality work.
Our aims can be achieved only by the Government and manufacturing sectors working in partnership. We must continue to improve the UK's skills base. promoting closer links between education and industry and providing a supportive framework for technological advance. We must look to the long term, delivering a framework of stability and steady growth and delivering our strategy for supporting manufacturing and British industry in a global and competitive economy. In that way, we are optimistic that British manufacturing and business can rise to the challenge and match the best in the world.

Asylum Applications
11 am
Mr. Andrew Lansley: I am grateful for the opportunity to speak on this subject today. Not only has there been a great deal of debate concerning the position of the Oakington immigration reception centre, which is in my constituency, but last Friday, the Court of Appeal gave its judgment on the legality of the detention of asylum applicants at the centre. In addition, we learned at Home Office questions on Monday that the Home Secretary anticipates that his review of asylum will be published by the beginning of next month. My purpose is to set out for the benefit of the Minister and, I hope, for the Home Secretary's review, some thoughts prompted by my experience of the circumstances at Oakington, and a little about how it fits into the system of management of asylum applications.
First, I should like to thank the staff at Oakington immigration reception centre. Whatever our views about the desirability of the centre, we should express our appreciation for the way in which the staff have buckled down to the task of trying to manage it in an effective and decent way that is sympathetic to the circumstances of the asylum claimants who reside there. Many of them are my constituents, and I applaud their work. I know from visits to Group 4 on the security side, to the Immigration Advisory Service and the Refugee Legal Centre, that the people who maintain the centre and those who advise asylum applicants do a good job to the best of their ability.
Although it is not relevant to the debate, I understand that in the past few days the Oakington reception centre helped to accommodate those affected by flooding in my constituency and in that of my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice). I am grateful for that neighbourliness on the part of the Home Office.
I shall attempt not to be tedious in terms of the statistical background to this subject; the Home Office is already painfully aware of it, particularly in relation to the review. What is important is to try to manage the process better. That is best done by analysis and by discussing principles, not by trading statistics, especially if the Parliamentary Under-Secretary of State for the Home Department (Angela Eagle) agrees that we should not now ascribe guilt or otherwise about the past, but should consider where to go to from here.
The management of asylum applications is a serious issue for the United Kingdom. Last year there were some 80,000 applications—two and a half times more than there were four years ago. Some countries in Europe have experienced similar increases and others have seen reductions, so there are clearly a number of factors at work. If we examine them, they might point to the reasons why the UK attracts a larger number of asylum applications than other European countries do, and that could assist us in respect of the decisions that we have to make in the review.
The failure to take asylum decisions was a chronic problem until last year. I do not ascribe blame only to the present Government; prior to that, too, there were insufficient case workers. Those who have held ministerial office in Governments of both political
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persuasions, including the Minister, will know that the shortage of case workers and their resultant inability to make decisions quickly is at the heart of the problems that have emerged in recent years.
The Minister will no doubt tell us that the increase in the number of case workers has made a substantial difference and that the number of initial decisions made last year exceeded the number of applications. However, the Government's expectation that that factor, along with the implementation of the Immigration and Asylum Act 1999, would lead to a reduction in the number of asylum applications has proved wrong. The backlog of decisions has turned into a substantial backlog of appeals; the dispersal system and support arrangements are, at best, overstretched and in some places chaotic and only a small fraction of those whose applications are refused have been removed from the country. The overall result is that our immigration and asylum systems have been undermined, and opportunities for abuse have increased, as have opportunities for the malicious stirring up of xenophobia. The effectiveness with which we can offer a haven for genuine refugees is severely constrained.
I do not propose to discuss border controls and to concentrate on the subsequent management of asylum applications. I submit that the best way to restore the integrity of our border controls would be to relieve the pressure that is placed on them by people who claim to be asylum seekers, but are actually economic migrants who attempt to enter the United Kingdom and avoid subsequent removal. I shall begin with the Oakington reception centre.
The High Court, and subsequently the Court of Appeal, accepted that under the Immigration Act 1971 the Government had the power to detain asylum applicants pending an initial decision. The issue upon which those cases turned was whether detention was compatible with article 5 of the convention on human rights, which covers the circumstances in which deprivation of liberty may occur. The Court of Appeal held that the Secretary of State was acting within the terms of article 5 because the action was intended to prevent unauthorised entry into the United Kingdom. It was held that the restriction of liberty entailed by detention for up to a week, and the circumstances in which the applicants were held at Oakington made the use of detention in such circumstances proportional to the objective and thus not an unacceptable infringement of liberty.
As I said at the time, I agree with the Home Office view and therefore with the Court of Appeal. I know that the Home Office was not using detention to assuage local concerns about asylum seekers wandering about the area. In truth, it was used because of the concern that applicants would not be present when they were needed for interview.
As of last month, there were 11,618 detainees at Oakington, of whom 2,310 were women and 1,817 were children. I shall not dwell on those figures, but it is important to recognise that the cases heard by the Court of Appeal were in relation to four Iraqi applicants. Those applications were brought in respect of four Kurdish men, not in respect of women and children held at Oakington. We should be aware of the risk that similar cases might be brought in respect of families with children and that the use of detention as a proportional

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measure might be open to further challenge if it were applied in relation not only to adult men but families. It may be more arguable as a proportional measure.
We know that 0.28 per cent. of asylum seekers at Oakington have absconded. It is a small number—about 30 of the 11,000. Whatever the original fears of the Home Office about the absconding rate in the absence of security measures and the power of detention, applicants are held for such a short time that absconding would lead to the effective abandonment of a claim. It would also lead to the loss of access to benefits and support, and, if discovered, it would lead to detention. All that suggests that applications could continue to be processed at Oakington while it is redesignated as a reception centre for the purposes of temporary admission. Therefore, the fact that the Court of Appeal has allowed the Government to continue their regime at Oakington does not mean that there is no case for change.
Change is possible. A much greater proportion of applicants—perhaps all of them, except in-country applicants and those who do not need to be detained—should, in the first instance, be housed in reception centres while an initial decision is made. Applicants who are refused asylum on initial decision should also be housed in such reception centres until they are removed from the country, have had their appeals heard, or are detained for other reasons.
It is important to give support to claimants. In my visits to Oakington and my discussions with people who work for the immigration support services, I have been struck by the fact that, while thousands of applicants are sent to the Oakington reception centre, many others, who do not fit the criteria for residence at Oakington—which often means that their applications are less obviously manifestly unfounded—are dispersed around the country. Those applicants are asked to produce evidence to support their claims under different circumstances than those enjoyed by the residents of Oakington and, frequently, in the space of a mere couple of weeks. The perverse result of that is that, sometimes, those with a manifestly unfounded claim for asylum are resident at Oakington, where they have access to support and legal services, and to help with translation and interpretation, and that enables them, if their application has any validity, to pursue it successfully. That rarely happens, as many of them are selected for Oakington on the grounds that their applications are manifestly unfounded. However, applicants who are dispersed, and whose claims might be better founded, do not have the same access to services. Therefore, it might benefit such applicants to be accommodated in reception centres that offer legal, translation and other services.
The latest figures with regard to the number of decisions where asylum has been refused on non-compliance grounds indicate that applicants who have been dispersed around the country might face serious problems in substantiating their claims—not because they have no evidence to support their claims, but because they are unable to assemble the evidence and understand the questions that they must answer and the forms that they are required to fill in.
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In 1999, 1,085 cases were refused on non-compliance grounds under the normal procedures. In 2000 there were 26,630 such refusals. The figures must be considered in the context of the considerable increase in such cases: however, the problems that I have outlined arise out of the process of trying to clear those cases at a faster rate. All hon. Members must be concerned that, although refusal on the grounds of non-compliance might often be justified, it might also lead to the refusal of a significant number of applicants who have a genuine claim to refugee status but are unable to validate it, and are not given the support to enable them to do so.
Simon Hughes: The hon. Gentleman is right to draw attention to that subject. Does he understand that there is a strong legal argument that refusal on the grounds of non-compliance is incompatible with the convention on human rights, and that there is authority for saying that, in the end, that is not a justification for refusal? The technical grounds cannot undermine the basic case, so in addition to the practical arguments that he has proposed, there is a legal argument.
Mr. Lansley: I am grateful to the hon. Gentleman for his comment. However, I suspect that I am better at practical arguments than I am at legal arguments. The hon. Lady will perhaps take note of that and comment on it later.
My understanding is that the refugee convention requires those who seek to make a claim for asylum to be able to support it and to demonstrate that it is well founded. The inability to produce evidence to support such a claim can mean that it is refused on non-compliance grounds because there is no evidence to support it and in legal terms that is entirely justified. Whether I am right or wrong about that, my argument relates to the practicality and the desirability of giving asylum applicants a better service. I hope that I can demonstrate that that is in the interests of both the management of the system and genuine refugees.
Essentially, it is a perverse situation. Those who manifestly or apparently have unfounded applications seem to be given a better service by way of support for their applications. We could go further down that path. Reception centres for temporary admission are successful and help genuine refugees to support their claims more effectively. I have a proposal to put to the hon. Lady and to my hon. Friend the Member for Beaconsfield (Mr. Grieve) and, via him, to my hon. Friend the Member for Woking (Mr. Malins) who, I am happy to say, as he is experienced and knowledgeable, has responsibility for these matters in my party. I recognise that my suggestion would represent a shift in both Government and Opposition policy.
The policy of the Conservative party at the last election was one of universal detention. Last Friday's Court of Appeal judgment suggests that prolonged detention while applications were being dealt with would have been in conflict with article 5(1)(f) of the convention. That is one of the reasons, if not the only reason, why it is in the interests of my party, as well as the Government, to look for a wholly different legal solution that is none the less compatible with the regime at Oakington.

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An alternative is available. Section 4 of the Immigration and Asylum Act 1999 empowers the Secretary of State to provide accommodation for those granted temporary admission. Schedule 2 to the Immigration Act 1971 gave powers to impose residence conditions during temporary admission. Schedule 14 to the 1999 Act would enable the extension by regulation of the purposes for which such residence conditions can be imposed. The legal structure seems to exist. My suggestion to the Minister and to my hon. Friend the Member for Beaconsfield is that those powers should now be used to speed up the handling of applications in respect of initial decisions and appeals.
One sure way of improving the management of asylum and enhancing the situation for genuine refugees would be for applications to be processed more swiftly. I am sure that a greater use of reception centres would assist, but the number of appeals heard each month must also be increased. The appeals backlog doubled between mid-1997 and the middle of last year. The number of adjudicators is now increasing and I hope that the Minister can confirm that there will be a substantial increase in the number of appeals that are determined each month. The present rate of appeals, together with the backlog, which is something of the order of 50,000, suggests that a capacity of some 6,000 a month is required.
We are well below that capacity at present and the introduction of one-stop appeals last year should have been accompanied by greater capacity. It would be desirable for that capacity to come on stream, but it can be helped by the continuing availability of applicants who have appealed for the provision of information and interviews. In view of the increase in budgets and the £835 million annual costs of the asylum system, I suspect that it would reduce costs to proceed down this route, rather than dispersal, given the difficulties associated with managing appeals for those who are dispersed around the country.
Indeed, the whole process of dispersing people around the country has many consequences, one of which is the establishment of stop-off points. As the Minister may know, Wackenhut, or the Premier Group which manages these matters on behalf of the Home Office, is proposing to establish one at Great Gransden, just outside my constituency, presumably to deal with those being dispersed from Oakington. Great Gransden is only a few miles from Oakington, so it is surprising that they need to stop off so quickly. Will the Minister explain why that is necessary and why such an inappropriate location has been chosen? Many of my constituents who live in the area would appreciate an explanation. At the moment they do not understand the proposal and they disagree with it.
Although it is important to deal with applications speedily, that will not suffice as an explanation. The presence of many nationalities and communities in our country, our relatively buoyant labour market in compared with that of some of our European neighbours and our comparative lack of internal enforcement often makes the UK a destination of choice for economic migrants. I do not criticise people for making that choice, but we have a responsibility to uphold the right of a sovereign state to determine whether aliens should be able to enter our territory. If the Home Secretary proposes to offer significant
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opportunities for migrants to work here, he should also introduce further measures to prevent the abuse of our asylum procedures by those who want to enter this country for purposes of economic migration.
I therefore call on the Minister to enforce the employment checks and sanctions provided in the Immigration and Asylum Act 1996. Unless further measures are taken, the pressure to introduce other forms of identity checks inside the UK—up to and including ID cards—will increase. I view the introduction of ID cards for the purposes of managing the asylum system as the tail wagging the dog. It would be an undesirable infringement of our liberties. If we choose to go down that path, it should be for wider and more important reasons. It is much better to deal with asylum in its own terms than to impose further constraints on the liberties of the whole population.
The further strengthening of our asylum system will also depend on the effective removal of persons whose claim for asylum is refused. Additional detention places are being provided, hopefully so that detainees need no longer be put in prisons. The hon. Member for Southwark, North and Bermondsey (Mr. Hughes) may have more to say about that. I understand that the Home Secretary has committed himself to ending the use of prisons for detention purposes within four months. Will the Minister confirm that? I recognise, however, that we need more detention centres in order to be more effective at achieving removal.
The limitations of our expertise as well as time constraints mean that it is difficult to go further in the comprehensive analysis of the asylum system urged by the Home Office. Other issues are relevant. However, I have referred to the need for some substantial and necessary changes. We must establish the principle that those with a viable claim to asylum should be given leave to enter and remain in this country, while those who cannot substantiate their claims should be housed in decent circumstances, given the opportunity to be heard, but not dispersed around the country. Subject to the refugee convention, they should be returned to the country from which they entered, their country of origin or a safe third country.
Those dispersed should be those with a prima facie case for refugee status and the choice of accommodation should be the subject of informed discussion with the refugees themselves or their representatives. They should be sent to areas with good community support, good community relations and the necessary facilities to look after refugees in an appropriate manner. Those given leave to remain could be given greater opportunities for work; we could try to dispense with the voucher scheme and escape from the risk of stigmatisation and abuse associated with vouchers; and we could give people with a genuine case for refugee status the facilities and support that they need.
In that context, the Minister may be aware that this morning the British Medical Association and the Medical Foundation for the Care of Victims of Torture have put out a document called "Asylum Seekers and Health", which describes the experiences of medical practitioners working with asylum seekers. The two organisations want the dispersal system to be reformed and the well-being of asylum seekers improved in the community, not least by scrapping vouchers in favour of cash benefits.

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The health screening facilities at ports of entry are not effective enough, and the health facilities and support available to asylum seekers dispersed around the country are often not appropriate. At Oakington, people have to deal with asylum seekers' health matters despite the fact that those who come to them have not always been screened. The medical practitioners also recognise that the time that they are there—seven days—is often insufficient to deal with that properly. Unless asylum seekers are housed in reception centres for sufficient time for health facilities to be concentrated to support them, some of the unhappy experiences to which the BMA and the Medical Foundation for the Care of Victims of Torture refer in their dossier will continue.
I do not underestimate the difficulties of managing the asylum system effectively, and I am aware of how the Government's expectations of the beneficial impact of the Immigration and Asylum Act 1999 have been dashed. The present review must be wide ranging, and changes may need to be substantial. The Government and Opposition may have to accept new solutions, but that does not necessarily mean toughening our asylum laws in a knee-jerk reaction. What is in the interest of refugees may also be what is needed to reform the system: faster decisions; clear separation of refugees from economic migrants; a generous welcome and work opportunities for those who appear to have a good claim; and decisive action to detain and remove those wishing to abuse our system. Making the system less open to abuse will not harm the interests of genuine refugees. On the contrary, it should cut the ground from under those who would abuse our welcome and frustrate those who would want to treat all asylum seekers as bogus.
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Simon Hughes: I thank the hon. Member for South Cambridgeshire (Mr. Lansley) for the opportunity to have this timely debate. He made his points in a measured and helpful way, which, given the points of view that were attributed to him before the election, is encouraging and will correct some perception of his position. He has clearly benefited from having Oakington in his constituency.
The debate is timely because the Home Secretary made clear again on Monday that the Government are reaching the end of their initial review and will make proposals soon. I have an initial procedure question for the Minister, which she may want to answer. Apart from debates such as this one, and given the general courtesy of the Home Secretary to seek as much agreement as possible on such matters, are further representations best made urgently—between now and the date that the Home Secretary is minded to make his initial response—or should we wait for that initial response on the understanding that it will have Green Paper status rather than White Paper status, and provide an opportunity for reconsideration? It would be unreasonable if the proposals, when made, were firmly stuck to without any flexibility around the edges. The
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best approach is the Green Paper approach, so that the proposals can be considered before any firm decisions are taken.
The Parliamentary Under-Secretary of State for the Home Department (Angela Eagle): I thank the hon. Gentleman for his question. If I were him, I would make my representations urgently.
Simon Hughes: In that case, there will probably be a call to the Home Secretary, asking for an urgent meeting with him or the appropriate Minister of State. However, I urge the Government to present their proposals in a way that allows debate and response based on the broad experience that hon. Members have gathered on the issue from around the country.
How we deal with asylum seekers is one of the tests of our civilisation. Obviously, it is comparatively easy for a country to take responsibility for looking after its own citizens. It is always more difficult and more controversial to take responsibility for looking after people who come from elsewhere, and the issue often engenders irrational, primaeval instincts about differences and alienation and causes politicians, the media and the public to overreact and become overly defensive.
As the hon. Member for South Cambridgeshire said, there has been a rise in the number of people who are making applications to the United Kingdom; however, that is part of a worldwide trend. Nothing that has happened, is happening or is about to happen changes the obligation that we entered into immediately after the war when we signed up to the universal declaration of human rights and, later, the United Nations convention on refugees. We must take responsibility for and accept those who are refugees within the definition of the convention.
As the fourth most successful economy in the world, we must accept that the situation is one that we can manage. If we have been bad at handling asylum applications, it is because we have been incompetent and not because the issue was unpredictable or the obligation unclear. The record of Governments, the Home Office and those dealing with the matter over the years has been one of slow response and periodic incompetence. That has worsened the situation and made it far more problematic. People have been allowed to say that there is a great problem that we cannot handle, whereas it is not a problem and we should be able to deal with the issue without considerable difficulty.
In that context, it is unfortunate that the Home Office continues to get its figures wrong. I hope that it will not happen again; I cannot understand why it happens so regularly. We had an admission just a few weeks ago that the figures for asylum cases waiting to be dealt with had been 100 per cent. wrong. We cannot go on like that; we must be able to rely on the Home Office figures so that we can make accurate projections and formulate appropriate public policy.
The basis of the debate is that individuals have not only the right to asylum under the United Nations convention, but the right to seek asylum. That may sound trite, but one cannot obtain asylum unless one can seek it. Therefore, one of the first questions in

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respect of how we manage asylum applications is the "What?" question: what rights do people have? We have all recited and read often enough the provisions of article 1 of the convention, which was updated by the protocol that makes it relevant to people who are fleeing now. It contains an exception that deals with one of the concerns of the past six weeks; namely, those with a criminal or terrorist background who are seeking asylum. Article (1)(f) is clear:
"The provisions of this Convention shall not apply to any person with respect to whom there are serious reasons for considering that:

(a) he has committed a crime against peace, a war crime, or a crime against humanity, as defined in the international instruments drawn up to make provision in respect of such crimes:

(b) he has committed a serious non-political crime outside the country of refuge prior to his admission to that country as a refugee;

(c) he has been guilty of acts contrary to the purposes and principles of the United Nations."

It is important that the public understand that Governments have a right to tell people in those categories that they cannot claim asylum in another country. That does not apply to people who may have been active in attempting to overthrow an undemocratic regime in their country. We must be careful about generalising that people who have been associated with violence are therefore presumed to be ineligible for asylum. The most obvious example, which is always given, is in respect of people who fought against apartheid in South Africa when it did not have a democratic Government. With the benefit of hindsight, no one would now argue that they should be prevented from leaving that country just because they had an association with the anti-apartheid movement. We must be mindful of the difference between people who have been associated with seeking to overturn Governments on the one hand and those who clearly, and tightly, come within the definition of article 5(1)(f) of the convention on the other.
The next question is, "Where should people make their application?" I repeat this in every debate on the subject: of course some people make their application here having coming to the United Kingdom lawfully. They come on the basis of the free right to travel, if they come from another country where there are no travel restrictions, or they may have a student or tourist visa. However, as we well know, many people have to risk life and limb to avoid the authorities in order to come here to put their case, because at present the only place where people can apply for asylum to the United Kingdom Government is within the territorial jurisdiction of the United Kingdom. Ministers owe the House a better answer than we have had in the past to the question, "How can you put your case if you can't get here lawfully?". It will be helpful if the Minister can now say that the Government are considering that question in the general review.
It is absolutely proper that people should be able to make their asylum applications at United Kingdom missions abroad. I have never understood why it is not possible for someone who leaves a country where there is conflict and goes to a nearby country which is a safe place where there is a United Kingdom foreign mission, or one representing the United Kingdom, to put their case there. I have visited foreign missions and I am
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aware of the pressure of their immigration and visa work, but that is a practical matter; it is about having staff on the ground at least to receive the applications. It must be better for people to avoid the risk of travelling across the world to put their case, often being exploited in the process. Are the Government willing to consider allowing people to make asylum applications at British missions overseas?
Another obvious matter to consider is what arises from the experience of Sangatte and similar places. People there are in territorial France, but subject to that understanding we could have British officials in Calais and Paris to deal with matters in that part of the territory that was negotiated under the Canterbury treaty, which is technically under UK jurisdiction. There are also people in the Red Cross holding centre, the Eurotunnel building appropriated for the purpose. I have had discussions with Eurotunnel and with the French Ambassador to the United Kingdom, who was extremely courteous and helpful. A sensible proposal would be to allow applications to be made to the United Kingdom from a place outside the United Kingdom. It would be far better for people who say they want to come to the UK, who are waiting on the other side of the English channel, to be able to put their case there, rather than—
Angela Eagle: Does the hon. Gentleman admit that under the terms of the Geneva convention, people are supposed to claim asylum in the first safe country that they reach? That convention does not give them a choice of country in which to claim asylum. If people are in France—I assume France is a safe country—why on earth should they not claim asylum in that country? Is the hon. Gentleman suggesting that people should be allowed to choose the European country in which they claim asylum? That would be the end of the Dublin convention.
Simon Hughes: I was coming to that and I will answer the Minister's question. This is about not the Geneva convention but the Dublin convention. I understand that it requires people to claim asylum in the first safe third country. The convention is nonsense, because people often arrive in the first safe country completely by accident.
The example that I give most often relates to the civil war in Sierra Leone. When people fled from there, they often arrived immediately in a French-speaking west African country. They did not claim asylum there but got on an aeroplane to Europe to seek asylum in the UK. However, flights from the Ivory Coast, for example, always went to Paris, because that was the traditional link, so people ended up in France. By the logic of the Dublin convention, they should claim asylum in France. The fact that they did not speak French and had no tradition or links with the French was disregarded, which was complete nonsense.
We should recognise that when people leave a country where they cannot stay or do not feel that they can stay and they seek haven in a safe country, a number will come to Europe. We must therefore have a broader vision than just saying, "Let's send them back to the first safe third country."
The convention is also nonsense in practical terms, which I discussed with the French ambassador. People who end up at Sangatte without paperwork will not own

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up to the name of the first safe country at which they arrived; they simply do not answer that question. It is no good saying that they must—they do not. Most people will have come by land across western Europe. It depends whether we consider non-EU countries relevant, but people will have been through non-EU countries and many other EU countries. According to the logic of the convention, a lot of time is spent deciding whether to send them back to Germany, Romania or wherever, which is a completely pointless exercise.
A better solution lies at European level. We could reasonably consider processing in the EU but not necessarily in the UK asylum applications in respect of the UK.
Mr. Lansley: Did not the Dublin convention have more to it than simply the specification that applicants should claim asylum in the first safe country that they reach? The convention was drafted, among other things, in contemplation of relatively large numbers of asylum seekers from eastern Europe, who at the time arrived in Germany, Austria or Italy in the first instance.
The extension of that principle is one of burden sharing. If a relatively large number of asylum applicants from Sierra Leone arrive in Paris, there should be a burden-sharing system involving the French and others. Whether or not an asylum seeker has papers, the simple incontrovertible fact is that someone at Sangatte is in France, a safe country, so their application should be managed in France. If a burden-sharing system is needed, we can manage it between us and France, rather than allowing people to make applications from across the world and importing them all to the UK to deal with them.
Simon Hughes: Let me explain the consequences of that. The French Government told me—I have no reason to disbelieve them—that they interviewed all or many of the people in Sangatte and asked them whether they wanted to seek asylum in France and that they said no. The reason was that they did not speak French, had no links with France and so on. An opportunity was offered but not taken up. It is no good having legal systems that will never work in practical terms. We need the combination of a legal structure that works practically. Logically, we should work out a common EU policy, and that is on the drawing board.
Can the Minister tell us where we have got to in progressing the common EU policy in terms of burden sharing? I have always taken the view, as have my colleagues in the European Parliament and elsewhere, that burden sharing is the right way to proceed. However, one should not implement that in an arbitrary way because those who have links with the United Kingdom, because of Commonwealth traditions and so on, would be more likely to come to the UK. It should not matter where people first make their application.
The Dublin convention is also protective of the United Kingdom. As the hon. Gentleman rightly said, almost everybody coming to Europe from outside—or who came from the Balkans during the civil war in the former Yugoslavia—comes first to eastern and south-eastern Europe. That fact has loaded the responsibility
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on to Germany. Britain was about the last place that people would reach and it was very much in our interest and that of the Irish Government to minimise the number of people who came here. That does not seem fair. We should have burden sharing.
Angela Eagle: Is the hon. Gentleman musing? The whole policy area is difficult. Is he expanding the Liberal Democrat policy by advocating the abolition of the Dublin convention, giving people a free choice to decide in which country they wish to seek asylum and for those processes to be automatically accepted by the country concerned? Is that Liberal Democrat policy?
Simon Hughes: Of course I am not musing. It is our view that the Dublin convention is not appropriate and that it ought to be replaced by a Europe-wide policy—that is why I asked how much progress we are making on that—as soon as possible. That means that people who came within the European Union territorial boundary would make an application—in law, because of subsidiarity it has to be made to the country in which they arrive—and that we would accept a responsibility to accept claimants proportionate to our population, so that we all took an appropriate share of people coming to Europe. The accident of whether one arrives in Britain or in Germany should not be relevant.
Angela Eagle: I thank the hon. Gentleman for that explanation. I am intrigued. He is expanding a choice mechanism whereby asylum seekers can choose in which country they will end up. What if the number of people making claims to that country is larger than its allocation under the system of burden sharing? Is the hon. Gentleman saying that asylum seekers should have such a choice, regardless of their numbers? Asylum seekers wanting to come to Britain may end up in Sweden, Germany or Spain.
Simon Hughes: I did not say that there should be a choice-based system. I said that people coming within the boundaries of the EU should make their case and that it would then be sensible to interview them to establish the most logical and appropriate place for them to go. Asylum seekers can reasonably express a preference. In as far as it can be accommodated, that is appropriate, but if three quarters of applicants—to take a ridiculous number—said that they wanted to come to the UK, it would be entirely disproportionate.
The purpose of burden sharing is that the burdens are shared appropriately across the European Union. We should therefore take people's preferences into account. The reality is that many people coming to the UK from Sangatte and elsewhere have done so as a means of going on to the United States, Canada and other countries. We need to be more intelligent about working out how we process cases in ways that share the burdens across the EU and take account of people's community, family and linguistic ties. I therefore repeat my question to the Minister: how far are we going and how urgently are we making progress in the EU-context, which seems the essential way forward?
Mr. Frank Cook: Order. I have been becoming a little concerned for some time now. The subject of the debate is the management of applications

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for asylum in the UK. The hon. Gentleman, conscientiously I am sure, is expanding the debate and almost hijacking it. I ask him to confine his comments more closely to the subject that was introduced by the hon. Member for South Cambridgeshire (Mr. Lansley). If the hon. Gentleman wants to explore the matters that he seeks to, he might be better to have his own Adjournment debate.
Simon Hughes: I was trying to respond to questions and I shall move on.
For me, the next matter is the "When?" question. I share the view of the hon. Member for South Cambridgeshire that the processing of asylum applications in the UK should be done as quickly as possible. That has logical consequences. We need more case workers; we have always needed more. Apparently, they are neither relatively expensive nor difficult to recruit, so there is not a supply problem.
I share the hon. Gentleman's view—it would be an interesting development of his party's policy but I welcome it—that the best way of processing cases is at reception centres. I have always taken that view. That is how Finland and other European countries manage the matter. The benefit of that is that one accepts that detention centres are illegal, which seemed to be the Court of Appeal judgment, although the matter has yet to reach the House of Lords. We may then do what other countries do, and give people an incentive to stay by telling them that their case will only be processed if they do. The Finns have done that. If a person walks away and disappears, he or she loses any benefits. In that case we would not need detention centres or prison and I welcome that, should it be the Government's clear view that neither should be continued. We would allow what is effectively, but not technically, bail; people would be free to go outside and be able to go elsewhere. Also, there would not be the totally unsatisfactory dispersal policy that has been imposed, through which people are dispersed to places that are inappropriate for them and for the host community.
Mr. Lansley: The hon. Gentleman said that we did not need detention centres. Does he mean that there should be no detention centres for the purpose of detaining people while making a decision? Surely by the time a decision has been made and a person is pending deportation, there must be substantial detention facilities.
Simon Hughes: I can give the hon. Gentleman two quick answers. It is clearly lawful to detain people who have committed offences or who are reasonably suspected of being about to commit offences. That is always an exception to the general policy of permitting people to come and go. Secondly, there is the matter that he rightly raised about what happens at the end of the process. I agree that we have had inadequate policy relating to people whose applications have been rejected and who are thus not entitled to stay here. There must be a combination of factors, such as better tracking conditions while people's applications are processed—signing on and so on. That is not difficult. People who
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have exhausted their right to put forward their case may be detained prior to their removal, and I do not argue about that.
I have two questions for the Minister. Are we examining increasing the numbers of people accepted for resettlement? Our numbers for that have been extremely low. Will the Government address the system of managing people whose applications are turned down? That system has clearly failed and discredited much of the rest of the system by containing no adequate provisions for managing such people. Do the Government accept that that should be done on a European Union-wide basis?
The best way forward is to ensure that the way in which we manage our applications is consistent with the way in which our neighbours in the EU manage their applications. Thus, if the burden were shared, it would be reduced and the controversy and difficulty of the policy would be minimised for this and other Governments.
11.54 am
Mr. Dominic Grieve: In light of the lengthy peroration of the hon. Member for Southwark, North and Bermondsey (Simon Hughes), I shall be brief because I am keen to hear the Minister's response to my hon. Friend the Member for South Cambridgeshire (Mr. Lansley). In fairness to the hon. Member for Southwark, North and Bermondsey, the way in which the debate has developed may have been inevitable. The problem with asylum seeking and how we process asylum applications is bound up intimately with the profoundly changed circumstances that now prevail compared with those when the original conventions were drawn up in the 1950s. No one at that time had the slightest notion of the novel way in which asylum applications and asylum seeking would develop.
I am sure that, when the conventions were drawn up, the idea was that people would spill over the borders from areas of localised conflict or persecution into adjoining states and that, at the conclusion of the political problems or hostilities, they would return to their own homes. In reality, we have once more in the world a "volkervonderung"—a wandering of peoples who move around for a host of reasons. Whether or not they may be asylum seekers does not mean that their aims or ambitions are invalid. One has only to consider the conditions in some of the countries from which such people come to appreciate that the distinction between an economic migrant and someone seeking political asylum is thin and grey. The Government have an extremely unenviable task that demands from Opposition parties measured support whenever it can be provided. They have to make difficult distinctions, which are particularly problematical when defining whether asylum seekers fall within the criteria under the convention that political asylum ought, as a matter of right, to be granted.
The contribution of my hon. Friend the Member for South Cambridgeshire to the debate was particularly valuable. Rather than adopting theoretical rhetoric, he drew attention to practical problems and emphasised the need for the application process to be speeded up in a way that is fair to applicants without infringing on their

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human rights. In that context, the reversal of the initial judgment on Oakington is welcome, although it has yet to go to the other place and we do not know what the final outcome will be. No one wants to infringe the human rights of asylum seekers by detaining them, but the problem—of which I have had personal experience before becoming a Member of Parliament—is that asylum seekers who are released into the community present two challenges. First, we must know whether they are receiving the help that they need to conclude their asylum application and, secondly, we cannot escape the fact that certain asylum seekers find such a process a convenient way in which to exploit the system.
I had to prosecute on behalf of the Department of Social Security individuals who had made multiple applications for asylum and who had adopted different personae for the sake of milking the benefit system. In one case, an individual had adopted 30 different identities. Once within the system, such people did not respond to the invitations to present themselves at Lunar house to be interviewed so that their asylum application could be processed. Therefore, there is an enormous difficulty, and the Government are entitled to our sympathy. It is difficult for Conservative Members, who are in opposition and who, therefore, do not benefit from the input of officials, to arrive at hard and fast ideas about the best way to tackle the problem. However, the key to solving it is to increase the speed at which applications are processed. Ultimately, it matters not whether that is achieved by telling applicants that they are free to go into the community but that they must attend their interviews, or by arranging reception centres where their cases can be streamlined. However, it is essential to speed up the system: that will ensure fairness and, ultimately, it will deter those who wish to abuse the system from doing so because they will know that they will rapidly be found out, and that appropriate steps will then be taken to ensure that they are removed from the country if they do not fulfil the criteria.
I will now conclude, as the debate has only 30 minutes left to run, and I want to hear the Minister's remarks.
I welcome the comments of my hon. Friend the Member for South Cambridgeshire, because he put forward some sensible and pragmatic proposals, and I look forward to hearing the Minister's response.
12 noon
The Parliamentary Under-Secretary of State for the Home Department (Angela Eagle): I welcome you to the Chair, Mr. McWilliam.
The debate has been interesting because hon. Members have acknowledged the difficulty of the practical and policy issues involved in ensuring that the asylum system in the United Kingdom works well, and expressed some sympathy which I am happy to accept.
I welcome all the contributions to the debate. They have been serious and they have wrestled with the key practical issues and I assure hon. Members that the Government always listen to representations. I also welcome the opportunity to consider the issues that have been raised by the hon. Member for South Cambridgeshire (Mr. Lansley). However, although the
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debate is timely and important, it puts me in an awkward position, as my right hon. Friend the Home Secretary will soon make a statement about the matter under discussion, and I cannot pre-empt it.
The Government are determined to adhere to their obligation under the 1951 UN convention to maintain the integrity of the asylum system. With regard to the practical issues that the nation faces, I welcome the fact that not one hon. Member—or anyone else—is thinking, or has thought, that we should renege on our commitments to genuine refugees who flee from torture and oppression. The Government would never do that.
It must be recognised, however, that there is growing concern about the number of asylum seekers and illegal immigrants who have recently entered the United Kingdom, particularly as many of them are economic migrants. It is not wrong for people to aspire to better their lives, and I do not condemn them for wishing to do that, but it is important to examine how we fulfil their aspirations: it must be achieved in a more sensible way than by asking the UN convention to take the strain because it was designed to perform a different task. That is why my right hon. Friend the Home Secretary has said that we need to be more rational about economic migration, and I am pleased that, in general, raising the debate about asylum has been welcomed outside the House. A rational debate about the matter is necessary. There is also an emerging debate in Europe about the possibility of creating a common migration system; that would be beneficial to all.
It is necessary to ensure that a credible and faster end-to-end asylum system is created, and that there is closer contact between applicants and the authorities. At the end of the process, those who are given refugee status because they need to be protected must be integrated into society, and those who are not must be removed.
People generally recognise that there has been a huge increase in applications throughout the European Union, not only in Britain. As the hon. Member for Beaconsfield (Mr. Grieve) said, that trend has continued partly because of changed world conditions, and we must have a way of managing it.
I shall spend some time giving specific answers to some of the questions asked by the hon. Member for South Cambridgeshire, especially about the Great Gransden site. I am told that it is not true that the site is used for Oakington cases. It is in fact used by Wackenhut, an internal escorting contractor used by the Home Office in the dispersal process, as a satellite-operating base, and it has several such places in various parts of the country. It is intended as a 30-minute transit stop for staff and detained persons being transferred over long distances north to south and vice versa. It is a secure area in which a stopover can be made. Sometimes staff and vehicles are changed, too. It is also an opportunity for a comfort break. It deals not with Oakington cases but with those being dispersed. There is no intention at present to use it for overnight accommodation. It is simply intended for short stops.
Mr. Lansley: I do not expect the hon. Lady to be aware of the physical circumstances of Great Gransden in the Huntingdon constituency, which is next door to mine. Those of us who are should immediately

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appreciate that it is not convenient for either north-south or east-west transfers, and that other locations would ostensibly seem to be much more directly on the Al or A14 north-south or east-west routes. Great Gransden is not, and it still seems an inappropriate location.
Angela Eagle: If the hon. Gentleman writes to me, as I am sure he will, and as his neighbour already has, I am sure that we can continue to debate the matter. I wanted to ensure that any misconceptions about the connection with Oakington were corrected.
I should also like to confirm that we fully expect to be able to end detention on remand in remand wings of prisons, at Cardiff by Christmas and elsewhere in the prison estate by the end of January, as my right hon. Friend the Home Secretary announced.
The hon. Member for South Cambridgeshire made some understandable remarks about what he called technical refusals, made on the basis of the statement of evidence form not having been filled in and returned to the appropriate place in a sufficiently timely fashion. He suggested that reception centres might be able to deal with the matter more effectively. It might cheer him up a bit if I tell him that we have introduced a post box system, which has massively cut the number of late arrivals and forms registered late, and therefore the technical refusals about which he was so worried. When the system was introduced, 400 to 500 forms a week went astray and were not appropriately registered on a file, which meant that we had to change a technical refusal to a reply saying that we had received the form but not in the right place. The simple administrative introduction of a PO box cut that number to 50 a week.
Having spent three years at the Department of Social Security, I know that obvious and modest administrative coherence can make an enormous difference to a system. I hope that the hon. Gentleman will recognise that we have made progress, although I accept his point that technical refusals are not always the best way of dealing with cases.
A fast system is part of the answer. As hon. Members hinted, the system must be fast but fair. It should give people appropriate time to make representations, but hurry cases along. As the hon. Member for Beaconsfield hinted, people often seek delay because they do not want a decision to be taken. The system must therefore continue to set tight timetables while making them achievable. That is the tension with which we must always deal.
I want to comment briefly on action at EU level. Action to equalise and harmonise the way in which asylum seekers are treated within the European Union can have value-added benefits that prevent the kind of asylum shopping that we have witnessed. Hon. Members will know about the Tampere extraordinary council in 1999, which reaffirmed our commitment to setting minimum standards and establishing a common European asylum system. The Government fully support action at Community level in this field, and believe that moves towards harmonisation of the process should ensure more equitable treatment for those requiring protection across the EU, thereby reducing the secondary movement to which I referred.
To date, the Council has adopted several measures in this field, including Eurodac, which is a computerised central database of fingerprint images. That allows us to
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deal with people who claim to have different identities and nationalities, and make multiple claims in the same system, to which the hon. Member for Beaconsfield referred, and which I have also encountered. The fingerprinting system allows us to discover fraud quickly, and deal with it. If it is available at European level, it will enable us to ensure, for identity and fraud purposes, that people traffickers and those who seek to abuse the system are spotted quickly.
Proposals under discussion include a directive on minimum standards in asylum procedures, a draft regulation on how to determine which member state is responsible for examining an asylum application—colloquially known as Dublin II—and minimum standards on the reception of asylum applicants. We await a proposal from the Commission in the next few weeks on minimum standards for qualification of refugees. Progress is being made, and Britain is in the forefront of urging faster progress. The Laaken council will assess progress towards the Tampere goals, which will include putting the bricks of a common European asylum process in place. I am therefore optimistic that we can make good progress in that area. That should help us to handle the flows of people currently coming through Europe, along various people-smuggling routes.
The key to establishing an efficient asylum system that is not susceptible to abuse is to process claims quickly. We have taken a range of measures to ensure that that can be achieved, which have included additional financial resources, new streamlined casework procedures, the expansion of the appeal system and the recruitment of new staff. The Immigration and Nationality Directorate now has approximately 10,580 staff. That is 4,180 more than in April 2000, which includes 1,000 new operational grade staff in the immigration service.
A project has also been undertaken—it is now well advanced—to transfer responsibility for aspects of asylum casework from the immigration service to the Integrated Casework Directorate. The ICD will be able to serve decisions in port cases itself rather than sending them back to the immigration service. That will enable immigration officers to concentrate on core enforcement work and other activities designed to establish the true identity and nationality of asylum seekers. As part of that project, the asylum process will be reviewed to enable speedier handling of cases. Asylum seekers will have a clear point of contact, file movements will be reduced—which is one of my bugbears—and unnecessary duplication will therefore be eradicated. I expect to see tangible benefits from those administrative initiatives by the end of the year, and further benefits next year.
Hon. Members have acknowledged that the number of decisions has outstripped the number of applications, at least in the first tier. In the past financial year, 132,840 decisions were made, compared with 52,040 the year before. We must acknowledge that there has been a step change in the past year in the amount of work that has been done. Neither I nor the Home Secretary are complacent about the way in which the system works, but it is important for the morale of those who work in this difficult area that we acknowledge their contribution and the step change that has been made. I

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thank the hon. Member for South Cambridgeshire for acknowledging the good work done by the staff at Oakington in making the system work.
The quality of decision making remains high, and the Immigration Appellate Authority dismissed 80 per cent. of appeals in the past financial year. When we examine the coherence of the system, we must have regard to removals, and I agree with the hon. Gentleman that it is no good having a system—however elaborate it is—for reaching decisions, if they cannot be put into effect.
The Labour manifesto said that more than 30,000 people who could not justify their claims would be removed by 2003–04, which is about 2,500 people a month. The Home Secretary announced that the Government had decided that the target must be met by next year. That will enable us to make a commitment to exceed the 30,000 removals by 2003. To achieve that, we are implementing a wide range of measures, and I welcome the acknowledgement by the hon. Member for South Cambridgeshire that detention will have to play a role at a certain stage in the process if we are to achieve our target.
We have increased the number of immigration staff and are training further immigration arrest teams, which will have the power to apprehend those who will be removed. As has been acknowledged, we are in the middle of expanding the detention estate, which we need to do to establish transit for removals. We are also establishing an enhanced reporting system, improving the existing return arrangements and finding new routes of return to countries to which return has been difficult up until now.
Before people can be removed, they must be issued with papers from the countries to which they are going. The process is not fast, and people cannot simply be put on aeroplanes—it is more complicated than that. We rely for some of our success on co-operation with the countries of return in ensuring that appropriate papers can be issued.
In July, the immigration service and the police signed a protocol, which was formally introduced at a meeting with the Association of Chief Police Officers. That means that the police now have a firmer footing and know where they will be required to assist in the removals process. We have also seconded a chief superintendent to coordinate relations with the police and the provision of police support for immigration service operations.
We are at the beginning of what I hope will be significant increases in our ability to remove those whose asylum claims have failed. Again, however, I ask hon. Members to acknowledge that the process is difficult.
Simon Hughes: Has the Home Office done any work to establish whether there is a link between the speed of applications and the number of appeals, which has recently increased, as the hon. Member for South Cambridgeshire said? I am not trying to put the Minister on the spot, but can she tell us what the trend is for the
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success of appeals and whether there are more appeals when the process for dealing with initial applications is speedier?
Angela Eagle: I do not have the latest figures on appeals in front of me, although I ran the social security appeals system. There is little reason for people who have claimed asylum not to appeal under our system. I mentioned a figure of 80 per cent., and the rate at which appeals are overturned and original decisions are upheld as valid is extremely high. The figure for overturning appeals at Oakington is 95 per cent. including those who withdraw appeals and those who return voluntarily before the appeal process happens. There is a high level of confirmation by the Immigration Appellate Authority of the original decisions taken by our case workers.
I should like to say a little about the purpose of Oakington. An important feature of our asylum policy has been the introduction of new procedures to speed up the consideration of claims, and the establishment of the reception centre at Oakington has been a key element in the effective operation of tough but fair immigration controls. It is there to help to deal with claims in those cases where it appears that a rapid decision can be taken. Decisions cannot always be taken quickly; any one of a range of issues might mean that appeal is not appropriate because it cannot be done in the seven to 10 days allotted by Oakington—the circumstances might be complex, it could be difficult to obtain evidence or we might be dealing with children. The straightforward cases are taken to Oakington.
Under existing immigration powers to detain, applicants are required to stay at the centre for a short period of about seven days. There is a relaxed regime with minimal physical security—the recent use of some of the spare capacity at Oakington to accommodate the victims of flooding in the area demonstrated that it is not a grimy, horrible place, where people are locked in cells, and says something about the kind of facilities that are there. I welcome the thanks recorded by the hon. Member for South Cambridgeshire in that regard.
Fast-tracking Oakington applications that are, mainly, unfounded brings applicants to the point of removal sooner than would be the case if their applications were processed in the normal way. That is because, in addition to the seven to 10 day fast-track process, most Oakington appeals are accelerated and can be heard within four to six weeks.
Since Oakington opened, we have been able to deal more quickly with straightforward claims, which has helped to reduce the pressure on immigration control. For example, applications from nationals of eastern European countries—many of whom were accommodated at the centre and whose claims were found to be manifestly unfounded—have fallen by about 50 per cent. In particular, there have been big drops in the numbers of asylum applications received from Poland, the Czech Republic and Romania—down 73 per cent., 55 per cent., and 45 per cent. respectively, if one compares the figures for the six months before Oakington opened with those for the same period a year later.
That effect has been noted. We shall keep an eye on such figures to see whether the drop is sustained. Up until 12 October this year, 12,200 people were referred

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to Oakington—9,815 were principal applicants, with 2,385 dependants—and 8,762 asylum applications were decided there, 8,690 refusal decisions were served and 72 grants of either asylum or exceptional leave were made at the initial decision stage. There were 235 allowed or conceded appeals. Of those, 7,826 applicants appealed against the refusal decision and 4,444 appeals have been decided, of which 95 per cent. have been dismissed by the adjudicator or withdrawn or abandoned while 5 per cent. have been upheld.
The fact that Oakington exists in the form that it does sends a strong message that we shall deal speedily with asylum claims, many of which are unfounded and would otherwise impose a considerable burden on the taxpayer and undermine public support for genuine refugees. We therefore welcome the judgment of the Court of Appeal last Friday but recognise that leave to appeal to the House of Lords was granted. The Court of Appeal confirmed that the detention of asylum seekers at Oakington for a short time in order for speedy decisions to be made on their applications is lawful, and that seven to 10 days is not an excessive period for the consideration of an application for asylum. We shall continue our review and to develop our thinking on the reform of the asylum system.
I welcome our serious and informed debate, and assure Opposition Members that there will always be at least a two-way process, because the issue affects us all. I am pleased that all Members who spoke condemned the xenophobia raised by some of the more hysterical coverage of the problematic system. As the Minister with responsibility for race relations, I understand that it is important to make our systems as robust and effective as we can while we continue to tackle such a challenging issue.
Mr. John McWilliam: I invite Members who do not want to stay for the next debate to leave quietly.

Sport on Television
12.25 pm
Mr. Parmjit Dhanda: I am grateful to have secured this Adjournment debate on access to sport on television, a matter of great importance to my constituents and to people throughout the land. I shall discuss three aspects of the issue: why access to sport on television is important, some of the current problems of access to sport on television, and what may be done to improve levels of access.
We may ask ourselves why access is of such significance. Anyone who was in the country when Tim Henman reached the semi-finals of Wimbledon, or when David Beckham hit that free kick at Old Trafford a couple of weeks ago, will be aware of the sense of national pride felt across the nation when we do especially well at sport. The Department for Culture, Media and Sport is keen to encourage participation, and greater visibility of sport on television will lead to further encouragement. Participation in sport helps to reduce unemployment and crime and leads to better health and qualifications.
The formation of a university of Gloucestershire was announced yesterday, and it will concentrate on sports science at a campus in my constituency. I hope that the Minister will join me in congratulating everyone involved in that announcement on their hard work to ensure that the project has come to fruition.
A wide range of parties have different interests in how sport is shown on television, including fans, players, clubs, rights holders, competition organisers and digital, terrestrial, satellite and cable companies. However, at times some effective mediation seems to be missing between those parties, and agreement between them is also missing. Several governmental and non-governmental organisations including the Department for Culture, Media and Sport, the Office of Fair Trading, the Independent Television Commission and Oftel—it will soon become Ofcom—are trying to fit into the mediating role, but we need to look at the issue more closely.
As the DCMS put it, we have a duty as a Government to provide quality broadcasting for the many, rather than the few. In some cases, the Government can safeguard universal coverage due to the listed events under the Broadcasting Act 1996. Come what may, we know that certainly the final stages of Wimbledon tennis will be on terrestrial television, as will the Olympic games and the football, cricket and rugby world cups. Under the 1996 Act, the ITC is required to ensure that a non-free-to-air broadcaster, or a free-to-air broadcaster, can show any part of a tournament live only if a free-to-air broadcaster with at least 95 per cent. coverage has acquired similar rights or been given the opportunity to do so on fair and reasonable terms. It is those terms that sometimes cause confusion.
Thanks to that legislation and to good government, the Minister for Sport, working with ITV and the BBC, was able last week to announce that the World Cup in Japan and Korea will be available free to air. I should like to think that my early-day motion 221 calling for the World Cup to be on terrestrial television had had some effect.

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I want to take a closer look at the deal that was struck last week. The TV company Kirch Media that bought the rights to the World Cup in 2002 did so with the clear objective of maximising profits by selling the rights to the highest bidder. Kirch insisted throughout that it would make only England matches, the opening match, the semi-finals and the final available to terrestrial television channels. That would have meant their missing the Brazil v. Argentina match and games involving Italy, Germany and France. We need greater clarity in the regulations, because in seeking to back up its position Kirch said that selling the rights to the highest bidder in each country was in line with the regulations of FIFA, football's world governing body.
The European Commission investigated the television rights to Champions League games, and it signalled that UEFA may have violated competition laws. An EC spokesperson described the system of auctioning TV rights to the highest bidder in each country as highly anti-competitive. The self-regulatory system of major football rights holders ultimately limits TV coverage and reduces access to sport on television. I am delighted that good government should have prevailed over profiteering for the rights to the 2002 and 2006 World Cup. We must remember that, during the last World Cup, even games such as Belgium v. Sweden and Cameroon v. Austria attracted 7.3 million and 8.7 million viewers respectively—bigger audiences than for most live games on terrestrial television.
I would like to see the BBC and ITV deal replicated for those rugby matches in which the British Lions are playing. My constituency of Gloucester, a rugby-loving town with a successful team—the cherry and whites—had problems in the summer during the British Lions tour. Live games were available only on satellite television, and in order to watch them my constituents had to choose between signing up to a satellite TV package and visiting a pub. often at 9 o'clock in the morning. Those who wanted to see highlights of the games could do so only by popping over the border into Wales and watching S4C, a far from satisfactory arrangement.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Dr. Kim Howells): Good for Welsh tourism.
Mr. Dhanda: Yes, good for Welsh tourism, but the British Lions tour games are steeped in such history that they should be on an even footing with the rugby world cup, not least because rugby world cup games such as Tonga v. Argentina are better protected for terrestrial viewers than British Lions tour games of Australia.
Access to sport on TV could affect not only how we watch sport; it has the potential to determine the future of broadcasting. When people buy new television sets and choose to subscribe to pay TV, their choice is usually determined by the availability of sports and movies in the package. The massive growth of pay TV during the past 10 to 15 years has been driven by the public's appetite for watching football. The rights to show sport have a positive effect by increasing subscription and are therefore hugely significant as a
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factor in deciding who will be the dominant provider. Today's debate about access to sports on television is therefore also a discussion about the shape of broadcasting in the longer term. It is a complicated but important debate about a highly aggressive market, in which technical and legal arguments are often used to make things much foggier.
The television market is made up of different providers—Sky, the BBC, ITV and so on—on a range of different platforms such as digital terrestrial, cable and satellite. The TV that we are most used to is the traditional analogue television, which is picked up with an aerial on the roof. The Government plan is to phase out analogue TV at some stage between 2006 and 2010. The reason for switching to digital is obvious: it gives a vastly better picture than analogue, provides more channels and choice, better mobile reception and greater interaction. The advantages are there for all to see, as last week's digital action plan made clear.
The plan, however, did not define a clear date for the switch-off of analogue TV; we know that it will happen at some stage between 2006 and 2010, but we need to take a closer look at the date. The lack of clarity on that point has had some negative effects for sport on television. By setting a date, we would allow our forefront digital companies to plan for the long term, which can only help to bring down subscription costs. Digital television is already available to around 8 million viewers and is currently dominated by Sky TV, which distributes its digital TV package through satellite dishes. ITV is the next major player in the market, but even that company is dwarfed by Sky.
Sky is largely responsible for creating the market. The massive amounts of money going to football and the influx of quality foreign stars and managers into the Premiership are a direct result of the money that Sky has paid for the broadcasting rights. Providing access to sports makes business sense for Sky, which uses them as an incentive to encourage new viewers to take up subscription to Sky on satellite. Sky is doing a good job: it has more than 50 per cent. of pay-TV homes, recoups more than 70 per cent. of pay-TV revenue and is without doubt the dominant player. However, Sky sometimes uses its strength to muscle other opponents off the ball, and its style of play in Europe has required some intervention from European Governments.
Sky has four times the number of subscribers of ITV, its nearest rival, which has only 1.2 million customers. The two companies do not have a good relationship; it is not merely a fierce rivalry between two channels but a more significant battle between two platforms. Sky broadcasts use digital satellite while ITV uses digital terrestrial television—or DTT. Over the past few months, supporters of football clubs such as Liverpool, Manchester United and Arsenal have suffered: having paid for a sporting package on Sky Digital, they find that they cannot receive the ITV sports package that allows them rights to the Champions League. The process works in the opposite direction, however: viewers can have an ITV digital package and watch Premiership football on it. So consumers are sometimes required to buy two packages rather than one, or they may choose between them and have to get rid of the package at the relevant moment.

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The communications White Paper, published in December 2000, proposed the imposition of a "must offer" obligation on public service broadcasters without a matching "must carry" obligation on satellite networks such as Sky. Under current arrangements, cable operators carry the public service broadcasters free on their networks and, in return, cable operators are not charged for copyright. "Must carry" also effectively applies to digital terrestrial television because of the capacity on the multiplex gifted by public service broadcasters and the requirements set out in the multiplex licences.
The White Paper envisages the situation continuing for both cable and DTT but does not extend that to satellite. We should consider that matter more closely. The guidelines specifically preclude satellite providers, which are the largest providers of much of the exclusive sport on television. We should look for a way in which to provide greater clarity, vision and leadership in that debate. This week, it has emerged that ITV Digital is suffering under the weight of heavy competition. It is right for the digital action plan to focus on the long-term plan, but there is also a need for immediate action in this volatile market. I would like us to set a date for the end of analogue television.
I am sure that I have given hon. Members a taste of the complexity of some of the issues involved in broadcasting sport on television. Given that complexity and the potentially massive influence of how sport is shown on television, there is a need for a body to monitor and work as a mediator in this highly competitive market. Perhaps it is even time for us to consider an Of-football regulator for football, which is so huge and of such value to us. Such a regulator could not only resolve disputes between players and the industry but deal with arguments over football in the media, such as that between ITV and Sky. If we do not act now, we are in danger not only of taking away from the nation the joy of a successful and beautiful David Beckham free kick but of depriving the nation of its position at the forefront of the digital age.
12.40 pm
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Dr. Kim Howells): First, I congratulate my hon. Friend the Member for Gloucester (Mr. Dhanda) on securing the debate. I am aware of the strength of feeling that exists in his constituency, in mine and in the House on this matter. The accessibility of sport on television is an important subject. It is also at the centre of our economy in this—to use a cliché—post-industrial age. Television and communications are huge drivers of jobs, entrepreneurial ventures and new inventions. We need those sectors. The countries that will do best in the 21st century are those that have recognised that their economies must be talent-driven, and television is a classic example of a talent-driven industry.
My hon. Friend has represented Gloucester very well. I suffered badly at the hands of rugby players in Gloucester—they were a rough lot, I remember. Cherry and white shirts used to become blood red very quickly. That is where the art of coarse rugby was invented and is still played.
I enjoyed my hon. Friend's call for a single regulator or mediator. My hon. Friend will know that recently, in another place, we introduced what is known in the
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jargon of the House as a paving Bill to set up Ofcom, the single regulator. At the moment, there are a large number of regulators. There is also the BBC, which regulates itself through its board of governors, and a small but important broadcasting organisation in Wales called S4C—the Welsh Channel 4—to which my hon. Friend referred earlier.
We are concerned at the great confusion of regulators. I would not criticise any of them, because they have done a good job, but the world has moved on and technology is moving on quickly. We must ensure that the regulation that is in place— especially for the brave new world of digital services—can keep pace with technological advance and that it can accommodate it. We must not institute a new regulatory regime that is already redundant. It is important that we do it.
I disagreed with little of my hon. Friend's argument, but the idea of another regulator—a football regulator—will wake me up at 2 am tomorrow in a cold sweat. There are enough regulators already, without appointing more. However, I can see his point and I hope that when we publish the full communications Bill, which we hope to do in February, my hon. Friend will contribute to the debate. We will publish it in February for consultation, and we want everyone in the industry to read it. The question of sport and regulation is most important.
Mr. Dhanda: On that point about regulation and current legislation, does my hon. Friend believe that Ofcom will be a more effective regulator in bringing together the entire communications field—satellite, digital and terrestrial television with the interactive studies that go with it—than the current more disparate layer of regulation?
Dr. Howells: Yes, I hope that the single regulator, instead of the collection that exists currently, will be a step forward and will accommodate the various platforms. My hon. Friend concentrated on the question of different platforms, and I will do so, too. We are at a vulnerable point in the digital programme. Two ITV companies, Carlton and Granada, have put a lot of money—as much as £800 million—into what is now known as ITV Digital, but used to be called ONdigital. So far, it has about 1.2 million subscribers, but the companies are concerned about the investment, which has been written off—far too often—by the press and the broadcasting anoraks. I am an eternal optimist and I hope that it is safe, because it is important that we have at least three competing platforms.
The digital revolution will be pushed forward by competition, and it is not the business of the state to underwrite those technological and commercial advances. It must be content driven, and people will want to buy digital only because they see it as better than what they have, whether through increased access to programmes on sport or those on any other subject. Competition must drive that forward, not the pronouncements of a Whitehall Minister or official.
Mr. John McWilliam: I hope that the Minister was not referring to me as a broadcasting anorak because I am a former member of the BBC's General Advisory Council.
Mr. Khalid Mahmood: I want to point out some statistics about current access to

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pay television. Some 41.5 per cent. of people have access to pay television of some kind. Of those, 36 per cent. have access from satellite and 11 per cent. via digital. Being a former rugby player, I enjoy the six nations tournament and the good record of the British Lions. People in Birmingham, especially in my constituency wards of Perry Barr and Oscott, are tremendous supporters of both football and rugby. Enthusiasm for sport is high, and Birmingham has a parks cricket league with 58 teams, which is the largest set of teams in any part of the country.
However, pay and satellite channels are not affordable for most of those people, who are in the lower end of the pay scale but still want to watch sport. Sport should be a family event. It should enable people to get together. When there are pay sports, people generally go to their local pubs and so they cannot sit with their children and wider family. Over the weekend, the ITV network decided to reschedule its Premier League matches, but that is different. International and national games should belong to everyone and should be more widely available on terrestrial channels.
Dr. Howells: I thank my hon. Friend. That is a great advert for Birmingham rugby. It was the most concentrated speech I have heard in this place in a long time, although it was really an intervention.
Mr. John McWilliam (in the Chair): Order. Had the hon. Gentleman made a speech, I would have called him to order.
Dr. Howells: Thank you, Mr. McWilliam. I love the relaxed atmosphere here.
On the specific question of rugby being a listed sport, it might be a good idea if I reminded hon. Members of the lists of sporting events protected under part IV of the Broadcasting Act. Group A, for which full live coverage is protected, comprises the Olympic games, the FIFA World Cup finals tournament, the European football championship finals tournament, the FA cup final, the Scottish FA cup final, the Grand National, the Derby, the Wimbledon tennis finals, the rugby league challenge cup final and the rugby world cup final. Group B, which protects secondary coverage, comprises cricket test matches played in England, non-finals matches in the Wimbledon tournament, all other matches in the rugby world cup finals tournament, six nations rugby tournament matches involving the home countries—which now include Italy, an idea that I love—the Commonwealth games, the world athletics championships, the finals and semi-finals of the cricket world cup involving home nation teams, the Ryder cup and the Open golf championship.
My hon. Friends are calling for an event like the British Lions tour to be included. BSkyB has purchased exclusive live rights to the British Lions rugby union tours for 10 years. British Lions matches are not listed events because they do not meet the necessary criteria, or they certainly did not meet them until my hon. Friend the Member for Birmingham, Perry Barr (Mr. Mahmood) made his case. BSkyB must therefore decide to whom, if anyone, to sell the highlights. Secondary coverage of this year's three test matches against
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Australia was sub-licensed, as I think my hon. Friend the Member for Gloucester mentioned, to S4C and was available to viewers in Wales.
The time to make the case is when the next review of the listed events occurs. That time probably starts now, although we do not envisage an early review of the list because there has only just been one. I take my hon. Friend's point about rugby union, which is certainly an enormously popular sport. In some parts of the country, it borders on a religion. A great many people would love to have seen the games in the southern hemisphere. There is a problem, however. I am not making excuses for the broadcasters, Mr. McWilliam, and you are well aware of the problems. If one takes the British Lions tour to New Zealand or to Australia, the time differences are so huge that broadcasters would have to run them through the night. That is not a bad thing, given some of the dross on television during the night, but it is a decision for the broadcasters.
The case for running an entire series as a listed event with that time difference in mind is no easier to sustain in terms of projected viewer figures than is running a cricket test match through the night. At least as many people would appreciate watching cricket. Those who are passionate about rugby would not mind that, though I have to admit that it is a long time since I have been able to stay awake after 10.30 on any night.
The World Cup final tournament is important to millions of UK sports fans. In 1998 the tournament included 64 matches. It has been listed in its entirety since 1985. It is a huge tranche of games. Interest in cup matches goes well beyond those involving the home nations. My hon. Friend the Member for Gloucester mentioned that matches between what might have been thought of in this country as obscure nations gained audiences larger than "News at Ten" and many other popular programmes.
FIFA requires that the opening game, the semi-finals, the final and games involving a national team should be shown on free-to-air television. One expects such matches to attract large audiences in this country and elsewhere but, as my hon. Friend said, it is much more surprising that 9.3 million people tuned in for Morocco v. Norway. I was amazed when I saw that figure. Furthermore, 9.8 million people watched Germany v. Iran and no fewer than 10.2 million watched Jamaica v. Croatia.
Mr. Peter Luff: Hear, hear.
Dr. Howells: Clearly one of them is sitting opposite and I have no doubt that it was a cracking game. I was nevertheless surprised at that level of interest.
Mr. Dhanda: I agree with virtually all that my hon. Friend said. However, does he agree that, although we should let the markets decide in most respects, when people have already forked out to watch Premiership football on Sky Digital, they should not have to fork out again for another platform to have the widest choice? That is why they paid in the first place.
Dr. Howells: My hon. Friend makes one of the key arguments that I hope will be debated when the draft Bill is published in February. It is an important point.

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The manner in which the digital project is carried forward will depend on people feeling comfortable with the system and platform that they have bought into. We know that ITV is having problems with Premier League football on Saturday evenings: it may be shifted to another time and there is talk about selling to another platform, which will remain nameless, for wider distribution. We shall have to examine that carefully.
I hope that my hon. Friend does not believe that politicians should decide the matter. Parliament should certainly debate it, but God forbid the clay when politicians such as myself, others in the House or officials tell broadcasters what they can and cannot broadcast. The great achievements of the British television industry—terrestrial, satellite or cable—have been gained not as a result of political decisions but because of the creativity and talent of the people who work in it.
Many curious decisions are made about what sport should be on television and when it should be shown. The market research carried out by ITV revealed that buying the Premiership rights cost £185 million—£25 million more than the deal that ITV and the BBC did with Kirch to buy two lots of World Cup coverage. It looks like a lot of money now, and people wonder about those decisions, but they are commercial, artistic and creative decisions taken by broadcasting companies. We should not be in the business of telling them how to conduct their business.
I am a little confused about the time. Perhaps you can tell me when I should finish, Mr. McWilliam.
Mr. John McWilliam: Time is up now.

Education Funding (Worcestershire)
1 pm
Mr. Peter Luff: I am delighted to see so many hon. Members from Worcestershire. I think that they want to intervene later, and others may turn up. I am not surprised that they are here in such large numbers, because the debate is about fairness, to which we are all committed.
In this Chamber on 24 January, the largest lobby of head teachers that the Commons has ever seen gave all the county's then MPs a grilling of which Jeremy Paxman would have been proud. A few weeks later, it was the turn of the governors, who were equally angry about unfairness in the distribution of education expenditure across the United Kingdom.
Successive Conservative and Labour Governments have not been fair to Worcestershire in a range of sectors: health, social services, policing, fire, regional development and, above all, education. The Government inherited an unfair situation, but far from seeking to address it urgently, they allowed it to get worse. As a result, schools in my constituency have fewer books, teachers and resources than those in neighbouring areas. Now, probably for the first time, we are experiencing difficulty in recruiting teachers to our schools. Appointments are being made because the successful applicant was not the best but the only applicant.
I should like the Minister to address three basic themes: the problems caused by diverse funding streams; the unfairness of the standard spending assessment formula; and the impact of the transfer of post-16 budgets to learning and skills councils. I will not labour the point about diverse funding streams, but I want to knock on the head the common argument that shortfalls in basic funding can be made good through standards fund money. Many of my local head teachers are worried about the complexity of applying for such funds, and I worry about the power that they give Ministers to centralise education policy even more.
Gerry Burgess, the head teacher of Simon de Montfort middle school, told me that the school's basic budget allocation is £900,000, but £840,000 goes on staffing. He needs the flexibility to use every penny that he gets in the school's best interests, not the prescription that inevitably flows from the increasing use of standards fund money.
Some 29 separate funding streams are available to schools. I sought the exact number in a parliamentary question, but Monday's answer avoided the issue. Schools need one cheque, as it were, that enables them to decide how to spend the money available—of course, there is not enough of that.
The current arrangements—the formula at the heart of the debate—were introduced, I believe, for the 1990–91 financial year as part of the background to the council tax or poll tax, as it was unpopularly known. If I have understood correctly—I am sure that the Minister will say so if I have not—what really happened was a freezing of historic patterns of expenditure. In crude terms, across-the-board increases were then applied to those historical levels for future years.
As any mathematician will tell us, if we apply a common percentage increase to a large sum and a small sum, the gap between them will grow over time. That

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growth does not become apparent for a few years, but as the compound interest rate rules have their ruthless way, the rich get richer and the poor get relatively poorer. That has been happening in Worcestershire for 10 years.
The last Conservative Government should have addressed the formula's rough justice before the 1997 election, but did not. This Government have had four and a half years to do something, but have done nothing. The consequences are now becoming desperate for Worcestershire's schools.
The average shire county SSA in the secondary sector is £3,156.83 per pupil; in Worcestershire, it is £3,011.43. I say "shire county" because it is a strictly comparable unit. In the primary sector, the average shire county gets £2,456.41 per pupil; in Worcestershire, we get £2,346.48.
I am not comparing Worcestershire with national averages, but with shire county averages. I am trying to be fair. I accept that deprived inner-city areas are likely to need more than most shire counties. However, we are doing exceptionally badly compared even with shire counties. We are 31st out of 34 in the secondary sector and 32nd out of 34 in the primary sector. In 1998–99, the first year for which the Government must accept responsibility, the gap between Worcestershire and the shire average was £86 per primary school pupil; this year, it has risen to £110. In 1998–99, the gap in the secondary sector was £118; it is now £145. That means that my county gets £4.3 million less than the average shire for its primary and first schools, and £4.6 million less for its middle and secondary schools—nearly £9 million overall.
It is against that background, and in the face of an unprecedented campaign—a campaign so intense that it broke my fax machine—that the Government coughed up a one-off payment of an extra £1.35 million for the current year. That sum is welcome, but it still leaves us approximately £8 million below the shire average, and we have no way of knowing whether that extra million or so will be available again in the new financial year beginning in April.
My parliamentary question on the subject, due for answer on Monday, got a dusty answer from the Minister, saying that he would reply as soon as possible." As my hon. Friend the Member for West Worcestershire (Sir M. Spicer) said in a letter apologising for his absence owing to a very long-standing engagement,
"There is, I know, cross-party agreement that the expenditure formula works unfairly for Worcestershire when the grants it receives are compared with those of similar counties. Governments of all persuasions have acknowledged this for some time but have been reluctant to do anything about it. The time has come for a change to be made in the formula. Piecemeal, temporary 'solutions' are not the answer."
The current funding arrangements make Prince Henry's high school in Evesham £358,172 worse off than the national average. Just a few miles up the road in Birmingham, the figures are very different. David Braham, head teacher of Bengeworth first school told me:
"Heads have to continue to come up with creative ideas to fund essential resources. In our school, leasing, fundraising and seeking outside funding is becoming routine to keep the wolf from the door and make our budget balance."
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The acting head teacher of Chawson first school in Droitwich Spa, Eleanor Sinton, told me:
"If our school were up-rooted and re-sited in say, Surrey, our budget would be greater and we should be able to provide our children with more facilities and opportunities."
Roger Davies, chairman of governors at Cropthorne with Charlton Church of England first school, said in a letter asking seven questions that I will be sending to the Minister:
"Should Worcestershire County Council increase local taxes in order to help the education budget, it is totally unfair that central government should penalise us by effectively rate capping the county."
The funding formula leaves Droitwich Spa high school £460,000 a year worse off than an equivalent school in Hertfordshire, but its costs are roughly the same. The real-terms budget increase for Evesham high school was about 2.9 per cent., not the 5.6 per cent. that the Government claim. I understand that there have been redundancies at that school, as other unavoidable costs squeezed its staff budget.
I wish to be bipartisan and emphasise that both major parties bear a share of responsibility. However, the attempt by the hon. Member for Worcester (Mr. Foster) to involve parents in his constituency in the campaign was, to put it kindly, mistaken. He sent thousands of letters to schools in his constituency—I believe that the hon. Member for Redditch (Jacqui Smith) may have done the same—inviting schools to distribute the letters to parents, who would then return them to him. I wrote to the Minister to tell him that I would mention that today. Those letters wrongly put all the blame on the last Conservative Government. They do not explain that the problem is not only the formula but its extended life. It should have been put out of its misery years ago.
The letter also claims that all the credit for the extra funding should go to the county's Labour MPs. That ignores the huge efforts made by local head teachers in the lobby, the thousands of letters from governors and parents and the tidal wave of general opinion expressed throughout the county, including in the local media. People power, not Labour MPs, won the useful but modest concession for the current year.
The letter may have been too party political, but I was fascinated. A Minister, the hon. Member for Redditch, and a Parliamentary Private Secretary in the Department for Education and Skills, the hon. Member for Worcester, were prepared to stoke up such anticipation of an extra sum for the coming year, assuring us that the money was already earmarked. I received from the Secretary of State this morning a letter that assured me that that was not the case, but I remain unconvinced. I cannot believe that people in their position would risk having to criticise their own Government for failing to deliver, so I have high hopes.
Jacqui Smith: We are also constituency Members of Parliament.
Mr. Luff: That may be so. The hon. Lady is a good constituency Member of Parliament but I do not think she would want to criticise her Government for failing to deliver or that she would encourage thousands of her constituents to write in that way unless she had reasonably confident expectations.
I understand that the Government will change the formula in the 2003–04 financial year. I have pressed for a long time for a commitment to change the formula and

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to make a commitment to a time scale. The information was available at the beginning of the summer and I am pleased about that. I hope that the Minister will restate the commitment today.
I want to know, too, how long the transitional arrangements will take, and to have a clear indication of the basis on which the new formula will work, although I appreciate that the details cannot be revealed today. A new formula is all very well, but it must be much fairer than the one it replaces. Put simply, schools have a national curriculum, national targets and standards and national pay scales. It is difficult to see any justification for significant discrepancies in funding, especially between shire counties.
There is speculation that the implementation could be delayed beyond 2003, and that the transitional arrangements will be lengthy. I hope that is not the case and I look to the Minister for some words of comfort when he replies to the debate. If it is the case, another generation of schoolchildren could go through Worcestershire's schools before any benefit is felt from the changes. I know that education spending is rising overall and I am glad about that, but the 1997–2001 Labour Government spent a lower share of the nation's wealth on education than the Conservative Government they replaced. Their achievements are a good deal more modest than they are sometimes fond of claiming.
Miss Julie Kirkbride: I congratulate my hon. Friend on raising the issue. It will not go away; it was the subject of much attention before the last election. I hope that the cynical attempt by Labour Members in the county to raise the letter will be the harbinger of good news for our schools later in the financial year.
My hon. Friend knows that I have to dash away and I will not therefore hear the Minister's reply, but I shall read it later. We will return to the matter if the Minister does not give us what we want. The issue is important for our schools, especially as it concerns learning and skills councils, which my hon. Friend will mention in a moment, as Bromsgrove schools, including high schools and sixth forms, will be equally affected in the most bizarre ways. We want to know more about that.
Mr. Luff: I thank my hon. Friend for that helpful intervention. I shall now give way to the hon. Member for Wyre Forest (Dr. Taylor), whom I am happy to call my hon. Friend.
Dr. Richard Taylor: I am grateful to my hon. Friend for allowing me to intervene to support him in raising awareness of the unfairness of the funding arrangements for shire counties. As I have the rare privilege of being an independent, I do not have to attack either party for past events. I am looking only for an improvement.
I was concerned to hear from a head teacher in my constituency that at the recent Ofsted inspection, an inspector had told her, mistakenly, that her school was well funded. She could not move him from that misapprehension, even though the school passed the Ofsted inspection well. It is disturbing that Ofsted inspectors are given incorrect information before an
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inspection and that an inaccurate perception of Worcestershire schools' funding seems to be widely held.
Mr. Luff: I am grateful to my hon. Friend. I hope that the Minister will reply, either now or subsequently, to the important point, which has not been made before, about what Ofsted thinks.
My hon. Friend the Member for Bromsgrove (Miss Kirkbride) mentioned learning and skills councils. I am not happy about those undemocratic organisations; their indicative budgets for post-16 education are very worrying and came as a big shock to schools in my constituency. The head teacher of Droitwich Spa high school, Mr. Cledwyn-Davies, wrote to the Department for Education and Skills, asking to see the formula used to calculate these budgets. He was told that it was not available.
There are bizarre results, as my hon. Friend said. Mr. Cledwyn-Davies's school, with 280 pupils in the sixth form, will receive £675,289, while Haybridge high school, with only 219 students will receive £728,000; it has 61 fewer pupils and £53,000 more cash. We need to know what is behind the formula. At Prince Henry's high school in Evesham, the shortfall is estimated at £40,000—and that is on the back of promises that real-term funding for school sixth forms would be maintained. That is manifestly not happening. Something has gone wrong and if it is not addressed, Droitwich Spa high school will have to make three teachers redundant. The Department is making soothing noises, but the final figures will not be known until December. That adds a new dimension to the unfairness of the SSA formula. There is also the uncertainty and cost caused by the new exam arrangements for AS and A2 levels and the problems of the basic need formula for increasing sixth form accommodation—which has meant that Prince Henry's sixth form has increased from 110 to 340 with no additional accommodation.
The issue is largely, but not solely, to do with the SSA, as I hope the Minister understands. The Government enjoy their image of seeking fairness and justice but while they rightly fight injustice internationally, they ignore a real injustice at home. Indeed, the local government Minister has refused even to receive a delegation of local head teachers for a 15-minute meeting for them to explain the consequences of Government policy in Worcestershire. Are not the 70,000 Worcestershire schoolchildren worth even 15 minutes of the Minister's time? It is not good enough to say, as the Minister will when he replies, that Worcestershire has had real increases in its education funding. Under successive Governments, it usually has had. The problem is that other shire counties, never mind inner-city authorities, have always got even more. Our relative poverty has got worse, year after year. Successive Governments—Conservative and Labour—have valued Worcestershire's schoolchildren less highly than those from other parts of the country. Worcestershire needs to hear from the Minister that that scandal will end, and end quickly.
1.16 pm
The Parliamentary Under-Secretary of State for Education and Skills (Mr. Ivan Lewis): First, I congratulate the hon. Member for Mid-Worcestershire

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(Mr. Luff) on securing the debate. It is an important issue and all hon. Members who represent areas with those difficulties and uneven funding acknowledge such problems and the need to do something about them. I, more than anybody, relate to the concerns that he expressed. My own area of Bury has those problems and has been involved in the same campaign, as I shall detail in a moment.
I shall first address the hon. Gentleman's reference to sixth-form funding and the concerns about the transfer of responsibility and resources to the learning and skills councils. I reassure him that the Government have made it clear, through their real-terms guarantee, that the funding will be distributed and allocated fairly. There has been negotiation and discussion about reaching a fair definition of pupil numbers in school sixth forms for the purpose of calculating the real-terms guarantee for the year 2000–01. There has been a significant consultation process with all local education authorities to reach agreement on the baseline—the starting point for making that calculation—which will feed into funding allocations in the future.
I am pleased to say that Worcester was one of the authorities that raised concern about the baseline pupil number figure and that the LEA has now reached agreement with the Department on that figure, which will be reflected in an appropriate guarantee that is consistent with the real-terms guarantee and with the numbers that have been agreed between the LEA and the Department.
Mr. Luff: I want to express my gratitude for what the Minister is saying. Does he mean that each individual school will get a real-terms protection for funding?
Mr. Lewis: It depends on pupil numbers and the relationship between the numbers for the year 2000–01. It has been agreed in consultation with local authorities, the Local Government Association and others that that is the appropriate year to look at in calculating the baseline assessment. It is a transparent and fair formula for calculating the figure. The process that we intend to adopt in terms of your local authority—I mean the hon. Gentleman's local authority—has now been agreed between that LEA and the Department.
Mr. John McWilliam: I do not mind if the Minister refers to my local authority as well.
Mr. Lewis: We all have similar views on those issues.
There is a genuine worry about the inequality of funding in respect of the standard spending assessment formula. The hon. Gentleman said that he accepts that the Government have acknowledged the problem and are doing something about it, yet he suggested that somehow, in their first four years in office, they should have put right the in-built structural unfairness that has been in place for many years. Such a view is unreasonable. If the Conservative Government were unable and unwilling to change that formula during a 15 or 20-year period, it is extremely disingenuous to suggest
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not only to hon. Members but to people in Worcestershire that, in only four years, that problem should have been resolved.
Mr. Luff: We had six years in which to rectify the matter and the hon. Gentleman's Government have had four-and-a-half years to do so, so the blame is pretty evenly shared. We did not have 15 years in which to take such action.
Mr. Lewis: The unfairness of the formula pre-dates the poll tax. The problems were crystallised by the local government finance structure that was adopted to introduce that disastrous local taxation policy. The Government acknowledged in the Green Paper that the system is unfair and that they must make it fairer. Subsequent to that, the Department for Transport, Local Government and the Regions has now clearly committed itself to introducing a fairer formula on 1 April 2003. That is not a possibility or an aspiration but an unequivocal commitment that there will be a new, fairer and more even SSA formula not only for education, but for local government generally. It will make a significant difference to the hon. Gentleman's constituents and to mine.
It was amazingly bizarre that the hon. Gentleman attacked my hon. Friends the Members for Redditch (Jacqui Smith)—the Minister of State at the Department of Health—and for Worcester (Mr. Foster) for campaigning on probably the most important issue to local people among all the issues with which Members of Parliament are asked to deal. During the past few years, the standard spending assessment has been the major campaigning issue within my community and that of my hon. Friend the Member for Bury, North (Mr. Chaytor). As we move towards the change in the SSA system, we are currently launching a further push to ensure that Ministers are fully aware of the need to change the formula so that it is fair and transparent.
Whatever their ministerial responsibilities, the colleagues to whom I referred would have been failing in their duty to their constituents if they had not made the matter a priority and campaigned locally about it. Accusations that there is control freakery in the parliamentary Labour party are unfounded and undermined by the fact that my hon. Friend the Member for Redditch and Parliamentary Private Secretaries insist on campaigning vigorously because the formula matters to their constituents, even when such campaigning may cause short-term embarrassment to the Government. I commend them for their campaign and for working in partnership with parents, head teachers and governors in their constituencies.
I must advise the hon. Member for Mid-Worcestershire that. I have been involved in the campaign and, if my hon. Friend the Member for Redditch knows details of the local government settlement that is about to be announced, I should be delighted to have a cup of tea with her in the Tea Room after the debate and to be reassured that all the activity and correspondence in which I am involved is futile. That she may have access to information that the Prime Minister, the Chancellor of the Exchequer and the Secretary of State for Transport, Local Government and the Regions are not even aware of when considering

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the financial situation facing the country, particularly now, and knows details of next year's local government settlement is a most spurious accusation.
I understand why the hon. Gentleman may be embarrassed by my hon. Friends who led such a campaign in those communities on a matter of concern. He was seen to follow on the tail end of that campaign. Parents, head teachers and governors will be delighted that my hon. Friends led the campaign on a matter of such importance—fair funding for education in their schools. They demonstrated that they are good constituency Members of Parliament. That is the first priority for all Members, be they Minister, Parliamentary Private Secretary or Back Bencher.
It is misleading to suggest that the SSA formula in itself is the whole story. We know, as does every school in Worcestershire, that education funding has significantly increased since this Government came to power. The hon. Gentleman is disingenuous to dismiss that and suggest that that occurs every year and did so under the Conservatives, because it did not. Funding for primary and secondary schools went down under the last Conservative Government. That is a reason why they were turfed out of office in 1997. Extra resources for schools and for education are a primary reason why we had such an outstanding election result in June 2001.
We should examine Worcestershire's funding. Since 1998, Worcestershire's SSA has increased by nearly £30 million—almost 16 per cent. over three years. The amount that it receives from the standards fund increased from £4.3 million in 1998 to £17.9 million this year. The school standards direct grant, introduced last year, is worth £7.76 million to Worcestershire's schools this year.
The hon. Gentleman implies that there has not been a massive and significant investment in education since this Government came to power. When the figures for Hereford and Worcester were calculated jointly, capital expenditure on education in 1996–97—the last year for
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which the Conservative Government can be held to account—was £6.02 million. This year, Worcestershire will receive £16.5 million for capital investment.
The hon. Gentleman raised the matter of the standards fund and ring-fenced resources. One of the ways in which the Government have tried to address the unfairness and unevenness of standard spending assessments—while coming up with a long-term structural solution to achieve a fairer SSA regime—is to distribute significant amounts to local education authorities and schools outside that unfair formula, which filters in such a disproportionate way and leads to disadvantage and inequality. Hon. Members who represent constituencies where the SSA is low should, as an interim measure, welcome the ring-fencing and the standards funds.
The Government are not willing to apologise for the fact that some of the ring-fencing has been to ensure that our objective of raising standards in schools is achieved. The money should not be spent for purposes outside our priorities, such as literacy and numeracy, class sizes, special needs provision, textbooks and computers. We do not apologise for spending additional money on those vital elements of education. We celebrate the additional money given to education budgets from the school standards fund, and we are proud of it. We accept that the formula must change, and we will change it. We are the first Government willing to tackle that difficult problem. We will do that, and we are proud of the additional funds that we have put into schools in the hon. Gentleman's constituency and others. There is no question about it: education has received tangible additional investment.
Every poll taken of what is most popular about this Government has found that it is their achievements in education. People in schools throughout the country have experienced for themselves the difference between those barren Tory years and the growth in investment, revenue and capital during the first term of a Labour Government. We were not able to do everything. We were not able to make up for all those dreadful cuts in the latter years of the Tory Government, but we are proud of what we achieved.

Fishing Communities Regeneration Initiative
1.30 pm
Mr. Bob Blizzard: The cumulative effects of reduced fishing quotas, limits on days at sea, the closure of fishing grounds and high fuel prices, even though there is no tax on marine diesel, have all been crippling for this country's fishing industry over many years. That has serious consequences for fishing communities around our coasts, and has been graphically documented in a new report from the World Wide Fund for Nature, which states:
"Our fishing industry is disintegrating before our eyes. The UK fleet declined by 55 per cent. and the value of these catches has been reduced by 77 per cent. As a result of such changes, the number of full-time UK fishermen, after remaining relatively stable between 1970 and 1990, has fallen by 29 per cent. between 1990 and 2000."
That does not take account of many more onshore jobs in fishing communities that depend on the catching and have also disappeared.
We know that the Government cannot suddenly conjure up more fish in the sea, but people expect help in coping with these problems, and they also expect the Government to have a clear plan for the future of fishing. I do not think that the Government have such a plan. In the same circumstances, fishing industries in nearly all other European Union countries are in a much stronger position than ours, especially those in Holland and Spain. The WWF report shows that financial assistance for fishing in this country is the lowest in the European Union.
The report also asked whether the funds that are available are being used wisely, and I want to focus on that question in this debate. The view of fishermen is clear: they feel that they were the forgotten part of the former Ministry of Agriculture, Fisheries and Food, when billions were heaped on farmers but little came to them. Matters came to a head earlier this year when the Scottish Executive announced £25 million of new money for fishing. That embarrassed our Government. The response was £6 million from MAFF for decommissioning, and £5.5 million from the then Department of the Environment, Transport and the Regions to be delivered through the regional development agencies, recognising their role and responsibility for regional economies.
I want to focus on that £5.5 million today. It was heralded on 2 April in a Government news release:
"Elliot Morley launches aid for English fishing industry",
including £5.5 million for
"retraining and rejuvenation at fishing ports."
What is happening to that money, and how wisely is it being spent in relation to the reason for which it was made available—problems in the fishing industry, and the effects on the people caught up in it? Immediately, I was mindful of a previous scheme run by the European Union called PESCA, which spent millions of pounds, sometimes on cobbles and Victorian lampposts, but did not relate at all to the problems caused by fisheries decline. It was entirely accidental if anyone in fishing, or displaced from it, benefited at all. I was determined to ensure, at least in my area, that that did not happen again.
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I spent the summer pursuing the matter. I found a travesty of mismanagement, confusion and rushed bids. I am sorry to say that the target is being missed again, because this is anything but wise spending. There should be two key principles behind the initiative. First, the £5.5 million must be shared out fairly between the regions in proportion to the size of the fishing industry in each one. The bigger the industry in a community, the bigger the dent in the local economy. Secondly, the money should help the right people. Community is not an abstract term: it is about people. The guidance given to the RDAs on this matter by the DETR said that the
"divvy-up between the regions is intended to reflect the relative size of the demersal fishing industry within each region."
I have the official MAFF figures, and there is no correlation between the figures for size or value of catch and the shareout of the £5.5 million. The Yorkshire region accounts for 46 per cent. of the catch by weight, and 33 per cent. of the catch by value, but it is receiving only 24 per cent. of the £5.5 million.
I represent the port of Lowestoft: it accounts for 9.5 per cent. of the fish by weight and value, and yet the entire eastern region is receiving merely 7 per cent. of the £5.5 million. The south-east provides the worst example: that region accounts for only 2.5 per cent. by weight, and 3.6 per cent. by value, but it is receiving 22 per cent. of the total pot.
I asked a parliamentary question to determine the methodology that was employed. I was told that the regional development agencies were awarded £120,000 for each port that is located in their region, and that that accounted for 70 per cent. of the total, with the rest to be distributed in proportion to the weight of the catch. However, that methodology is fundamentally flawed and unfair, because the resources are not being sufficiently allocated to the places where the fishing industry is largest. I learned from another parliamentary question that that allocation was based on a list of 32 ports. I want to know where that list came from, because I have all the MAFF figures for demersal landings and I can find only the 21 MAFF-designated ports.
That matter raises another question: what is a fishing port? How can ports such as Lowestoft, Grimsby, Newlyn, Scarborough or Whitby, which have trawler industries that account for a significant part of the local economy, be compared with some of the other ports on the list, which merely have a small harbour with a small fleet of fishing boats, most of which are operated only part-time? Such smaller ports make an insignificant contribution to their local economies, yet their RDAs are receiving £120,000 for them. Some of those smaller ports, such as Southwold, which is located on the Suffolk coast a few miles south of my constituency, are not poor communities. Southwold is one of the wealthiest communities in the country, yet its regional development agency is receiving £120,000.
Worse still, I believe that the lists were not communicated to the regional development agencies. I visited the East of England Development Agency, which covers my region. Its staff had no idea about which fishing ports it was supposed to help, or the relative sizes of the ports within the region. It had picked six coastal towns, and it planned to divide evenly between them the eastern region's £390,000. It appears to have done that. However, five of the six ports that it chose are not on the

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list of 32 ports, and I cannot find any records of landings; moreover, one of the two ports in the eastern region that are on that list is not on the list that the East of England Development Agency was using.
As a result, Lowestoft, which is in my constituency, and which is the third largest fishing community in England in terms of weight of catch—its catch amounts to nearly 10 per cent. of the national catch—has been offered merely £65,000 out of a total of £5.5 million. That cannot be right.
The Minister informed me in a letter that I received in September 2001 that Southwold was on the list of 32 ports. I think that that piece of information was supposed to make me feel better, but Southwold is not in my constituency—although it is in the Waveney district council area. As Lowestoft and Southwold are the only two ports on the list that are located in the eastern region, they should, logically, get all of the £390,000, even taking into account the way in which the Department has made its calculations.
I have established that the money has been wrongly divided up, but is it being spent on the right things? To repeat a point that I made earlier, the initiative under discussion was introduced because of the problems associated with the decline of the fishing industry, which is causing dents in many local economies.
A fishing community is a collection of people, and we must ensure that we help the right people. Help must be provided for the people who have already been displaced from fishing, and for those who are still either voluntarily of compulsorily losing their jobs in the industry. There are many unemployed fishermen in the area that I represent, or former fishermen who are unhappy with the job that they have had to take up, or who want to be retrained or to change their qualifications so that they can work on ships that they are not currently entitled to work on. The people who are struggling to survive in the fishing industry must also be helped. The Government are having to take draconian measures to try to conserve and, we hope, rebuild stocks, but it is important to ensure that, when that job is completed, there is still an industry to catch the fish—otherwise the fish will be caught by fishermen from other nations.
If we do not deal with those who are trying to struggle on in fishing, the inference is that we envisage no future for fishing and are just letting it fall to pieces and using the money to pick up those pieces, which, as the WWF says, is more expensive in the long term. Restructuring is the best and fairest way to help people affected in fishing communities.
Lawrie Quinn: I am grateful for the opportunity to make a point on behalf of the fishing communities in Scarborough and Whitby. Does my hon. Friend recognise that many key fishing communities in England are on their knees in terms of economic decline? The port of Whitby and many of the wards in Scarborough are some of the worst affected areas in terms of economic decline, with objective 2 status. That is another criterion that should have been taken into account when, as my hon. Friend puts it, the money was divvied up. It is an outrage that certain
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wealthy communities in the south of England seem to have benefited from a scheme that was designed to help my constituents and his.
Mr. Blizzard: My hon. Friend is right. It is a pity that the people who drew up the scheme did not take note of those points.
I was heartened to read in guidance note 6, which was given to RDAs, that
"Ministers do not wish to be prescriptive on the sort of project that RDAs may wish to fund."
That encouraged me, but I have a sad tale to tell about my constituency. When I returned from holiday towards the end of September, I found that my council had submitted a bid that had already been agreed with EEDA to spend the £65,000 on free child care places for people in two wards in central Lowestoft, and a community development officer. The council's report told me that the development followed detailed discussions with EEDA about the nature of potential bids. Sadly, no discussions were held with the fishing industry or anyone else. That is unacceptable.
The council tells me that the criteria of the scheme direct what can and cannot be submitted and that the rules feel prohibitive, especially to small authorities. The question is where do the rules come from if Ministers do not want the scheme to be prescriptive? What started out as millions of pounds of aid for the English fishing industry ends up with the country's third largest fishing port receiving £65,000 for child care and a community development officer. That is a travesty.
To be fair, following intervention by the council leader, another bid has now been made in consultation with the fishing industry. I hope that it will succeed, but if it does not I shall ask my hon. Friend the Minister to investigate why.
Where is the accountability? I pursued the matter all summer, and various Departments seemed to be in disarray. On 19 July, the Leader of the House told me that the Department of Trade and Industry was responsible for the matter. Indeed, a DTI Minister answered my first parliamentary question. In midsummer, I was told that the matter fell within the remit of DTLR. Eventually, on 5 September, I received a letter from the Minister's colleague, my hon. Friend the Member for Southampton, Test (Dr. Whitehead), and on 6 September an identical letter from the Minister telling me that there was no case for reviewing the allocation.
I hope that the Minister now appreciates that there is a case for reviewing the allocation. I invite her to sit down with me and other hon. Members present to go through it in detail and unpick the tangled mess. The money is not yet spent; there is still time. Sadly, if it is not possible to do that, the only other course open to me in order properly to represent my constituents is to refer the matter to the National Audit Office to find out whether it is satisfied that the money that was made available is being properly shared out and spent in the right way.
Mr. Austin Mitchell: I am sorry to interrupt my hon. Friend's peroration. He has done an enormous service to the industry, and to Members of

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Parliament who represent fishing constituencies, in highlighting the problem and showing what has happened. Does he agree that the real problem now facing fishing is how to prise more money from the Treasury so that we can invest in fishing as an industry to help, as the WWF suggests, to bridge it from its present decline to the sustainable catches that lie ahead, ensuring proper conservation?
Mr. Blizzard: My hon. Friend is right. It is clear that the country and the Government need a plan for the future of fishing, which we can ask the Treasury to fund.
I have presented a picture of how the delivery process simply did not work and how policy objectives set in Westminster went amiss. We are left with a fishing industry that feels neglected and unwanted yet again. Worst of all, the £5.5 million which the Government made available because of the crisis in fisheries and which was welcomed by all hon. Members representing fishing areas, is in danger of being dissipated in ways unrelated to fishing.
1.45 pm
The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Ms Sally Keeble): I congratulate my hon. Friend the Member for Waveney (Mr. Blizzard) on obtaining this debate on the Government's fishing initiative. I should make the point that that initiative is a specific part of the package of help for the fishing industry and does not represent the whole story.
My hon. Friend dealt with two main points: the make-up of the package and the accountability and monitoring of the programme. However, I start by dealing with his suggestion that we should sit down and have a meeting. My letter to him, dated 6 September, states clearly:
"If it helps, I would be quite willing to meet you to discuss this matter further."
Since that date, he has not approached me for a meeting. I think that it would have helped and that he should have taken up the offer and tried to find a constructive way forward.
Mr. Blizzard: My hon. Friend has already said that she saw no case for review. I am afraid that I took that as a rebuff. I went on holiday, and since then things have moved on. It is too late now.
Ms Keeble: My hon. Friend may have gone on holiday, but the offer was there. It was clearly set out and could and should have been taken up. If he wants to have a meeting, I am still more than willing to do so.
The sea fishing industry has been a traditional and important sector of the United Kingdom's economy, especially in my hon. Friend's constituency, where many people's livelihood depends on the industry's success. However, as he rightly says, like some other of our traditional industries, fishing has been in decline. Colleagues here would no doubt agree that the Government have a duty to consider what extra help they should offer beyond what is already available to the industry and the affected communities.
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As I am sure my hon. Friend would acknowledge, the Government's response has been positive. We share with the fish catching and processing organisations the goal of a sustainable, viable future for the industry and are taking firm action to address long-term needs. At the same time, we must address the future direction for priorities. We all seek a sustainable industry that is economically profitable and uses environmentally sustainable practices.
On 2 April, my hon. Friend the Member for Scunthorpe (Mr. Morley), then a MAFF Minister, announced various measures to address a range of problems faced by the industry, including the launch of the European Union fisheries structural fund grants scheme for England, with the aim of helping the industry's adjustment. That package relates specifically to the industry and includes £11 million in grants over the next three years. The scheme seeks to improve the quality and value of fish caught and to promote the use of environmentally friendly equipment. My hon. Friend also made available £6 million for extra support in England to assist restructuring in the fishing industry by decommissioning fishing vessels.
The Government recognised that there was a strong case for helping coastal communities that might be affected by the restructuring of the industry. I would argue that that represents a wider remit, which comes under my Department. On 4 April, my right hon. Friend the Member for North-West Durham (Ms Armstrong), then a DETR Minister, announced a £5.5 million fishing communities regeneration initiative. That is being made available through the regional development agencies during the current year, to provide help for communities in regions with fishing ports, including working up local regeneration strategies and getting help from existing regeneration programmes more easily. That is clearly a wider remit, relating to helping and regenerating communities, as opposed to concentrating on the industry.
My hon. Friend might want to consider whether arguments about the north-south divide are unjust: if a particular industry is in decline, there is likely to be an impact on a particular community, or a pocket of a town. There are pockets of disadvantage even in some of the more affluent areas of the south-east.
Mr. Mitchell: I want to point out that, first, the £11 million was not new money, but was being recycled, and secondly the package was provided because European Governments were giving far greater aid—as was the Scottish Executive—directly to their industries. As it was being put through the regional development agencies, which is a policy that I support, it was surely incumbent on my hon. Friend's Department to impress on the agencies the importance of fishing to the local economy and the fishing communities. The extent to which agencies have realised that—and brought aid, development and support to the fishing industry in their areas—has been variable.
Ms Keeble: The £11 million mentioned by my hon. Friend was announced by MAFF. I have been talking about the £5.5 million that is going through the regional development agencies, and which is relevant to the issues of the wider community. It is a specific scheme for which my Department is responsible and about which we have been in correspondence.

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The North East, North West, Yorkshire and Humber, East of England, South East and South West regional development agencies each received an allocation to take into account two factors. The allocation was to provide £120,000 for each port with the largest demersal fishing catches recorded in the then most recent MAFF table. That accounted for £3.84 million of the £5.5 million. The rest was distributed in proportion to the weight of the catches at the relevant ports.
The exact list of the ports included has been a matter of some dispute, because when the scheme was announced and proposals began to be made—in consultation with the local authorities—the most recent MAFF figures were from 1999. The list that has been constantly quoted in this debate is the 2000 list.
Lawrie Quinn: The Minister mentions the allocation that was made for ports, but does she recognise that there are nine to 12 shore-based jobs based on the fishing activity out of ports like Whitby and Scarborough? That is not true of some of the other ports. On my reckoning, the Yorkshire and Humber regional development agency should, on the basis of catch alone, have been provided with about £2 million to allocate. In fact it received about £1 million. It is incumbent on my hon. Friend to take account of such matters. Perhaps my community feels, quite rightly, that it has been significantly shortchanged by the allocations calculated by her Department.
Ms Keeble: The allocation of money between different areas was always going to be the subject of great dispute. What was perfectly fair about the decisions that were taken was the recognition that when a sector of industry is affected in a community, the community or area will encounter a problem, great or small. A certain allocation was made with reference to the town, and a proportion was added to reflect the size of the catch. That approach tries to achieve a fair weighting by taking into account a number of issues.
In addition, to ensure that the allocation of the money reflects the needs, priorities and pressures in the different communities, it was made clear to the RDAs that they will have substantial flexibility in spending the money. The weighting tries fairly to reflect the fact that there are several different communities, and there are also different weightings for different catches. There is also a high level of flexibility. To those who think that there is not enough accountability, I should say that the schemes have been worked out with the various partners and that local councils have had an input into the design of the plans and the priorities that have been put to the RDAs.
Mr. Blizzard: The figures that I used were the 1999 figures from the Minister's Department.
Ms Keeble: Fine. My hon. Friend will accept that much of his argument was about the towns and ports
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that should be included and about the amounts involved. It is important to put on record that the figures were from 1999.
Shona McIsaac: The Minister cannot deny that Hull, Whitby, Scarborough, Bridlington and Grimsby are some of the top ports in the UK and account for about £25 million worth of the UK catch. Ports such as Poole, Shoreham and Portsmouth account for only £2 million, but the percentage split in the funding to support those communities is 23 per cent. for ports such as Grimsby, Hull, Bridlington and Scarborough and 21 per cent. for ports in the south. That is simply unfair, as my hon. Friend the Member for Waveney (Mr. Blizzard) tried to demonstrate. Hon. Members present who represent ports feel that the Minister has not dealt with the issue.
Ms Keeble: We must make an allocation that recognises the fact that there are several different areas. One might say—although this would depend on a detailed knowledge of the industry—that large ports could modernise their industry and retain more of it. However, the important point is that the allocation weights for two issues and gives the RDAs discretion. It is also strictly time limited because it is a one-year fund, although I am concerned that we shall spend three quarters of the year arguing about the allocation of the money rather than discussing how it will be spent.
Management of the initiative will follow the same arrangements as the successor schemes to the single regeneration budget during 2001 and 2002. The RDAs will monitor how the money is spent in accordance with existing SRB programme requirements.
As my hon. Friend the Member for Great Grimsby (Mr. Mitchell) probably knows, two of the five schemes that the East of England RDA is considering come from Waveney. I am not sure whether he is aware of the details of the bids that have been made for his area, but if he is not, I will be happy to write to him. The same goes for my hon. Friend the Member for Scarborough and Whitby (Lawrie Quinn). I have some details, although they might not be complete.
Lawrie Quinn: I am aware of them.
Ms Keeble: Good. I am happy to deal with the issue in that way.
My hon. Friend the Member for Waveney asked about the types of scheme. They have been introduced in consultation with local agencies and, in particular, local councils. Retraining needs will go wider than the immediate needs of the industry.
My hon. Friends clearly have concerns, and I am more than happy to go through the finer details with them. However, I urge them also to deal with the councils and the RDAs to ensure that progress is made on the scheme, which is intended to help not only hard-pressed industries but hard-pressed communities to recover from some of the damage that has been inflicted on them as a result of structural difficulties in the fishing industries.
It being Two o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.