Westminster Hall Sitting of 23 April 2002

Preamble
[SIR ALAN HASELHURST in the Chair]

Public Appointments
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Sutcliffe.]
9.30 am
Tony Cunningham: I am delighted to have this opportunity to share some of my concerns about appointments to public bodies. I am particularly concerned about the enormous power given to many members of public bodies, some of whom have responsibility for huge sums of money. Public bodies play an important role in helping to shape and develop Government policy. More than 1,000 non-departmental public bodies influence the expenditure of a total budget of about £23 billion a year—as I said, it is a huge sum. In addition, there are approximately 500 national health service trust and health authority boards.
Those appointed bodies, often referred to as quangos, have a considerable influence over public life. In that respect, I have no doubt that public bodies are a force for good—a force for progress and social improvement that is to be wholeheartedly welcomed. Indeed, because those bodies have the potential to be at the heart of delivering the programme of social justice to which the Government are committed, I would like to see more effort being made to encourage fair practice within them.
Thousands of people participate in public life through service to schools, colleges, NHS trusts, magistrates courts and tribunals. According to a Cabinet Office paper on the subject,
"Public involvement provides accountability, brings a wealth of skills and experience into the running of Public Bodies and supports democracy by allowing 'ordinary' people"—
I do not like that term—
"to play an important and constructive role in the process of local and national government".
According to a paper on frequently asked questions published by the public appointments unit, appointments are made to public bodies using fair selection procedures in accordance with the relevant codes of practice. However, although such quangos have well-intentioned objectives, I am worried that those aims are not effectively realised.
In the mid-1990s, under the auspices of Lord Nolan, the Committee on Standards in Public Life established seven general principles that should govern public life. I am sure that we all agree on those principles. They are selflessness, integrity, objectivity, accountability, openness, honesty and leadership. It will come as little surprise to hon. Members that such principles are reflected in the remit of many public bodies. However, the extent of openness of those organisations, and by extension their transparency, is questionable.
I stress that I do not believe that some sort of cynical operation is occurring beneath the purported policy of attempting to widen participation in public life. On the
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contrary, the Government are genuinely committed to recruiting people who more accurately reflect the society in which we live. They are actively attempting to recruit more women and ethnic minorities to public positions. I shall return to that theme later, but it sufficiently highlights the fact that any suggestion that jobs in public bodies are solely for the great and the good would be an exaggeration. I would like to think that society has moved on from that.
Mr. Simon Burns: Could the hon. Gentleman say which of the people's peers is not one of the great and the good?
Tony Cunningham: If the hon. Gentleman wants to debate the House of Lords, I am sure that time can be found. He need only catch your eye, Mr. Deputy Speaker.
I wish to highlight the fact that although we have moved on from bodies being simply for the great and the good, a series of structural constraints on the process of appointment make it difficult to counter some of the problems that I am about to raise. Public bodies carry out some of the most important and prominent tasks in public life, but their members, unlike parliamentarians and councillors, are not elected, and the processes by which they are selected are neither well known nor well understood. A recent MORI poll stated:
"The majority of the public know very little of the ministerial public appointments process",
but I would argue that the vast, vast majority know very little about it.
The Nolan rules recommend that organisations use as many methods as possible to find suitable candidates for jobs in public service. The rationale behind that is surely to allow as wide a range of people as possible to apply. It is impossible to get precise empirical data to support the claim that I am about to make, but I am sure that colleagues will agree that we, as representatives of our constituents, are suitably placed to assess the extent to which they feel that they have adequate access to information about public and civic life. I am sure that so-called ordinary people in my constituency are not aware of the vacancies that arise in public bodies to anywhere near the extent that the Government would like. We might think that advertising on the internet would increase the number of people who apply for vacancies, but people in parts of my constituency have little or no access to the internet, so it does not often affect them.
The next issue is perhaps more parochial, but it is still of great importance. I am far from convinced that people in Cumbria—it is nice to see the hon. Member for Westmorland and Lonsdale (Mr. Collins) in the Chamber—and particularly in west Cumbria, which I represent, have a fair opportunity to get involved in public bodies. The Committee of the Regions was set up because
"about three quarters of EU legislation is implemented at local or regional level, so it makes sense for local and regional representatives to have a say in the development of new EU laws."
I am not sure whether the hon. Gentleman knows who our nearest Committee Members are, but they are probably some distance away—in Lancaster or

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somewhere in the north-east. Cumbria has no representative on the Committee—indeed, it has never had one.
The regional development agency is a key regional player in my constituency, and indeed throughout Cumbria. Let me quote from its website to demonstrate just how important it is. The RDA
"co-ordinates economic development, regeneration, skills development, strategic sites, business relocation and inward investment in North West England".
West Cumbria and Furness have been identified as its top priorities, along with east Manchester and Liverpool, yet it has no west Cumbrian representative. If west Cumbria and Furness are such a high priority, we should have a representative.
The Government remain committed to increasing the range and diversity of all their public appointments. They are committed to ensuring that there is an equal proportion of men and women and a pro rata number of people from ethnic minority backgrounds. They are also attempting to increase public appointments of people with disabilities, and I am sure that we all share those sentiments. Since 1992, the proportion of women in non-departmental public bodies has risen by about 8 per cent. The proportion of people from ethnic minorities who hold a public appointment more than doubled over the same period, but the figure remains low. Indeed, according to The Sunday Times,
"the average quango member still fits the white, male, middle-aged stereotype".
About three quarters of appointees are aged between 46 and pensionable age, with fewer than 3 per cent. under 35. Women make up only 38 per cent. of public appointees and—I am sure that hon. Members will be interested in the next statistic—only 3 per cent. of those who earn £50,000 or more. That is interesting, is it not? Some 8.5 per cent. of appointees come from ethnic minorities, and just 2.4 per cent. are disabled. A huge amount of work remains to be done.
However, while gender and ethnicity are at least considered, regional discrepancies are not. Perhaps that is an important factor in explaining the relative disadvantages faced by the regions, and particularly the north of England. The Government are committed to promoting equality of opportunity in all walks of life, and discrimination by gender, ethnic background and age are unacceptable. I contend that discrimination by geographical location is equally intolerable. It is difficult to establish precisely the proportion of people in Workington holding a public appointment, because— strangely—figures published by the Cabinet Office are not broken down geographically. It does not report on quangos in Cumbria and tends to refer to "offices throughout England and Wales". That flaw must be addressed. Many of my constituents would be tremendously interested to know how many appointees to public bodies are residents of the 88 local authorities with the most deprived neighbourhoods. If we are serious about social inclusion, such people must be better represented on public bodies.
The final issue that I would like to draw to hon. Members' attention is the training and managerial acumen of people appointed to public bodies. If people
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from various backgrounds are to be appointed to public bodies and retained, we must ensure that they are properly trained. People appointed to important bodies with huge budgets, such as health authorities and primary care trusts, need excellent managerial and communications skills, and we must provide them with the skills and know-how to do their jobs properly. Without such skills, they will surely not perform at the level that we expect of them. Their ability to do their jobs well will have an enormous impact on their local communities. It is essential to invest in proper and effective training—sustained over time—so that they remain fully equipped to carry out their work.
My intention has been to provide a constructive platform on which future public appointments can be made. The Government should feel no shame at the advances that they have made in actively encouraging more women and members of ethnic minorities to engage in all areas of public life. The Minister has expressed the Government's desire for a wider representation of people regardless of age, disability, gender, ethnicity, geographic or socio-economic background. There is no such diversity of representation at the moment. I hope that highlighting some areas of concern will lead to a genuine, informed debate about how we can widen participation in public life. I am sure that other hon. Members have much to add and would like to raise other concerns. I look forward to hearing from them.
9.43 am
Mr. Simon Burns: I congratulate the hon. Member for Workington (Tony Cunningham) on having secured this important debate. The Government have built up a justifiable reputation for seeking to control every nook and cranny of our lives. One hears examples of the way in which they seek to control their Back Benchers so that many are reduced to clones who, if one is to believe the hon. Member for Hayes and Harlington (John McDonnell), are induced not to spill the beans about what the Government, through Millbank and No. 10, try to do.
The hon. Member for Workington has given us an excellent opportunity to debate the question of public appointments that affect our lives. I shall start by considering the areas on which I could not agree more with him—and, I suspect, with the Minister. We need the best individuals from all walks of life and from all backgrounds—whether ethnic or gender backgrounds—to contribute to the vast array of public bodies in this country that rely on the selfless duty and commitment of those who want to serve. However, on considering the areas in which such individuals are needed, one discovers that all is not well with regard to appointments.
The national health service, for example, is a crucial area, especially in the light of the problems that we have all faced with it over the past few years. As the hon. Member for Workington said, there are 373 chairmen of NHS trusts and slightly more than 1,800 non-executive directors. Until 1 April, the health authorities that were created in 1999 will remain in place, with 520 non-executive directors. Those were all public appointments, made before 2 July last year through a process that eventually depended on Ministers. In addition, from 1 April the strategic health authorities will come into

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being, which will have non-executive directors. There will also be those that remain of the primary care groups, and a significant number of primary care trusts that have come into existence over the past few months.
All those bodies require a significant number of appointments. Because of the numbers, a significant temptation or potential for patronage is vested in the power of Ministers. That is a worrying fact, and the remedy that Ministers have sought to apply to the health service in the form of the Appointments Commission has not rectified the problem but accentuated it.
The Minister can be a bruiser on occasions, and will no doubt make the point that when the Government were in opposition they made the accusation that the health service was stuffed with Conservative placemen. Before he gets too excited about that statement, I should state that the reality was very different, but if one spins a yarn often enough it takes root, regardless of its accuracy. Figures given by the Government in written answers have proved the fallacy of that statement. Of those appointed to NHS bodies who declared a political activity in the last full year of the last Conservative Government, 8.2 per cent. were Labour supporters and 7.2 per cent. were Conservative supporters, with the Liberal Democrats left drifting further down the scale. The Minister could argue that that shows the failure of the Conservative Government. His Government have not made the same mistake, because they are systematically packing the bodies with Labour placemen.
I make my case about the health service through information given in written answers and the Government's own statistics. When Dame Rennie Fritchie became Appointments Commissioner in March or April 1999, she received so many criticisms and complaints about the appointments process that she carried out an investigation. Her report makes interesting reading. She says that in the 1998 appointments round in the north-west national health service region, 70 per cent. of the 109 candidates declared political activity on behalf of the Labour party. She also cites the example of a former Conservative Minister—
Helen Jones: The hon. Gentleman has given us the figures for candidates, not for appointments. Would he like to give us the figures for appointments?
Mr. Burns: Yes, I certainly will. If the hon. Lady is kind enough to let me develop my argument, I will give her the figures that she requires, in buckets—
Helen Jones: For the north-west.
Mr. Burns: No, the overall figures, because what matters is what is happening throughout the country.
It transpired from the report that a former Conservative Minister had acted as referee for someone who was seeking a position in an NHS body. The candidate's politics were unknown to the referee, but the individual was known in the local area in which the position was sought and was well qualified as a result of experience gained in professional life. Time and time again, that individual was turned down for a position,
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and the former Minister reached the conclusion that it would be better if he did not act as referee, because it seemed to be harming the candidate's prospects. I confess that, long ago, I gave up agreeing to act as referee for anyone seeking an appointment—usually in the NHS in Essex—because I decided that, notwithstanding my judgment and experience, giving my support to any suitable candidate would be the kiss of death for them. I thought that it was actually kinder not to agree to act as referee because to do so would be counter-productive.
Furthermore, more and more of those who are being placed on NHS trusts and the old health authorities—I suspect that nothing has changed with the introduction of new strategic health authorities and primary care trusts—have declared affiliations to, or act on behalf of, the Labour party. I am not suggesting that simply being associated with politics, be it Labour, Conservative, Liberal Democrat or any other sort of politics, should be a barrier to a public appointment—of course it should not. Just because one engages in political activity does not mean that one does not have a great deal to contribute, outside that sphere, to a public body.
Mr. Kevan Jones: Does the hon. Gentleman agree that most of those people, whether they are Conservative, Labour or Liberal party members, are also active in voluntary and political organisations in their local communities, so they are exactly the people who should be appointed to NHS trusts, for example? It is not that the current situation is anti-Conservative or anti-Liberal Democrat: the establishment is anti-anyone who has any political affiliation.
Mr. Burns: No, I am afraid I do not agree with the hon. Gentleman. Of course, many people who are politically active are also active in their communities, but as a Member of Parliament, visiting charitable organisations and local businesses in one's constituency, one encounters many people whose political activities are probably zero—certainly unknown—and who contribute in their different ways to the local community. However, the figures show that about a third of those who are appointed have a declared political affiliation, and of those a significant number—far more significant than the Liberal Democrat and Conservative appointees added together—happen to be Labour activists.
Before anyone accuses me of fiddling the figures, let me tell hon. Members that these figures were provided by Department of Health Ministers during the past year or so. Between 2 May 1997 and 31 March 2001, successive Secretaries of State at the Department of Health appointed 5,543 individuals to trusts, PCTs and health authorities. Of those who declared a political interest, 5.2 per cent were Conservatives, 3.9 per cent. were Liberal Democrats and a staggering 25.1 per cent. were Labour activists. Between 1 April and 2 July 2001—I use that time scale because on 2 July the Secretary of State ceased to have a role in the appointments, as the Appointments Commission came into force—4.5 per cent. of appointees were Conservatives, 2.9 per cent. were Liberal Democrats and 25.2 per cent. were Labour activists.

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Once the Appointments Commission was established and had started its work on 2 July, one would have assumed, from the rhetoric—bearing it in mind that the members are appointed by the Secretary of State for Health—that the situation would have been different. Ministers would argue that the purpose of the commission is that it should be independent and not influenced—as Ministers might be—in its appointments. However, extraordinarily, the situation has not improved. Between 2 July 2001 and 10 January 2002, 4.9 per cent. of appointees were Conservatives, 5.4 per cent. were Liberal Democrats and 23.5 per cent. were Labour activists.
If one considers the figures for all the work that the commission has done up to the latest time for which figures are available, which happens to be 4 April 2002, the situation is even worse. Some 4.5 per cent. of appointees were Conservatives and 4.4 per cent. were Liberal Democrats, but the proportion of Labour appointees increased from 23.5 per cent. to 26.5 per cent. Sadly, there is something rotten in the system, whether under the new Appointments Commission system or the old system of Ministers giving final approval to appointees. A disproportionate number of those declaring a political affiliation are from the governing party.
I can come to only one conclusion, given the record and the history of this Government. In the press and information units of the Departments, where we used to have a totally non-political civil service, there is increasing politicisation, as the unfortunate ongoing saga at the Department of Transport, Local Government and the Regions has shown. Mr. Alastair Campbell at No. 10 Downing street has control of information officers and the flow of information across the board. The media are manipulated with good news stories and through what used to be—the spin doctors are losing their touch—the highly skilled practice of burying bad news. One comes to the conclusion that the Government are continuing the politicisation of our society through the appointment of people to public bodies.
It does no service to public bodies or the local community for those bodies to be stuffed with Labour party political hacks. Some are being rewarded for an undue length of time in local government or for retirement from this House. Some who fail to get elected to the House or a local authority are given such jobs as a recompense both financially and to massage their egos.
Mr. A. J. Beith: Is the hon. Gentleman contending that the Appointments Commission is acting improperly, or is he saying that we have a high proportion of Labour activist applicants and that that may reflect a wide public assumption that a person will not be appointed to a position unless he or she is a supporter of the Labour party?
Mr. Burns: I am certainly not accusing the Appointments Commission of wrongdoing, but I believe that it has failed to meet the aims for which it was ostensibly set up. I am also arguing that if a person happens to be a Labour party activist, the system is slanted to benefit such an applicant in appointment to the jobs that he or she seeks.
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The statistics show that in recent years there has been a dramatic increase in people with a declared political affiliation being placed on a public body, and an exorbitant increase in those with a political affiliation on a body being supporters of the ruling party. The system is becoming more and more tainted, so we should seek a return to a system in which the person with the best qualifications is appointed, rather than one in which a person is favoured because they happen to support a political party. I am not confident that we will see that during this Government's lifetime, but that does not mean that we should not hold the Government to account over what they are doing about what is, in effect, a distorting and a stuffing of our public bodies with political appointees
10.1 am
Mr. Keith Vaz: I congratulate my hon. Friend the hon. Member for Workington (Tony Cunningham) on securing the debate. He spoke so eloquently, and touched on so many subjects, that I have little to add. However, as he looked in my direction when he spoke about the lack of black and Asian representation on public bodies, I thought that I would make a small contribution.
The subject has greater urgency following the events in France on Monday. The far right was successful in France because it portrayed the immigrant community there as spongers, rather than contributors. In Britain, we can learn the lessons of France and ensure that the black and Asian community plays a leading role in the way in which society operates.
We have an impressive and talented ethnic minority group in Britain. It is settled here and is now in its second generation. Young black and Asian men and women make a great contribution to our public services, but sadly their contribution to public bodies has not been of the order that some of us would like. In 1997, I published a report entitled "The Glass Ceiling", and in its opening I quoted the Prime Minister's speech in Brighton on 30 September 1997 when he said that we cannot be a beacon to the world unless we allow the talents of all our people to shine through. That was a commitment from the highest level that the Government would be different, and that they would ensure that black and Asian people were properly represented, not just in the civil service, but on public bodies.
I am pleased to say that progress has been made. I congratulate the various Departments, which have, during the past five years, attempted to ensure that black and Asian people are appointed to public bodies. However, one should consider the appointments that were made up to 1997 in three Departments. In the Ministry of Agriculture, Fisheries and Food, there were 225 appointees, none of whom were of Asian origin; in the Department of Environment, Transport and the Regions, there were three out of 134; even in the Home Office, there were only 16 out of 332. At that stage, the Department of Health would not release its figures. I am glad to say that the present Secretary of State for Health has not only ensured that the names of ethnic minority people are published, but that a register is now produced each year setting out how many have been appointed. In the overall figures, of the 2,005 appointments made in 1997, only 35 were of people of Asian origin. I hope that when the Minister replies, he can give us the up-to-date figures.

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I know that the hon. Member for West Chelmsford (Mr. Burns) thinks that people like me are just clones of the Minister because we Back Benchers are fairly well controlled, but it is actually much easier to ask the Government to produce the figures than to request the information through parliamentary questions. Judging by the amount of money that the hon. Member for Buckingham (Mr. Bercow) has spent—more than £500,000 I think—it is probably cheaper too. Politicians, from the Prime Minister downwards, are committed to ensuring that such appointments are made.
I pay tribute to the work of Sir Richard Wilson, the Cabinet Secretary. When appointed, he made sure that issues of race and diversity were very much a part of his term in that post. He has just managed to appoint the first Asian permanent secretary before leaving office, which he will in July this year. I very much hope that when Sir Andrew Turnbull, the new Cabinet Secretary, takes over, he continues the excellent work of Sir Richard Wilson.
When I published my survey, I found that one of the most interesting facets of the whole debate on public appointments was the lack of understanding of how they were made, to which my hon. Friend the Member for Workington also referred. That is especially important in the black and Asian communities. When I wrote seeking information before the publication of the report, I discovered that some people on the public appointments register had died. Because that register, from which the pool of talent is drawn, was not regularly updated, there was a risk that the information held on it was very old. I notice that the Government now advertise for those posts. Obviously, that means that information is current, but can the Minister tell us whether the problems encountered in the past over the way in which the civil service gather information have diminished? That would be one way of ensuring that we can modernise the system.
We could also ensure that the appointments are not only published in the mainstream press. My hon. Friend the Member for Workington quoted The Sunday Times. We see public appointments advertised in such newspapers, but if we want more black and Asian people to sit on public bodies, we should advertise in the ethnic minority press and on ethnic minority television and radio. We should seek nominations from a wider range of people. The hon. Member for West Chelmsford said that he does not recommend people. Such matters are difficult because, as hon. Members know, people come to us and ask for our support. It is important for them to realise that they do not need the support of politicians to be considered. That would be the best way of getting really talented people to serve on the committees.
We are coming to an era in which people have a career in quangocracy—they do not just sit on one body, but are appointed to others. That is grossly unfair. We want to ensure that the most talented people come forward for what are not full-time appointments. In some of the posts people are paid, but they always, inevitably, spend more time on them than that for which the remuneration, which is pretty low overall, provides. We should introduce a rule that prevents people from serving on more of those bodies. Unless they have retired, I do not see how people have the time to serve
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on several. Such a rule would enable more women and people from ethnic minority communities to be appointed, and would project a much better image.
We have a great deal of work to do, but the enormous power of appointment is very important. In the debate on race and citizenship, the need for more black and Asian people to be elected to Parliament and appointed to the House of Lords is discussed, but elections come only once every five years and can only get us so far, although people can stand for local government and be elected as councillors. The Minister's power, and that of the Cabinet Office and other Ministers, is absolutely enormous as far as public bodies are concerned.
We can change the shape and face of Britain by making our public appointments reflect the whole of society. The shadow of Le Pen is, of course, now over Britain, and we should take the leadership role about which the Prime Minister spoke in September 1997. We have the largest settled black and Asian population of any country in Europe. Many black and Asian people who live in Germany and France do not even have the right to vote. We have a huge contribution to make to the European debate. Let us start by giving the black and Asian population the chance to contribute and to serve, and make them truly a part of our multicultural society.
10.10 am
Helen Jones: I, too, congratulate my hon. Friend the Member for Workington (Tony Cunningham) on securing the debate, and on the lucid way in which he set out some of the difficulties in the public appointments process.
I want to concentrate on another aspect of the matter. Although I recognise the progress that the Government have made in appointing more women and people from ethnic minorities, I particularly want to consider the situation of our more deprived communities. We are all, of course, primarily interested in our constituencies, and constituencies such as mine can show a great deal about how deprived communities are treated. There are few people from deprived communities, and indeed from certain areas of the country, serving on our public bodies. That issue ought seriously to concern us if we really want to create a civic society in which all kinds of people participate in decision making.
I have asked a number of questions about what has happened in my constituency. It is fair to say that some areas have made better progress than others. Progress has been made in appointing more people from my constituency to the magistracy, for example, but the raw figures hide a more serious problem because people from the most deprived communities do not sit on the bench. Bewsey, the most deprived area in my constituency, has no magistrates. Orford, which is the centre of my constituency and covers several wards, has only four magistrates. Things such as that pose a serious problem. Those communities are not represented, yet seven magistrates from outside Warrington sit on the bench. The people who have most experience of crime and antisocial behaviour do not, for whatever reason, have an input into the process of administering the law, which makes us all poorer.
Contrary to what the hon. Member for West Chelmsford (Mr. Burns) said, the real problem facing my constituency is health authority appointments. I

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represent most of the health-deprived areas in Warrington, yet my constituency has consistently been under-represented on health authorities and trusts. In fact, one of the early meetings that I had in the last Parliament was with the then chair of the north-west region to raise that issue. I was promised that there would be an active programme to encourage people to apply; to provide training; and actively to seek applicants from all sections of the community. Then we got the spanking new Appointments Commission, and I am sorry to say that the situation did not get better.
In the past, my constituency had one person on the North Cheshire health authority and one person serving on the Warrington hospital trust. There were six members, four of whom were from Warrington, South and two of whom were from Warrington, North, on the old Warrington community health care trust, which has now ceased to be. Under the new Appointments Commission, we have one member on the new strategic health authority and one member on the hospital trust, which now covers both Warrington and Halton because the hospitals have merged. I have to say to the hon. Member for West Chelmsford that, contrary to the argument that he was making, in an area that is overwhelmingly Labour, there is only one person with a declared Labour affiliation on that trust. We have one member on the new Five Boroughs mental health trust.
It is, however, appointments to the primary care trust about which I am most concerned. They highlight the problem because the primary care trust serves the Warrington borough—the two constituencies. There are five non-executive appointments plus the chairman. Of those six people, only one comes from Warrington, North. The other five come from three wards in Warrington: two from Stockton Heath, one from Lymm and two from Appleton. Statistically, that seems a very unlikely result.
There are 24 wards in the Warrington borough, and I find it odd that three of those wards—including one of the small wards, Stockton Heath—throw up so many members of the PCT. I have to ask why. It is not geographical balance. When I raised that with the appointments commissioner for the north-west, he was rather unhelpful. I am sorry to say that I would rate him as the most smug and self-satisfied public official whom I have ever encountered in my years as a councillor or a Member of Parliament. He told me that the commission appointed the best people. I cannot believe that all the best people come from such a small geographical area.
We have to ask whether there is a flaw in the appointments system. I think that there is. I know of applicants whose applications were not acknowledged. I know that when the interviews took place, the interviewees were asked very technical questions. One of the interviewees, being a fairly lively lady, asked the chair of the PCT—who had been appointed by then— what he was looking for. She was told that he was looking for someone with financial or medical expertise. That is not the job of non-executive members. It is the job of the professional executive committee.
I have to say to the Minister that there is no equal opportunities process. People from deprived communities are not encouraged to apply. The commissioner told me that he was not a politician, and
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that he did not know where the boundaries were. That is, to say the least, somewhat disingenuous, since he was a parliamentary candidate in the 1970s, and I understand—although I have not been able to confirm this—that he lived in Lymm. Although he may not know where the boundary lies in the centre of Warrington, he certainly knows that Lymm, Stockton Heath and Appleton are nowhere near the deprived areas of Warrington, North.
The guidance says nothing about parliamentary constituencies, but I remind the Minister of the answer given to me by the Parliamentary Under-Secretary of State for Health, my hon. Friend the Member for Salford (Ms Blears):
"The National Health Service Appointments Commission aims at ensuring that board membership reflects the geographical areas served by the bodies concerned."
It does not in my area. She also said that
"it is crucial that a proper cross-section of the public serves on boards."—[Official Report, 22 January 2002; Vol. 378, c. 741–42.]
That is not happening.
The same situation can be seen in national bodies. I asked Departments several questions about how many people from my constituency had been appointed to non-departmental public bodies. Most of the answers were notable for their brevity. The answer was "None" for the Department for Work and Pensions, the Department for Transport, Local Government and the Regions, the Department for Culture, Media and Sport or the Department for Environment, Food and Rural Affairs. The Department of Trade and Industry did better in one respect, in that it managed to appoint one person from Warrington, North to the employment appeals tribunal—an event for which we were tempted to put out the flags. However, when I asked the DTI and the Home Office about other appointments, I received the usual answer that we all expect, about the information being "not held centrally". That raises some interesting questions.
How can we possibly monitor the make-up of national bodies if we do not hold the information? What information is put before a Minister when making an appointment? How do we manage to write to people to tell them of their appointments if we do not know where they live? Does that make a difference? I think that it does. If we are interested in promoting a civic society, and we want to involve people in decisions about how society moves forward, we must ensure that a cross-section of the community is involved and that areas are not excluded from the process.
The Government are committed to ending social exclusion, but they can do that properly only if people from the communities are involved in the delivery of the services. If we do not involve them, we lose a lot of experience and expertise. The people who live in our poorer communities know most about tackling poverty. Those who suffer most from crime and antisocial behaviour can tell us the most about what affects their lives and their neighbours' lives. Those who live in health-deprived communities can tell us why people do not access services. For example, there is no point designing health services that people in the communities cannot access because there is no public transport, or lecturing people about healthy diets if they do not have access to cheap fruit and vegetables. We need their

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expertise if we are to make real progress, and we ought to have learned the lessons of the past: trying to regenerate communities from the outside does not work. People from the inside must be involved if we are to design good services.
Nationally, there must be proper monitoring to ensure that appointments to non-departmental public bodies reflect the regional diversity of the country. It may come as a surprise to some officials in Whitehall that not everyone with brains lives in London. In fact, those of us from the north argue that people with brains opt for a better lifestyle outside London. In addition to the existing criteria for appointments to public bodies, regional diversity should be encouraged.
I suggest that the Minister talk to his colleagues in the Department of Health about the criteria of the NHS Appointments Commission. Locally, it should be required actively to seek out, encourage, train and support people from under-represented sections of the community. If the PCT in my area does not have confidence in my constituents, why should my constituents have confidence in it? That is the key. I want my constituents to get a fair deal in representation on other bodies. At present, they and many people in similar communities do not, and that must be addressed if we are serious about encouraging participation in public life.
Miss Anne Begg (in the Chair): I remind hon. Members that the summing-up speeches must begin at 10.30.
10.22 am
Mr. Kevan Jones: I add my congratulations to my hon. Friend the Member for Workington (Tony Cunningham) on initiating the debate. I want to concentrate on appointments to health bodies and to draw attention to my concerns about the way in which the NHS Appointments Commission operates in Durham.
As has already been said, the commission was set up following Dame Rennie Fritchie's report in 1998. The view of the Secretary of State for Health was that an independent commission should be set up, because that was the only way to reassure the public that appointments were being made fairly. The NHS Appointments Commission's website refers to the need
"to ensure that the public, the NHS and Ministers have confidence in the openness, transparency and fairness of the procedures which are used."
Openness and transparency are not words that easily spring to mind when one examines how the NHS Appointments Commission operates in Durham. On 5 December last year, I initiated an Adjournment debate in the main Chamber on the appointment of the chairman of the North Durham NHS trust and the removal of its existing chairman, Mr. Kevin Earley. I do not intend to repeat all the details of the case, so I urge hon. Members to read the debate if they want to know about the commission's unsatisfactory operations. I want to highlight the facts that I have since found out and some other concerns about how the commission is operating in Durham.
Following my Adjournment debate, and on the advice of the Parliamentary Under-Secretary of State for Health, my hon. Friend the Member for Salford (Ms
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Blears), I arranged a meeting on 5 March with Sir William Wells, the chairman of the NHS Appointments Commission, to discuss Kevin Earley's case and some other concerns. Mr. Roger Moore, the commission chief executive, was in attendance.
Like my hon. Friend the Member for Warrington, North (Helen Jones), I find Sir William Wells's attitude high-handed. He gave the clear impression that he did not want to be at the meeting, and that he thought it an affront that an elected Member of Parliament should question him or his organisation. Things were so bad that 10 minutes into the meeting I told him that I thought it was a waste of time. That pricked his conscience a little, and he started to listen to what I had to say. The chairman of the commission's lack of interest in the concerns of an elected MP is representative of the mindset of the rest of the organisation.
I raised three questions about the case of Kevin Earley. First, if the appraisals that Mr. Earley undertook were good, why did the commission not automatically reappoint him to the chair of the North Durham NHS trust? Secondly, why had he not received full reasons why he had been removed? Thirdly, when the commission failed to make an appointment first time around, why did it exclude at least one chair of a primary care trust from its shortlist of candidates?
The answer to the first question is simple: the commission did not use the appraisals. It consulted the regional director of health, Mr. Peter Garland. Mr. Earley's reappointment was in his hands, even though this is the same Mr. Garland with whom Mr. Earley crossed swords a year earlier about the appointment of a new chief executive of the North Durham trust. I have long suspected that this was Mr. Garland's attempt to get his own back on Mr. Earley, and that is now evident. I tried to find mention of a consultation with the regional director in the appointments procedure, but could not find one anywhere. The case is clearly an example of someone employed by the health service determining who sits on a health board. That cannot be right.
Until I intervened on Mr. Earley's behalf, he had been given no reason why he had been removed. I could not find mention of a decision not to use appraisals anywhere in the procedure book. It is clearly the commission's trademark that it makes up the rules as it goes along. On the subject of existing chairmen, the document, "The Appointment Process for NHS Chairs and Non-Executives", says:
"Whilst there can be no right to reappointment, there will be a presumption that all candidates who have served a single term will be eligible for consideration for uncontested reappointment if their appraised performance has been consistently good."
There is no mention of the regional director. I even looked in annexe D, which is headed "Exceptional Procedures", but I could not find any mention of it there. It is ironic that it was Sir William Wells who gave me a copy of the document at our meeting.
In my Adjournment debate, I questioned the basis on which the shortlist of the new candidates for the trust was drawn up, as it does not appear in the appointment process document. In my meeting with Sir William Wells, he admitted that it was not part of the procedure. I also asked why one of the chairs of the party trust was

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not included on the shortlist. As my hon. Friend the Member for Warrington, North says, the NHS trust is not very good on boundaries; it answered that it did not know that the chairman lived in Durham. Therefore, the shortlist of candidates did not include at least one able and appointable candidate. That raises questions about the process that arrived at the appointment of Mrs. Angela Ballatti.
Equal opportunities has already been mentioned. Mrs. Dorothy Burnett, who applied to be a non-executive member of the local primary care trust, asked me whether I would support her application, and I did, as she was a very able candidate, a committed trade unionist and a past president of her union who sits on the employment appeals tribunal, was an observer to Nicaraguan elections in 1999 and lives in one of the most deprived parts of my constituency, Tantobie. She applied last August and received an acknowledgment on 5 September. After that, she received no further communication and had no reply when she tried ringing the number given in the letter. In January, I wrote to Dr. John Marshall, the regional commissioner, to find out what had happened to her application. She received a letter on 3 February saying that she had been unsuccessful because of the high number and standard of candidates. To date, I, the local Member of Parliament, have not received a reply. How the commission treats Members of Parliament should be examined. If—
Miss Anne Begg (in the Chair): Order. I warned the hon. Gentleman that summing-up speeches had to begin at 10.30, and it is now 10.31.
10.31 am
Mr. A. J. Beith: Obviously, the hon. Member for North Durham (Mr. Jones) could dig deeper into his treasure store of the workings of the appointments system, but time does not permit him to do so.
The hon. Member for Workington (Tony Cunningham) has done us a service in bringing this matter before us, because of the extent of public bodies to which such appointments are made, the value of the public service done on them and the serious failure to get to grips with the under-representation of various groups, including women, ethnic minorities, people from particular parts of the country or, as the hon. Member for Warrington, North (Helen Jones) so effectively described, from deprived areas within regions and constituencies. She is a model of a Government supporter holding Ministers vigorously to account, which is not a contradiction in terms. The practice should be encouraged.
The hon. Member for West Chelmsford (Mr. Burns) made an interesting trawl through the figures. He might have looked at the figures for water authorities during the earlier years of the Conservative Administration, too, which showed similar trends. All parties should recognise that if procedures are not in place for public appointments that are not heavily influenced by political preference or affiliation, difficulties will be experienced and circumstances such as exist now will be created. In
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some areas, just as happened in other areas when the Conservatives were in government, people assume that it is not worth applying for public positions because they will all go to people from the ruling party. Whether that view is always justified is open to argument, but it is widely held and deters people from applying. That is also true of other considerations, such as the belief that someone with their background would not be considered, have a fair chance or withstand the interview process that they fear they may face.
Various concerns have been expressed. Much reference has been made, as perhaps it should be, to gender balance, because of the continuing conspicuous failure in that area. The Departments that have shown an improvement in the proportion of women on public bodies are the smallest, and include the Cabinet Office and the Export Credits Guarantee Department—all the Departments that started from a very low base. The record of large Departments, such as the Department for Environment, Food and Rural Affairs, which has vast numbers of appointments, is frightening. The Department still achieves only an 87:13 male to female ratio of appointments. Its target is only 80:20, and it seems unlikely to meet it. That shows how far short it is falling of the objective of achieving a better balance. Let us compare departmental figures with those for the Scottish Executive, who have a male to female ratio for public appointments of 53:47. It is obviously possible to do a great deal better than most Departments in England are doing.
Achieving a gender balance presents a serious problem, which Dame Rennie Fritchie has examined. It has been suggested that the emphasis that she places on the legal framework may be a factor in that and other problems of representation—because of the merit argument. I am not arguing that people should be appointed to jobs for which they are not suitably qualified or appropriately experienced. In the appointment of single posts, such as chief executive or chairman, a particular mix of qualities will be required and one will want to get the best person available.
If one appoints several people to a body over a period of time, however, one wants it to be broadly representative, so background and experience are relevant factors in assessing merit. We must ensure that merit is defined in that broad context, especially in bodies that, taken together, are expected to be representative and to reflect a variety of backgrounds—as most public bodies should.
The hon. Member for Leicester, East (Mr. Vaz) spoke about the representation of ethnic minorities. I agree that we must advertise the opportunities for public service and contributions one can make to public life that are available to people in ethnic minorities, as to other groups. A more active effort is required to overcome any feeling that there might not be a place for ethnic minority groups in the apparently closed world of advisory bodies.
The hon. Member for West Chelmsford spoke extensively about the problem of achieving political balance. It is especially acute in the national health service, in which so many appointments have been necessary because of the constant reorganisations and the creation of new trusts. In my experience in the northeast, in the earlier years of this Administration, appointment lists were stuffed with people who could

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declare Labour political activism. Almost every name on any list, of those who were political activists, was the name of a Labour activist. There were some nonpolitical appointments, but the political ones were almost wholly Labour.
There was conspicuous representation on the lists of people who had lost their positions as leaders of councils, for example, which included some able and competent people. However, the new system is designed to escape such clear bias in the lists. It is disappointing to hear that, in the experience of hon. Members from other constituencies, the new system may be failing to draw on the full range of people who should serve on public bodies.
To some extent, the appointments reflect the applicants: many applications in the north-east were from Labour activists. We should not simply accept that. Rather, we should counteract it: efforts should be made to recruit from a wider group than those who recognise, perhaps because of their political experience, that they would have a good chance of being appointed to a public body.
The hon. Member for Workington quoted a newspaper article that probably referred to a recent report by the Institute for Public Policy Research about public bodies in the field of culture and media. The report pointed out that such bodies were heavily white, middle-class and Oxbridge in their composition. Some are Government-appointed bodies, although some of the worst offenders are self-appointed bodies. High sheriffs, for example, are appointed by their predecessors. Those who have a political affiliation are almost invariably Conservative, and in rural areas they are almost always landowners or have substantial landowning or farming interests. We should examine cases in which people appoint their successors, which is the case with some of the cultural bodies referred to in the report. That should be of concern to the Government.
Too many responsibilities are in the hands of unelected bodies. People often say that they do not want regional government. We have regional government, but it is not elected: it is conducted by people who are appointed and are therefore the product of a system that, as we all recognise, has serious defects. Whenever possible, responsibilities should be handled by elected bodies, whether existing ones such as local government, or regional or specialised elected bodies. There is a role for unelected or partly unelected advisory bodies that draw together a particular mix of experience, but we would much rather put major executive responsibility in the hands of people who have to account to the public and who may lose their jobs if the public are not satisfied with how that responsibility is discharged.
Some of the many unelected advisory bodies and taskforces seem to escape the public body rules because they are temporary—even though they seem to last a long time. The new lobbying to get on taskforces is increasingly leading to questions about whether political donors are more likely to be appointed to taskforces than others. The proliferation of temporary taskforces, which are not particularly transparent in their appointments systems, suggests that whole areas of policy are being influenced by those who have come to public positions through a defective appointments
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system—one that clearly fails to represent many sections of society. The Minister should take such concerns seriously, and I look forward to his response.
10.40 am
Mr. Tim Collins: I, too, congratulate my constituency neighbour, the hon. Member for Workington (Tony Cunningham), on securing this debate and on the interesting way in which he opened it. He raised a series of concerns, which have been developed by other hon. Members.
The hon. Gentleman said that about £23 billion of public money had been spent by non-departmental public bodies. The latest figure that I have is £25 billion, but whatever the exact figure it is a substantial sum—and it has increased since the Government came to office. The Minister may say that the number of quangos has been reduced, but the number of people employed by them and the amount of public money that they spend has increased substantially since Labour came to power.
The hon. Gentleman was right to lead off by saying that the fundamental issue, which relates to a whole range of concerns expressed in the debate, is accountability. A number of clear concerns have been expressed by members of both main parties this morning, and I hope that the Minister will address them by saying how appointments are made. I hope that he will also deal with the widely expressed concerns about the workings of the NHS Appointments Commission. I know that that body is new, and that it is the responsibility of the Department of Health; none the less I hope that the Minister will take our concern as a sign that a debate on that subject on the Floor of the House would be useful in the not too distant future.
My hon. Friend the Member for West Chelmsford (Mr. Burns), in his characteristically robust way, flattered the Minister shamelessly by calling him something of a bruiser—a remark that I suspect the Minister will have framed in his smallest room before the end of the week. In a characteristic tour de force, my hon. Friend spoke of the appointments system in the NHS and more broadly, saying—the Minister would not expect me to make my speech without gently tweaking his tail—that it is important to put things in context.
The Government are of course entitled to take the view that they have won two general elections, that they are now in office, and that they would expect to appoint more supporters of the Labour party than supporters of other parties. However, that needs to be put in the context of what happened at the general election. For every vote won by the Conservative party, the Labour party had 1.3 votes; the evidence now is that for every appointment of a Conservative party member by the NHS Appointments Commission, five members of the Labour party are appointed. That seems a little out of kilter with how people voted at the general election.
The hon. Member for Leicester, East (Mr. Vaz) made some important points. I imagine that all of us here today would thoroughly endorse what he had to say about the unfortunate events in France, and would endorse his wish for a steady growth in the proportion

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of ethnic minorities at all levels of public appointments, including the most senior. I applaud, as he did, the early steps that have been taken by Sir Richard Wilson, but little progress has yet been made and a lot more needs to be done.
I strongly endorse what the hon. Gentleman said about the horrors of people making what he called a career in quangocracy. I endorse his view not only because, as he pointed out, if some people are getting themselves appointed to a multiplicity of quangos, it will mean fewer appointments for everyone else, but because if people are spending all their time on one quango or another, the very merit that they supposedly bring to those quangos—their outside experience and links—is likely to be lost.
The hon. Member for Warrington, North (Helen Jones) made an excellent speech. I very much agreed with everything she said. I hope that she will not regard praise from the Conservative Front Bench as damning her further, as she has already been praised by the right hon. Member for Berwick-upon-Tweed (Mr. Beith)—we are not trying to bury her political career. She is right that if our civic society is genuinely to mean anything, the issue of geographical representation must be carefully considered. I imagine that, like me, she would not expect any Minister in any Government easily to be able to divide the number of appointments made by central Government by 650 and allocate them evenly to constituencies, but she is right to say that some constituencies and types of constituency are under-represented.
I recognise that the hon. Lady represents an area where social deprivation and exclusion are widespread. My own constituency is in many ways more fortunate, but some people there feel excluded, as the hon. Member for Workington said. That applies throughout Cumbria because of its geographical distance from London, the difficulties in rural areas and the differences that arise even within regions, because Cumbria is very different from other parts of the north-west. The Government have a responsibility to address those issues of geographical representation. It would be helpful if the Minister would say whether the Government would like to address those issues, because I believe that any positive comments from the Government would be widely welcomed across the political divide.
The hon. Member for North Durham (Mr. Jones) raised some extremely powerful and cogent concerns about the workings of the NHS Appointments Commission. He is clearly much more familiar with the details of the cases to which he referred than I am, but he seemed to raise matters of grave concern. Certainly, the principle that those who are to be supervised by NHS bodies should not have a hand in deciding who should be on those bodies seems to be correct, and that reinforces the need to consider how the Appointments Commission is working in the health service.
In addition to paying tribute to the hon. Member for Warrington, North, the right hon. Member for Berwick-upon-Tweed also made a fair point when he said that there had been difficulties under successive Governments—this is not something that has suddenly sprung to life since 1997. He said that the best way of
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tackling the problem that he correctly identified—the fact that some people do not feel that it is even worth their while putting their names forward for nomination—is to increase the element of democracy and accountability.
We might differ about whether that should be achieved through regional government. Some of us are concerned that that would result in decisions that are currently taken at county level being hoovered up and decided at a more distant level. None the less there is a case, as the Conservative party has proposed, for Parliament to take on a role comparable with one in the American system, whereby Select Committees play a part in approving the appointments of very senior officials to non-departmental public bodies.
For example, we have suggested that that should apply to some of the individuals who have been mentioned in the debate, such as the head of the NHS Appointments Commission. Perhaps one way of ensuring that that person has a more constructive working relationship with Members of Parliament of all parties would be to decide that such an appointment could go ahead only with the support of the relevant departmental Select Committee. The hon. Member for North Durham is nodding his head, so he recognises that that might be one way to counter people's perceptions of arrogance and unaccountability.
Before the Government came to power, they made clear declarations about what they would do about the quango state. When he was shadow Home Secretary, the present Foreign Secretary said:
"Labour will dismantle this unelected quango state."
In his final speech to the Labour party conference before the 1997 general election, the present Prime Minister said that he would place
"the quango-state in history's dustbin where it belongs."
Given the statistics that my hon. Friend the Member for West Chelmsford has quoted today, perhaps he would like to reflect on the somewhat ironic comment by the right hon. Member for Islington, South and Finsbury (Mr. Smith), who in 1996 was shadow Secretary of State for Health:
"Solely political appointments made to non-executive directorships on the boards of trusts and authorities must end."
As my hon. Friend pointed out, he did not say that they must "sort of change".
We have a huge number of these wonderful tsars. I was going to read out the list, but it is so long that I do not have time. After going through a list of two or three dozen tsars, one comes upon the classic title of the "red tape tsar". That seems a little ironic to some of us.
I would expect from the Minister an admirably well intentioned declaration of Government belief in wider access to appointments and greater openness and transparency. However, we need to hear about how the Government propose to make the process even more democratic than he would maintain it currently is, and whether he can address hon. Members' concerns, not least those expressed by his hon. Friends about the workings of the NHS Appointments Commission.
10.50 am
The Parliamentary Secretary, Cabinet Office (Mr. Christopher Leslie): I shall try to live up to expectations, although the text of my speech has more pages than there are minutes left for me to deliver it, so I hope hon. Members will forgive me if I have to pass as quickly as possible over as many issues as possible.
I congratulate my hon. Friend the Member for Workington (Tony Cunningham) on securing the debate. It has been both refreshing and wide ranging, even if it has featured cross-party compliments going from one side to the other—perhaps too many for my liking. My hon. Friend stressed the need to broaden awareness and knowledge of the appointments processes. I would like to touch on those processes and develop that theme, but first it is important to consider the nature of public bodies. They operate at arm's length from Ministers, but Ministers are ultimately responsible for what they do. Some public bodies are well known in Parliament and have a high profile with the general public. Others are less well known, but all of them have an impact on our lives, whether they are concerned with the development of policy or the delivery of public services, or whether they help define issues or advise Ministers in that process.
There has for decades been a concern about the proliferation of so-called quangos. The Government are committed to keeping their number to a minimum. There are now fewer in the UK than at any other time during the past 20 years. As of 31 March there were 1,025 such bodies—a 10 per cent. decrease since 1997.
My hon. Friend the Member for Leicester, East (Mr. Vaz) made an important contribution when talking about the composition of these bodies. Of the roughly 30,000 individuals serving as board members, 34 per cent. are women. However, his particular concern related to the proportions from ethnic minority communities. In 1992, 2 per cent. of board members were from those communities, and in 1997 the proportion was 3.6 per cent. As of 2001, it is 4.8 per cent. There has been some progress, although I accept that a lot more still needs to be done to ensure that we focus on increasing involvement among the black and Asian community. I will read his report, entitled "The Glass Ceiling", and consider it for the future.
The accountability of public bodies is extremely important. Ministers are accountable to Parliament on behalf of the public bodies within their Departments. We have tried to take steps since 1997 to promote greater awareness of what such bodies do and to make them more open and accountable to the communities that they serve.
We publish detailed information on all public bodies. We intend to publish the next edition before the end of this year, and the intention is that that should include, for the first time, summary information on the arrangements that each body has in place for ensuring greater openness and transparency in what it does. I pay tribute to Dame Rennie Fritchie, the Commissioner for Public Appointments, who is responsible for governing the appointment processes and ensuring that the code of practice is properly adhered to.
My hon. Friend the Member for Workington urged us to give greater attention to the process of appointing local people to local public bodies. Where a public body
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serves a clearly defined neighbourhood, district or region, it makes sense for its members to have experience of living or working in that community. Merit and ability to do the job are the overriding criteria for appointment to any public body, but Ministers have to account to Parliament for the performance of local as well as national public bodies, so it is desirable for local decision makers to be drawn from a pool of candidates who are likely to engage with and understand local needs.
Clearly there are many communities in which we need to make extra efforts to encourage applications for places on the boards of quangos. My hon. Friend the Member for Warrington, North (Helen Jones) was articulate in voicing her concern that lower income groups and deprived communities are not sufficiently represented. Successful local boards are those with a wide range of people from diverse social, economic and employment backgrounds. We must engage proactively with individuals who, although they have the skills and abilities to do the job, for some reason do not know when vacancies arise, or how to apply. I shall continue to examine policies and practices to see how improvements might be made.
My hon. Friend the Member for Workington also made comments about the regional development agency in his area. It is difficult to achieve a balance in all specifics and to secure appointments on merit. I am assured that a member of that RDA, John Dunning, does live in Cumbria. Strict proportionality is never fully attainable, but I recognise the need to keep a close eye on such matters.
I have a deep-rooted concern about achieving diversity nationally, not just to represent the composition of the nation better, but to enrich the character and the work of public bodies. I am anxious to ensure that we are clear about our targets and aspirations. Gender, ethnicity and disability all require more attention; there have been positive improvements, but there remains a historic, lingering under-representation of women, ethnic and other minorities and disabled people. We have introduced various measures to address that problem, and seminars throughout the country have encouraged women to join public bodies. None the less, greater national diversity is still required, so the Government will continue to promote vacancies nationwide, so that people living in all areas of the UK have a fair chance of winning seats on boards.
There have been comments about the NHS Appointments Commission, particularly from the hon. Member for West Chelmsford (Mr. Burns), who developed his frenzied conspiracy theory at length. In April 2001, we established the independent NHS Appointments Commission, which has effectively taken NHS appointments out of the political domain. The appointments that it makes—there have been more than 4,500 to various trusts—still come under the remit of the Commissioner for Public Appointments, Dame Rennie Fritchie. She has said that there is no significant difference between the political activity of applicants and that of those appointed, nor is there evidence of any political bias in the appointments process. My hon. Friend the Member for North Durham (Mr. Jones) made a number of points about his discontent with a

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specific case. I listened to his comments with care and will ensure that I again draw them to the attention of Ministers in the Department of Health.
I want to stress the ways in which the Government can ensure faster progress on diversity, which should have high priority in our policy approach to public bodies. We publish the annual report to give all Departments a strong incentive to improve their performance. The Cabinet Office will now focus on making greater efforts to help Departments to apply best practice in making appointments to the public bodies that they sponsor, so that they can meet the published targets on diversity.
Work is also in hand to identify new initiatives and policies in order to broaden the range of options available to Ministers. That will allow us more radically to drive progress on diversity in its widest sense, while preserving the overriding principle of selection on merit. Merit is always our overriding principle, but we must keep a close eye on diversity issues. Our main focus must be on putting the right people in the right posts so that they can deliver higher quality public services. That must be the outcome that we all seek, and I am glad to have had this opportunity to highlight those matters.

Pensions
11 am
Mr. Peter Lilley: The greatest domestic problem facing all developed countries is how to finance retirement incomes for populations that are experiencing increasing longevity and declining fertility. People are living longer and having fewer children from whom to draw the work force of the future, and that is a serious problem. It behoves us all to participate as constructively and positively as possible in such debates, and I shall certainly approach this debate in that spirit.
Britain is better placed to cope with the problems of an ageing population than most other countries in Europe. That is not only because our expected population pattern is more favourable than those on the continent, but because we have taken steps to encourage people to save and invest for their retirement. We have more funded private provision for retirement than any other European country: indeed, we have more provision than all other European countries together, and the value of our funds exceeds that of all of theirs.
None the less, funded private provision still meets only 40 per cent. of this country's future pension liabilities. When the Government came into office, they set a target of raising that percentage to 60 per cent. by the middle of the century, and I unreservedly praise them for that. After all, we require companies to save and invest to ensure that they meet their pension promises to their employees. Even though Governments cannot legally bind their successors, it is extraordinary that they have not considered it necessary similarly to ensure that money and resources are saved and invested so that their pensions promises can be met. I therefore welcome the fact that the Government have at least set the target of making a major step towards more funded provision for our pensions liabilities over the next few decades.
Unfortunately, having set that target, they have, in practice, moved decisively in the opposite direction. They have vastly increased their unfunded pensions and retirement-provision liabilities by replacing the state earnings-related pension scheme with the state second pension, which is set at a more elevated level. Furthermore, they have raised the value of the basic state pension by introducing the minimum income guarantee, raising it and extending it across the spectrum through the pension credit.
At the same time, funded occupational schemes are in crisis. Many are closing to new members, many are cutting contributions and, therefore, the benefits to which employees are entitled, and many are in deficit. Insurance companies are advising older members in particular to opt back into the state second pension, which they will receive on a pay-as-you-go basis, not a funded basis.
Occupational schemes are being pushed in that direction largely because of the underlying problem of increasing longevity, which has been accentuated by the decline in investment returns in recent years. However, the situation was aggravated most of all by the extraordinary decision of the incoming Chancellor to impose a £5 billion a year pensions tax on people's pension funds. I christened it the "Maxwell memorial

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tax," not only because two of the Treasury Ministers were formerly close colleagues of Robert Maxwell, but because up to that point he had been the only person who believed that one could siphon money out of a pension fund and get away with it, as pensioners would not discover until many years later that the money was missing. The Government's action undermined private occupational schemes.
That effect was aggravated further by an increase in the regulatory burden and the disincentives to savings created by raising the minimum income guarantee and extending it up the scale through pension credit. That, in turn, was aggravated by the impact of the financial reporting standard 17, which is not directly the Government's responsibility but has caused problems. I hope that the relevant accounting bodies will consider the proposals of the Confederation of British Industry to allow a spreading of the impact of pension liabilities on companies' reported accounts.
As a result of all those factors, the savings ratio has collapsed. There has been a serious overall impact that we cannot ignore. However, we must be constructive and consider how the Government might pull back from that decline and meet the targets that they have set and which I welcome. In substance, there are only two ways in which they can do that.
First, they could promote more saving, investment and back-up, and supplement state pension pledges. When I was Secretary of State for Social Security in the last year of the Conservative Government, I proposed a scheme called "basic pension plus", which would have ensured that every entrant to the labour market—every young person starting work—was given his own pension fund, into which a rebate would be paid that was sufficient, over their lifetime, to fund a pension at least equal to the basic pension and the earnings-related pension. That would have been backed up by a guarantee from the state that if, through any misfortune or bad investment, the fund did not reach that target, the actual pension would be supplemented and topped up to the level guaranteed by the state through the old basic pension system. Those people would have had the prospect of sharing in a buoyant economy on the upside. If their funds did better than the modest projections by the Government Actuary, that would have acted as the basis for the rebates.
The scheme would have guaranteed the basic state pension to everyone in the country, enabled future pensioners to share in economic growth and given a massive boost to investment such that, if it had raised the growth level of the country from 2.2 per cent. to 2.3 per cent., it would have paid for the whole scheme through the extra revenues that it generated. It would have relieved taxpayers of the biggest single element of public expenditure that they faced and brought about the greatest extension of personal ownership since the spread of home ownership that ensued by allowing people to buy their council houses. In so doing, it would have resolved a major issue facing modern Governments: how to provide a decent, secure pension for increasing numbers of elderly people.
Sadly, although the scheme was widely welcomed by all the media—apart from the Daily Mirror, and I should have been alarmed if it had supported it—by those across the political spectrum and by commentators, the Government decided not to go
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ahead and implement it, as they could have done. I should have been only too happy to have seen my ideas purloined. Instead they have wasted five years, as we are five years further back from entering a system in which everyone has his own savings pot for the future. If we had introduced it, 3 million young people would now have their own pension funds, with £3 billion invested in them, growing towards their future retirement needs.
The Government went so far, as they often do, as to borrow some of my rhetoric and dress it up in stakeholder pensions, saying that they were adopting some of the substance of Lilley's ideas. Unfortunately, stakeholder pensions, about which I have said many favourable things, are as close to basic pension plus as a hologram is to the real thing that it represents—as soon as one gets to it, one finds that the substance has disappeared. The most desirable feature of the stakeholder pension is that it is to be hoped that it will reduce the cost of provision and the element of savings siphoned off for administrative costs rather than being invested for future pensions.
It is said that people will save and invest only if they are either persuaded or compelled to do so. Persuasion costs money. Introducing stakeholder pensions, with their limit on costs, has removed the reward that could persuade people to save without replacing it with any element of compulsion that makes them save. Compulsion was clearly envisaged in the paper produced by the Government, "Partnership in Pensions" when the right hon. Member for Birkenhead (Mr. Field) was still gracing the Government. Since his departure, matters which were then going in the right direction have taken a downturn. The famous page 105, paragraph 9 of "Partnership in Pensions" referred to
"compulsory funded pensions for those earning over £9,000 a year".
Obviously, that was the Government's original proposal, and they failed to proof-read it out of the final published document.
I urge the Government to think again. If they intend to meet their pledge, should they not consider automatically giving to all or some of those accruing the state second pension rights their own pension fund, with a rebate paid into it and a guarantee that their pensions will, at the end of the day, be topped up if, by any misfortune, the fund is not able to provide them with the pensions foreseen by the state second pension scheme? In many ways, the state second pension lends itself to such an approach even better than the basic pension lent itself to basic pension plus. That is because the state second pension is accruing, over a generation, rights to a better pension when people retire. It therefore lends itself to a scheme that comes in gradually, with a generation.
As the scheme is, in essence, a flat-rate one, or will become so for most people, it is rather more suitable for people to opt out of than was the case with the state earnings-related pensions scheme. As SERPS was earnings-related, people with low earnings received a very low rebate, which was inadequate to cover the fixed costs of setting up and maintaining a fund. The state second pension would have a flat-rate rebate paid into private funds that would be more than sufficient to make it worth while for everyone, on all income levels, to opt out of the scheme and have their own fund generating a pension at least as good.

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At present, 8.3 million people contribute to employers' pension schemes and 5.5 million have personal pension schemes. About 13.8 million in all have, therefore, opted out of the state earnings-related pension scheme, and about 7.5 million have opted in. We are talking of moving from a world in which two thirds of people have the benefit of a private pension to one in which 100 per cent. of those earning above the lower earnings limit have their own pension scheme. The current value of rebates paid into such pension schemes is £6.8 billion a year. That would have to be increased to cover the third not covered at present.
I have some questions for the Minister. I do not expect her necessarily to respond to them all here and now, but I hope that she will be able to provide answers in due course and that they will be placed in the Library to allow other Members to benefit from them. Why did the Government abandon their original proposal to make it automatic for everybody to have their own personal pension fund, equal in value to the state second pension, rather than leaving many people opted into the pay-as-you-go system? What would the value of the extra rebates be if the Government were to move to that system? What would be the value of a fund of an individual on average earnings if they paid into a fund to meet their state second pension liability by the time that they retired? How many ten or hundreds of thousands of pounds would they have accumulated through investing their rebates over a working life?
Was the reason why the Government were reluctant to move towards automatic opting out that for those who are older the structure of rebates does not fully reflect the rate of accrual—the value of the pension rights accrued by people who are working in older age—because there is less time for those rebates to accumulate compound? How much would it cost if only younger people, perhaps those under 30 or under 50, were automatically opted out of the state second pension? I calculate that if new entrants only were opted out, the net cost of extra rebates for each year's cohort of people would accumulate at a rate of £100 million per annum, but I ask the Minister to check whether that back-of-the-envelope calculation is correct.
The underlying problem facing our pension system is that we are living longer, but we are not working longer. In 1950–52, the life expectancy of a man who had reached the retirement age of 65 was, on average, 11.7 years, which meant that he could, on average, expect to enjoy 11.7 years of retired life. By 1997–99, a man reaching 65 had a life expectancy of 15.3 years. For women, whose retirement age was and still is 60, their life expectancy in 1950 was 18.1 years at 60, but now it is 22.8 years. Roughly speaking, average life expectancy in retirement has been rising by about one month every year for the past few decades.
In theory, if people worked for a bit longer and were therefore retired for a correspondingly shorter period of time, they would have more time to save and they would be able to buy a higher pension at a lower cost for the slightly shorter remaining period of their lives. Ideally, people should be free to make that choice and should be equipped with their own pension fund. When they reach the sort of age at which they may want to think about retiring, if they have a fund sufficient to cover a pension
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at least equal to the minimum that the state deems to be adequate or appropriate for them, they could decide to retire. Alternatively, they could decide to work a bit longer and build up a bigger pension fund to have a higher pension for their retired life.
The evidence—I seem to remember seeing it when I was Secretary of State—that people would behave like that is provided by the fact that those with money-purchase pensions, predominantly the self-employed, have been working for longer, while those with defined benefit pensions or those who are reliant on the state pension have been retiring earlier, despite their longer life expectancy. When people have a money-purchase pension to which they can continue to add by working a bit longer, they do that to enjoy a higher standard of living during a slightly shorter period of retirement.
Other countries have encouraged that process to a considerable degree. I was in Washington a while ago, and my taxi driver told me that he was 92. At first, I was slightly shaken by that, but he pointed out that he did not drive at precipitate speed, he drove with great caution, he had more experience than most taxi drivers and he drove extremely safely, which was proved because he had lived so long. People can continue working to very considerable ages if they so wish. Ideally, it should be up to them, but the Government have effectively repudiated plans to move towards a position in which all of us have our own pension funds, and all of us are free to make our own decisions about when we retire and whether we decide to work a bit longer. The Government have to face taking that decision collectively on our behalf rather than leaving it to us as individuals to make the decision.
In the Scandinavian countries and America, Governments have already begun to consider moving the pension age, or have already legislated to raise the state pension age, from 65, typically, to 67. I believe that it is time for the Government, working within their own parameters, to launch a debate about the future retirement age that they will be able to afford. They must consider whether it is more logical to raise the pension age by, for example, a month per year, so that those starting work now would probably work for three or four years longer than the previous generation, just as they would expect to live three or four years longer.
The decision will be important, whether the Government decide to go down that route or not. I emphasis that it is a decision that they face because they have chosen to rely largely on state pay-as-you-go obligations. They have increased those obligations and unless they do something about that they will not be able to meet their target of reducing the cost of state unfunded liabilities to just 40 per cent. of the total by the middle of this century.
My decision to equalise the state pension age for men and women at 65, rather than reducing it to 60 for both sexes, was extremely important. That was actually the biggest single cost-saving decision that any Government or Minister have or has ever taken. I am glad to say that it was endorsed by the then Opposition. Effectively, a consensus was achieved through the process of launching a debate, floating the arguments and allowing discussion. I believe that if the Government did a similar thing now, they would receive a similar constructive response across the political spectrum.

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Are the Government considering that process, or have they closed their eyes to that option? What is the cost to the taxpayer of a failure to reflect in any way longer life expectancy in the state pension age? My calculation is that a single month's deferment of the state pension age would save about £3 billion gross—perhaps £2 billion net—of any extra benefits that would have to be paid. That is a very significant decision.
Mr. Tim Boswell: Does my right hon. Friend agree that it is interesting and remarkable that the incentives for deferment of state retirement pension to a greater age are relatively modest and that doing so provides very little return? That may be reflected, as the memory of the earnings rule dissipates, in the much lower number of people who are deferring retirement and claming their benefit at the age at which they are entitled to it.
Mr. Lilley: I announced an increase in incentives for those who chose to defer retirement. Under the long-established system—I think, since 1948—anyone who deferred taking their state pension for a year subsequently received a pension that was 7.5 per cent. higher. I announced that that would be raised to 10 per cent. I am not sure whether that promise is being honoured by the Government, but I hope that it will be. I do not expect a huge impact from that. The evidence suggests that it will not be as effective as people having their own pension fund to which they can pay in extra if they work a month or two longer and buy a slightly higher pension at a lower cost as a result.
I reiterate that the Government have created the problem, not us. I pay tribute to my hon. Friends the Members for Daventry (Mr. Boswell) and for Havant (Mr. Willetts) for the constructive way in which they have approached the problems of longevity. I hope that the Minister will give a similarly positive and constructive response, rather than descend into the scaremongering and point-scoring that we saw during the 1997 general election. The problem is too important for us to take too partisan an approach.
In practice, pension provision over the years has been a case of each Government building on predecessors' work rather than undoing it. I hope that the Government respond to the building blocks that we have put in place, and to the ideas that I have put forward in today's debate.
11.26 am
John Robertson: I congratulate the right hon. Member for Hitchin and Harpenden (Mr. Lilley) on securing the debate. He raised several important pension issues, including how longevity in our population poses new challenges for the Government, and I look forward to the Minister's response. I shall expand the debate to incorporate final salary pension schemes, and discuss how the Government can seek to protect employees as more and more companies move away from such schemes.
A final salary pension is a type of defined benefit pension that guarantees, on retirement, to pay out a pension based on the final salary that the individual earned in a job—that includes their years of service for a company plus any pension that they have transferred
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to that employer's pension scheme from another employer. Most importantly, members of such schemes are guaranteed a specific pension, which they can calculate, and on which they can base retirement plans. The final salary membership has sadly declined from 51 per cent. in 1983 to 41 per cent. in 1995, but it is still the dominant occupational pension.
However, such schemes are expensive for today's employers. Several factors have played a part in making final salary schemes much more expensive for them. There are social factors, such as demography and, as the right hon. Gentleman mentioned, an increase in life expectancy. Policy changes, such as the introduction of the minimum funding requirement and financial reporting standard 17, and economic circumstances, such as the fall in stock market returns have also contributed. Those economic conditions and policy changes have impacted enormously on employers who previously offered final salary schemes, so we must consider how the Government can instigate policy changes to take off some pressure. If we do not remedy the situation now, although the full impact will not be felt for 20 or 30 years, it will be felt. Failure to act will create a pensions time bomb.
The alternative pension scheme that companies are embracing is the defined-contribution or money-purchase scheme, which transfers any investment risk to the individual away from the company. Thus if the stock market underperforms, the employee's pension is likely to be less than it would have been under a final salary scheme. In broad terms, a final salary scheme guarantees a pension at a given fraction of final salary—the firm has to fund the scheme to achieve that—but a defined-contribution scheme guarantees absolutely nothing.
According to the National Association of Pension Funds, 46 companies stopped accepting new contributions to their final salary schemes last year, offering money-purchase schemes instead. Nearly half the companies that ran defined-contribution pension schemes contributed 5 per cent. or less of employees' salaries. In a typical final salary scheme, companies contributed 10 per cent. or more. Without final salary pension schemes, retired workers could be 30 per cent. worse off.
A vast number of companies have closed their final salary schemes to new employees, citing the aforementioned factors, individually or collectively, as reasons. British Telecom closed the BT pension scheme, of which I am a member, to new employees on 1 April 2001, and many others, such as HSBC, Marks and Spencer, Abbey National and Barclays, have closed their schemes. To my certain knowledge, two companies have even closed their schemes to existing employees, and I fear that that may become commonplace. The Trades Union Congress estimates that the numbers in final salary schemes may have fallen from 5.6 million in 1991 to 3.8 million in 2001.
With money-purchase schemes, the size of the individual's pot at retirement determines the size of his or her pension. If the individual has not put in enough, or if investment returns have been poor, there may well not be enough to fund a decent pension. At present, the situation is made immeasurably worse by the high price

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of annuities. The law obliges people to use their pension fund to buy an annuity. If they look up annuity rates on the financial pages of newspapers, they will find that they need an absolutely huge pot of money to buy a half-decent pension. For a retirement income of £10,000 per annum, a half-pension for a partner, should the pensioner die first, and inflation proofing of up to 5 per cent., a pension pot of at least £250,000 is required. Clearly, that is impossible for the vast majority of people. The pension industry says that people need to save 20 to 25 per cent. of their salary for the whole of their working life to ensure a reasonably decent pension. For all but the richest in society, that is nothing more than a pipe dream.
Closure of final salary schemes also has implications for employee relations. Although closing a final salary scheme may not be a breach of contract, it may break an implicit promise in the employer-employee relationship. Apart from the obvious damage to the commitment that employees have to their company, the loss of a guaranteed pension and reduced company contributions may increase wage demands as employees seek to maximise their pension.
There are several problems with the minimum funding requirement, which is an assessment of the funding status of pension schemes on the basis of rules established by the pensions industry with Government support. The test for the schemes is too onerous. A scheme fully funded under MFR rules—one that can meet its pensions obligations is in fact over-funded; in other words, the MFR is too cautious. It might seem absurd to advance that argument, but it is not. Under MFR rules, schemes have to be returned to fully funded status in a fairly short period of time. It is now 10 years, and it used to be five years. The only way that that can happen is if employers make sizable payments to their pension schemes. The onus is placed on them to make up the shortfall, although in many cases the shortfall is really nothing of the kind.
Another problem is FRS 17, a new accounting convention, which is designed to force companies to show any shortfall in their pension scheme funding as a liability on their balance sheet. It is designed to aid transparency in company accounts by forcing companies to disclose the real state of their liabilities.
We must appreciate the sheer size of most mature pension funds. The BT scheme is capitalised at £28 billion, and is worth about 50 per cent. more than BT itself. If it were shown to be 10 per cent. less than fully funded, there would, under FRS 17, be a £2.8 billion liability on the BT balance sheet. That is a totally artificial state of affairs. First, when we define a pension fund using MFR, we greatly exaggerate the size of the deficit. Secondly, even under MFR, we have 10 years to put it right. FRS 17 grossly exaggerates that liability. It can seriously damage a firm's share value and current rating, making capital more expensive. Those two issues are, between them, driving firms to close their final salary schemes.
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Peter Thompson, chairman of the National Association of Pension Funds, said that companies were facing a number of cost pressures. He said:
"People are living longer, stock market returns in the last few years have been relatively poor, interest rates have been declining, so the cost of buying a pension has gone up by about 40% in the last five years."
Mr. Boris Johnson: Would the hon. Gentleman care to evaluate the impact that the rises in national insurance contributions will have on those companies? Does he agree with me that they will greatly aggravate companies' difficulties in paying generous pensions? He has not mentioned in his analysis the advance corporation tax, which my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) rightly compared to a Maxwell memorial tax. Does the hon. Gentleman agree that that, too, has had a severe impact on company pension schemes?
John Robertson: The hon. Gentleman has obviously read the penultimate page of my contribution. On his first point, I refer him back to the right hon. Member for Hitchin and Harpenden, who instigated the debate and said that we should not try to score points on the subject, as it is too serious. However, I would probably disagree with the hon. Member for Henley (Mr. Johnson) about national insurance contributions.
Given the comments of Mr. Peter Thompson, and the fact that buying a pension has gone up by 40 per cent. in the past five years, the Government might well say that they want people and their employers to take more responsibility for pension provision. However, the introduction of MFR and FRS 17 has created an environment in which that is practically impossible. The result is that we shall increasingly have to step in and use taxes to fund pension subsidies in order to prevent consigning the elderly to poverty and future Governments of all colours to electoral disaster.
What should the Government be doing? A first step should be at least to reform or, ideally, get rid of FRS 17 so that it does not have such a major effect on decision making. There should also be further reform of MFR to make it more realistic. FRS 17 is due to be replaced in 2005 with an international accounting standard. I would like that to be speeded up, although I am concerned that the international standard may well be based on FRS 17. Perhaps the Minister will comment on that.
We could add incentives, such as abolishing advance corporation tax for those firms that maintain their final salary schemes, and abolishing it retrospectively for those who reopen such schemes. We could also consider giving firms transitional relief from other taxes if they can show that they are under genuine pressure because of their final salary pension schemes. We could lift the requirement on people to purchase annuities with their money-purchase schemes and make it mandatory for firms to pay a minimum of 10 per cent. of salaries into money-purchase or stakeholder schemes. Essentially, we must make it cheaper for firms to keep final salary schemes going while making it more expensive to switch to money-purchase schemes.
I am pleased to have had the opportunity to contribute to the debate. I realise that some of my ideas to alleviate pressure on companies and encourage employers back into final salary schemes may fall under

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the responsibility of the Treasury, and I shall seek assurances from the Minister that she will raise them with that Department. I look forward to her response.
Miss Anne Begg (in the Chair): Order. I remind hon. Members that summing-up speeches must begin at midday. Two hon. Members have indicated that they wish to speak. I call Mr. Boris Johnson.
11.39 am
Mr. Boris Johnson: I shall be very brief, as all my points have essentially been made by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley), at whose feet I sit and to whose briefings on pensions I used to listen humbly and sincerely when I was a mere journalist—which, of course, I still am.
This morning, I asked my secretary, who is, I am afraid to say, a Labour voter, about her pension arrangements. She said that she had none, as no one in her family lived longer than the age of 50, and she saw no reason to make any private arrangements. That is a great shame, as I have every confidence, as she seems in the peak of health, that she will live a long time. As my right hon. Friend said, we live increasingly longer, and through several errors of policy the Government have gravely aggravated the pensions position in this country.
When sitting at the feet of my right hon. Friend, I used to write that Britain had the best private pension provision in Europe, which remains true. Unfortunately, however, we seem to be harmonising our position downwards, towards the rest of Europe. Perhaps that is a subtle scheme to approximate us to the rest of the Community, with a view to eventual membership of monetary union, or perhaps there is an agenda that I do not follow. However, I cannot believe that that is so. It seems more likely that errors of public policy, such as FRS 17, to which the hon. Member for Glasgow, Anniesland (John Robertson) referred, and advance corporation tax, which, as my right hon. Friend said, swindled £5 billion out of the general pensions pot, have contributed to a grave diminution in general available funds.
The question is, what are we going to do now, and how can we respond positively? Having listened to my right hon. Friend, I am delighted to discover that the Lilley plan rides again. We had such difficulty defending it in the 1997 election. The Minister smiles, because she remembers that at the time the Labour party grossly traduced and misrepresented it. It was a good idea, and I understand that my right hon. Friend is now offering a sophisticated variant that would do well and enable the Government to escape some of the mess that they have created.
The Government should think much more creatively about the retirement age. It is ridiculous that a man such as Sir Magdi Yacoub is forced to retire at 65 whereas a journalist such as Bill Deedes can, praise be, go on for ever, like my right hon. Friend's taxi driver. I am anxious to hear the Minister's comments about that, as I do not believe that many people will exculpate the Government for their failures in public policy over pensions. There is a risk that we will oscillate from apathy to panic. I am starting to detect serious panic about pensions. People my age are seriously wondering what is going on, and it is time that the Government did something to allay their fears.
11.44 am
Mr. Peter Luff: As I am sure that you would agree, Miss Begg, my hon. Friend the Member for Henley (Mr. Johnson) may be a journalist, but he is not a mere journalist.
I rise to speak with some hesitation, as I find my own personal pension arrangements immensely difficult to understand. An appropriate metaphor for today, to spare your blushes, Miss Begg, is that I feel like St. George taking on the dragon of the pension industry. The complexity of personal arrangements is difficult. I speak on behalf of my constituents, who tell me all their bewildering concerns—frankly, I often get lost.
Members of Parliament are a species of public servant who seem likely to continue to benefit from a final salary scheme. For those constituents who might criticise me, I would like to place on record that the average length of service in the House is not that long. The benefits of the final salary pension scheme are nowhere near as great as they may appear to the outside world, coupled with which, many of us take a substantial salary decrease to become Members of Parliament, so it is even worse than it looks.
I congratulate my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) on securing this debate on an important subject. Over the past year or so, my postbag has reflected a sharp increase in concern, not from the traditional pension lobby of those who rely entirely on state pensions, but from those who have put something away for their retirement and now find that it is under threat. In the past few months, employees of companies that are ending their final salary pension schemes have expressed complaints and concerns to me. The importance of that issue is growing. Politicians sometimes find it difficult to deal with because, typically, those who express their worries are approaching retirement or have actually retired. However, we must urgently focus our attention on it. The term "pension time bomb" was used by my right hon. Friend and by the hon. Member for Glasgow, Anniesland (John Robertson), in what I thought was a useful and thoughtful contribution, although I am not sure that the Minister would agree. He raised important and serious points.
In opening this important debate, my right hon. Friend took a characteristically emollient tone, and did not seek to score party points. I shall try to follow his example, but I believe that a substantial part of the fault for the problems that we face rests at the door of the Government. My right hon. Friend said that there were only two ways to persuade people to provide for their old age—by persuasion and by compulsion, but it is difficult to persuade people to deal with the issue against the confusing and complex background noise on pensions created by the Government.
Although the debate is primarily about final salary pension schemes, the subject cannot be divorced from the broader pension framework that the Government have sought to establish, the single greatest mistake of which is the growing reliance on means-tested benefit for pensioners. Pensioners have also been badly affected by the increase in council taxes, which is another source of taxation on pensioners that is outside the terms of this debate.

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Thanks to the minimum income guarantee, an impression has been created in the minds of some pensioners that they no longer have to provide for their old age. It may be that the closure of their final salary pension scheme does not concern them as much as it ought to. That worries me.
The Government's failure to move on annuities may also discourage people facing the end of their final salary pension scheme from making appropriate contributions to their own money-purchase scheme. The responsibility rests with the Treasury rather than the Minister's Department, but I urge her to look again carefully at the arguments relating to annuities. Final salary pension schemes appear to be in terminal decline, and there will surely be few private limited companies left with such a scheme within a few years—my right hon. Friend looks surprised, but it is difficult to imagine that any would maintain them. Therefore, the way in which the Government treat money-purchase schemes will become even more important.
The Bill introduced by my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) comes before the House again on 10 May. In the context of the demise of final salary pension schemes, I hope that the Government will take a more sympathetic view to that Bill than they have so far. The introduction of other pension arrangements such as stakeholder and second state pensions has made the background noise to the pensions debate immensely more complicated for people such as myself who, frankly, find such things very difficult to understand.
In October last year, the National Association of Pension Funds said that 46 companies had closed their final salary schemes to new members during the previous year, 13 schemes had been switched from final salary to money purchase, 95 per cent. of companies had said that providing an occupational pension took up more company resources compared with five years ago, and 92 per cent. expected that to continue. Fewer than one in 10 companies intended to replace any scheme with a stakeholder one. More than seven out of 10 private sector schemes said that the introduction of stakeholder pensions had had no effect on the benefits that they offered. Worryingly, as the hon. Member for Glasgow, Anniesland pointed out, more than three quarters of schemes said that the new accounting standard FRS 17 would make it less attractive to employers to offer a final salary scheme. The director general of the National Association of Pension Funds, David Cranston, summarised the situation very neatly when he said:
"Falling investment returns, combined with longer life expectancy undoubtedly account for much of this pressure. But the volume and complexity of red tape has clearly weighed heavily enough with some schemes to drive them away from final salary scheme provision … There is no shortage of evidence that employers want to provide good occupational schemes wherever possible. It is to their credit that many do so. But too often, regulations hinder rather than help. Now, more than ever, is the time to encourage such employers and to strip away unnecessary red tape."
I hope that the Minister can address that issue. It lies within her responsibilities.
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The two crucial issues that have been mentioned and cannot be repeated too often are the devastating impact of the Chancellor's raid on pension funds at the beginning of the New Labour Administration, final salary pension schemes—
Mr. Lilley: My hon. Friend suggests that there was a one-off raid on pension funds and that is often repeated in the press. However, £5 million is extracted from pension funds every year; I hope that that is clearly on the record.
Mr. Luff: My right hon. Friend makes an important point. Like the increase in national insurance contributions announced last week—£9 billion-worth of taxes on incomes, not just one year but year on year— so it is with the raid on pension schemes through the change in advance corporation tax rules.
The accountancy firm Chantrey Vellacourt DFK has calculated that a typical 30-year-old needs to save an extra £200 a year just to pay for the Chancellor's stealth tax. It has also been reported that Tesco has imposed a 15 per cent. increase in contributions to the company's final salary pension scheme as a result of that tax—a 15 per cent. increase that will not boost the final pensions of employees, but will pay the Chancellor's stealth tax. The Chancellor said that the stock market would continue to rise and that the increase in value of pension funds would more than compensate—he said that it would be a direct result of the abolition of the tax, as I recall. Those of us with modest shareholdings and ISAs know how sadly untrue that has proved over the past couple of years.
My right hon. Friend made a powerful case concerning the damage done by FRS 17 to the pensions industry, particularly to final salary pension schemes. He suggested its repeal. I suspect that the damage has now been done—repeal will not undo it, and it cannot be unwound—but I should like to hear the Minister's analysis of the point. Will she put pressure on the Inland Revenue to change the arrangements?
The issue is important, and there are three major Front-Bench speeches to come, so I shall not prolong my remarks unnecessarily. However, the total impact on pension arrangements of what the Government have done is serious. It is estimated that many will need to double their savings rates to provide a decent retirement income. An individual aged between 35 and 45, earning between £17,500 and £35,000 per year currently saves 10 per cent. of annual income for retirement. In order to provide a comfortable retirement, that needs to increase to between 10 and 21 per cent. of income. Those are immense figures. My fear is that, with their final salary pension schemes scrapped, such individuals will see the Government's promises to protect their income under the minimum income guarantee and decide that it is not worth the candle. When the Minister responds to the debate, she must set the demise of final salary pension schemes in a much broader context. This is becoming our most important domestic policy issue: in 20 years' time we shall have to face our constituents and say that we did not speak up soon enough to protect them from the poverty that confronts them.
A low savings rate, confusion caused by the stakeholder pension arrangements, more means testing, the failure to reform annuities, tax increases on pension

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schemes through the change in ACT and new Inland Revenue rules are creating a pensions time bomb. I hope that the Minister will address that problem, and will take from the debate a sense of urgency: the cries of pain are beginning now, but we have heard nothing yet.
11.54 am
Mr. David Heath: I, too, congratulate the right hon. Member for Hitchin and Harpenden (Mr. Lilley) on having secured the debate, and on the way in which he expressed his views. He has a great deal of expertise and interest. I do not always agree with his conclusions, but I do not doubt the genuine expertise that he brings to the subject. My only regret is that my hon. Friend the Member for Northavon (Mr. Webb) cannot be here—he is a member of a Standing Committee that is sitting this morning—as he has more expertise on the subject than I, even with my best efforts, could achieve. Nevertheless, I hope that I can contribute to what has been a good debate.
I congratulate the hon. Members for Glasgow, Anniesland (John Robertson), for Henley (Mr. Johnson) and for Mid-Worcestershire (Mr. Luff) on their contributions. The hon. Member for Mid-Worcestershire mentioned the parliamentary pension scheme, which is a serious problem. The idea that the House can vote to enhance its final salary scheme while the rest of the country sees its final salary schemes going by the board is difficult to defend, and I for one am not prepared to defend it. That, however, is a subject that should be addressed elsewhere.
The right hon. Member for Hitchin and Harpenden made a comparison with other countries. He was right to say that, in contrast to many European countries, we are fortunate in having funded schemes. I am glad that he did not follow the path taken by many of his colleagues on so many other subjects by saying that European models are preferable. I find it difficult to reconcile the Conservative party's telling us that health systems in Denmark are preferable to ours with what it says on other subjects. It took the biscuit yesterday when the shadow spokesman for the Home Office said that we should consider policing in Belgium as a model. The mind boggles.
Setting that aside, we are historically lucky that many pensions are provided by funded schemes. Indeed, it is the schemes that are not funded that cause the greatest problems. I recall my time in local government when police authorities had difficulties with non-funded schemes because of the problems of finding the contributions to ensure the recipients a proper rate of return on their pensions, and of dealing with the ever increasing proportion of their revenue that went towards pensions. I am not sure that the answer is to keep hiking up the pensionable age. Doing so has clear attractions, but I am worried that we would start chasing our tails.
I recently heard an interesting exposition by the head of demographics at the United Nations. He was comparing the ratio between those of working age and those of retirement age in various countries, and Britain is by no means the worst in that respect. In order to maintain a steady ratio between those in work and those of pensionable age, some countries, including China, would have to increase the age of retirement into the 90s.
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People would have to continue working until the age of 90 in order to receive a pension. That is clearly not sustainable, and it worries me that we might end up in some sort of forlorn race.
I shall deal principally with the crisis in funded pension schemes that so many hon. Members have spoken of, particularly that in final salary schemes. It is a hot potato at the moment, and is causing a great deal of concern to many people. Indeed, the hon. Member for Glasgow, Anniesland drew attention to it. Clearly, many factors are involved. I have no doubt that the impact of advance corporation tax is a factor—one among several. Many people also point to FRS 17, but I am less convinced by that argument. That change in accounting standards will improve the transparency of the arrangements, but it will not change the value of the funds. It is the triennial valuation of the funds that tells fund managers that they have insufficient funds to meet their commitments, not the way in which they are reported.
Several hon. Members have suggested that the real problem is twofold. First, mortality rates have fallen and longevity has increased; secondly, stock market returns are lower. It is extraordinary that actuaries can glibly pass over their contribution to those eventualities, given that they predicted neither of them in the 1980s, and did not advise pension funds of the need to make provision for them. As a result, many large companies took a contributions holiday at that time, saying that they had a large excess in their pension funds. As we came into this century, however, they were facing deficits, which raises serious questions about the way in which actuarial science was practised in the 1980s.
There are two problems with the way in which companies have behaved. First, they have often used pension schemes to reorganise their structures. Throughout the 1980s and 1990s, companies that were disengaging labour, restructuring and downsizing used attractive enhanced pension schemes to move members of the work force into early retirement. Those people are now, of course, the beneficiaries of the schemes.
The other problem relates to contributions holidays, with which I have some difficulty, although I have always defended the concept. It is fair for companies to take contributions holidays from final salary schemes, because they take the investment risk. They may have to put more money in during the bad times, so it is only fair that they should put less in during the good times. The trouble, however, is that they have had no intention of putting more money in during the bad times, even though they have been happy to take it out during the good times. They see schemes as one-way arrangements, or no-lose bets, which is why we now have huge deficits following the performance of the stock market and the inclusion of additional beneficiaries. Companies must tackle their deficits. BT's is an enormous £3 billion, BAE Systems' is £776 million and Unilever's is £647 million. Those big figures must be tackled, but as we heard, many companies have chosen to do so by closing their final salary schemes and pulling out altogether or migrating to money-purchase schemes.
A money-purchase scheme is not intrinsically a worse deal for recipients, and will indeed be better for some. One by-product is that employees have ownership of the

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fund and surety about what will happen. Companies with a final salary scheme are, however, the guarantors of the investment and are within their rights to say that it is theirs—although that is disputable.
Whatever the scheme, the key is whether the level of company investment is the same as before. Time and again, however, we find that it has gone down. Marks and Spencer migrated from a final salary scheme to a money-purchase scheme, and its contribution fell from 22 per cent under the old scheme to between 6 and 12 per cent under the new scheme. That is the problem: not enough money is going into the system to meet the demands made on it.
The crux of Government policy must be to find ways to stem the reduction in contributions, and, ideally, to enhance them so that schemes have sufficient resources to provide benefits. The Government have announced their review; they are working on it at the moment, and we look forward to the results. What is the basis for that review and the decisions that the Government will then take? Do they want simply to staunch the wounds, or to enhance the contributions made by the corporate sector into the funded pension area? Are they prepared to ensure those levels of contribution by one method or another? Will there be a compulsory minimum contribution, and if so, what mechanism would be used?
Should there be a compulsory employer contribution, to stakeholder pensions if not to company schemes? That might be exactly the spark that is needed to get people to take out stakeholder pensions, because an employer contribution often persuades people to take out such a scheme. Are there changes in regulation or in costs to companies that would make a difference? In the context of the 1 per cent. rise in national insurance, some sort of fiscal incentive might seem attractive to companies.
Is it necessary to revisit FRS 17? It is not the villain of the piece. In terms of reducing the contributions, it is the messenger rather than the protagonist. Nevertheless, if some aspect of it needs to be reviewed, the Government should respond.
The Minister responsible for pensions told us that there would be legislation on the minimum funding regulation. When are we likely to see that, what is it likely to comprise and what is the intention behind it? The Minister is smiling, and I suspect that she may not be able to give me the answer to all those questions, but perhaps she will—who knows?
Is there a case for exploring the concept of insurance against insolvency again, so that there is at least a backstop for companies who find themselves in difficulties? Should we re-examine the fiduciary duties of trustees and companies to existing and future pensioners? It is clear that nothing illegal or improper has been happening in the closure of the schemes, but in terms of the actual effects on pensioners, something profoundly disturbing has been happening. The Government have a role in ensuring that those people's interests are properly protected. They are not necessarily well protected at the moment, and there is a case to answer. I hope that the Minister will be able to respond positively to some of the questions that have been raised.
12.7 pm
Mr. Tim Boswell: My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) deserves all our thanks for securing this debate and for the moderate way in which he elucidated his concerns. For those who have any residual doubt about the efficacy of Westminster Hall as a sounding board for matters of policy, this debate justifies the innovation: a former Secretary of State and deputy leader of my party has taken the trouble to share his thoughts and give us his experience on this matter. In fairness to all those who have contributed subsequently, they have responded in kind.
My right hon. Friend drew on his experience and was critical, but not hyper-critical, of Government policy. He expressed concern about the expansion under this Government of unfunded liabilities. He made the point that savings and investment are central not only to the pension issue but to economic performance. He rather trenchantly made the point that persuasion costs money. We all need to remember that. The alternative to persuasion is compulsion, and many of us would not wish to go down that route without good reason.
Finally, he produced a series of specific thoughts built on his earlier thinking, which will repay further consideration. In particular, I welcome his ideas on incremental changes that would have a highly beneficial effect in the medium term, but might not necessarily either take the political trick or produce instant results.
The hon. Member for Glasgow, Anniesland (John Robertson) made a valuable contribution, which was not uncritical of the Government, and considered the issues very much from the employee's perspective. It is right that we should do that—I often think that the trade union input to the pensions debate has not been fully developed in either its practical or its theoretical aspects. He gave us a fascinating statistic about the relative size of the market capitalisation of BT as against its pension fund—twin stars, as it were, with different sizes at different times. That was hugely interesting.
My hon. Friend the Member for Henley (Mr. Johnson) spoke with perspicacity and self-assumed detachment. I especially liked his reference to the danger of oscillation from apathy to panic, which was germane to what my right hon. Friend said. Although there are a lot of reviews in hand, the Government seem to be in apathy mode, but we do not want them suddenly to push the panic button and make a series of dramatic and eye-catching gestures that may not be right for the long term.
My hon. Friend the Member for Mid-Worcestershire (Mr. Lull) said what I might have said, but eloquently and with a passion that I cannot claim to match—and amen to that, because he put his points very clearly. He rightly said that we must all get to grips with the issue.
The hon. Member for Somerton and Frome (Mr. Heath) spoke for the Liberal Democrats. His colleague, the hon. Member for Northavon (Mr. Webb)—or "the professor", as he is known is speaking in Committee upstairs. Both the Minister and I should be there as well, so we are two-timing at the moment, but I make no complaint about that, as it is in the nature of the House

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that we should be in two places at once. The hon. Member for Somerton and Frome made some interesting comments about companies and contributions, to which I may return in the moment.
To summarise my views, this debate is analogous to the debate about the national health service, in that we are at a turning point in our affairs in relation to pension provision. It may be no accident that the NHS and modern pension provision have their roots in the wartime consensus and derive from action taken by the post-war Labour Government. Subsequent Governments have worked on them in various ways, and there is now an interesting difference between the two. Whereas the NHS has continued as a broadly monolithic state and taxpayer-financed provision, the pensions industry quickly moved away from that and took advantage of a mixed economy with a diversity of provision and a high degree of private financing. That may be the reason for the relative success of our system compared with the more state-funded systems on the continent.
That success may now be at risk. The Government's attitude, as shown originally in their Green Paper of 1998, did not so much mis-sell as oversell the Government line. The objectives were not bad—in particular, the aim of reversing the split of 40:60 between private and public provision—but some hon. Members have expressed real doubt today as to whether that split can be achieved. Certainly, to achieve it, the Government must respond briskly to the reviews of Alan Pickering, Ron Sandler and the Inland Revenue that are under way, before going ahead with any changes.
I should remind hon. Members that funded pensions are what they say they are—they are pension funds, generally held in tradable securities. Therefore, the funds reflect the performance of stock markets and other kinds of markets, and whatever a Chancellor does is directly relevant to their success and to the amount that is available to beneficiaries. I cannot help but take notice of the changes to the national insurance contribution, just as I could not overlook the raid of advance corporation tax in the past. I had the privilege of serving under my right hon. Friend on our Treasury team, and we both remembered the impact of previous policies on pensions. We shared our knowledge with the Committee but, however hard we worked, people did not take much notice because they did not realise what could happen when the markets hit a downturn. Now markets have turned down, triggering difficulties for pension funds.
One cannot say that ACT was the sole cause of pension fund problems, but since 1997, perhaps coincidentally, there has been a series of phased retreats in provision by companies with company pension funds. They began by abandoning the pension holiday as finances became tighter and went on to close final salary schemes to new entrants, with the possibility that they might close those schemes to existing beneficiaries and place the arrangements on a new contractual basis.
As has rightly been said, the move from defined-benefit or final salary schemes to defined-contribution or money-purchase schemes is not, of itself, objectionable, but it is usually accompanied not by an extra contribution from the employer to acknowledge the transfer of risk, but by a reduced contribution, which
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reduces the employer's overall costs. I heard a senior partner, a well known figure in the pensions industry, speaking yesterday, and he said that employers seem to have lost interest in the whole pensions business. That needs to be recorded in the context of this discussion, because if that is happening—because employers do not want highly intrusive, pervasive and expensive pension funds—we must consider self-provision, for which my right hon. Friend and others in the previous Conservative Government established some of the framework for the future. That was not always successful the first time around, but now we are considering private pensions and stakeholders, which need not be objectionable, any more than the growth of self-provision of company cars is objectionable. What matters is how it is achieved and whether, ultimately, the figures are adequate.
Our concerns have been well expressed in the debate, and we want the Minister to answer the points that have been raised. They centre on the targeting of private provision; issues relating to annuities, which were raised so passionately by my hon. Friend the Member for Mid-Worcestershire; the adequacy of contracting out rebates in relation to the state second pension; the interaction of the state second pension and the basic pension, both of which are probably still inadequate to reach the guarantee offered under the pension credit—so there may not be an incentive to save—and that certainly will not help individual pensioners who have a partial contributions record; and the awful business of means testing 5.5 million pensioners, which has been referred to by several commentators, including the National Pensioners Convention.
What has come out of today's debate is an acknowledgment that we are all in this together. This is not just a matter for the young or old. The old will come and complain to us, now or in the next few years, and the young will be very critical of us if we let them down in the medium term or do not explain what is necessary to secure their future provision, which must be comparable with what we expect for ourselves. The concerns apply equally to the relatively affluent and to those who live at income support level. People need security in retirement, and it will be a long retirement because of longevity. We hope that people will he able to share in rising prosperity over that time. In addition, the issue should not divide either side of industry. Everyone needs to get together and decide whether provision should be made through a company scheme and, if so, how the burden is to be shared. Above all, the Government need to take the issue seriously and to level with the British people about what is needed and what they can do to assist us in providing for ourselves and our dependants for the future.
12.18 pm
The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): This has been an interesting debate. It is a shame that it cannot continue for a little longer, because it was apparent to me as I listened to the contributions of hon. Members that many of those present wished that they had a little more time to expand on their comments. None the less, we are stuck, as ever, with the time available to us.
First, I join many hon. Members in congratulating the right hon. Member for Hitchin and Harpenden (Mr. Lilley), who obviously retains his interest in the area in

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which he used to control Government policy as Secretary of State, on initiating the debate, and on the way in which he put forward his views, because as everyone in the Chamber is well aware, if we had so chosen we could have had a slanging match. I am in no doubt about that, so I congratulate him also on the tone that he adopted in making his points.
Before trying to deal with some of the many points that have been made, I want briefly to say something about the Government's approach. The right hon. Gentleman mentioned back-of-the-envelope calculations, but although he might be able to do calculations on his specific, technical points—the value of rebates, the rate of accrual for older people contracting out and what the value of pension pots would be if only younger people opted out—on the back of an envelope, I cannot. I do not have any envelopes with me, and I do not have the time or the wherewithal to answer those points in full now. I shall, of course, write to him on them and, as he suggested, ensure that my answers are placed in the Library of the House so that other Members can see them.
The Government's strategy is to try to ensure that those who can afford to save for their retirement do so. I do not think that that is different from the strategy of any previous Government. We want any saving undertaken to be rewarded, not penalised. We want individuals to have the right information to save enough. A theme that has run through this morning's debate is that it is how much people save, rather than the different ways in which they save, that is crucial. I do not think that people have ever saved enough. I am sure that it would be true of most of us here that, if we were to stop and examine our arrangements, we would be shocked to see how poorly we are providing for ourselves.
We must ensure that people have the right information. We must also ensure that regulation on employers and pension providers is proportionate, while providing the safeguards that people expect, and that the right savings products are available.
We have heard less today about those who cannot afford to save for their retirement, but they form a substantial proportion of our population. The Government are committed to developing policies that will enable such pensioners to share in the country's rising prosperity and that tackle pensioner poverty. As a Government, we value the genuine public-private partnership and mix of provision for pensions. That has been true of all Governments; although there have been different views on how to stimulate saving and the most appropriate way of doing that, the value of that genuine public-private partnership has not, I think, ever been questioned.
State provision, and pension policy generally, must seek to maintain a fair balance between the needs of today's pensioners and those of tomorrow's pensioners. We have heard little about that balancing act that Governments must carry out. Such balances are never easy to obtain, and there are bound to be tensions between the requirements of those of working age today, in respect of incentives to save, and the amount of money and basic state provision that we give to today's pensioners. There are trade-offs, and we must ensure that we get those right.
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Pensions are a long-term business. We must bear that in mind, no matter how much sound and fury there is about the particular issues of today and the past year or two, although I am not saying that those are unimportant. It would not be sensible for any Government to make panic judgments based on whether the stock market is going up or down, and that could be even more true if, as the right hon. Gentleman argued for, there were a much greater extension of funded provision. It is important to bear in mind that, although in many instances political decisions are a reaction to yesterday's or last week's headline, politicians on either side of the House should not fall into that trap with regard to pensions. I am not accusing anyone of that; I am simply saying that that must be borne in mind when we consider what we ought to do.
The right hon. Gentleman said that he approved of the 60:40 aim for 2050—the aim for more pension provision to come from private savings. He then said that some of our anti-poverty measures, which are aimed at relieving some quite bad poverty among today's pensioners, work against that aim. I do not accept that tackling pensioner poverty is a problem. We must ensure that the need for people today to have a decent retirement is balanced with the disincentive effects that adhere to increasing the basic minimum. Many Opposition Members would argue, and have argued this morning, that such disincentive effects adhere either to the minimum income guarantee or to the reward for saving that the pension credit tries to give. A balance must be struck, because there are those who have not had proper access to pensions in the past.
In the past, the pensions system was not perfect because many people such as carers and those who did not have full work records did not have proper access to it. SERPS was aimed at those who had worked for most of their lives. We have to try gently to move the entire system to benefit those who have not had that benefit in the past. We have to strike a balance between that and creating disincentives for tomorrow's pensioners.
We can argue about whether that balance is correct, but I hope that Government and Opposition Members will accept that the Government are not moving away from perfection. The right hon. Gentleman might believe that he approached perfection when he was in office, but many people were not able to have or to save for proper pensions through no fault of their own. We have to strike a proper balance, and I shall not apologise for trying to deal with pensioner poverty.
The right hon. Gentleman and some of his hon. Friends raised the issue of advance corporation tax credit. [Interruption.] My hon. Friend the Member for Glasgow, Anniesland (John Robertson) also raised that point. Those Opposition Members, and even my hon. Friend, do not always mention that a cut in corporation tax at least partially offset the cost of the removal of the credit, which is worth about £3.5 billion a year to companies, and that such company pension schemes also have tax privileges worth £14 billion a year. It was not just an annual removal of £5 billion because there were offsetting issues.
The hon. Member for Henley (Mr. Johnson) raised the issue of the national insurance increases in the Budget being an additional burden. If he had read Saturday's Financial Times, he would have spotted that employer national insurance contribution increases can

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actually encourage private pension provision because they make contributing to occupational pensions, on which one does not pay national insurance, more attractive than pay. It can be argued that that is an incentive effect.
The right hon. Member for Hitchin and Harpenden argued that the state pension scheme is not sustainable with the additions that the Government are putting on to it to alleviate poverty, but we do not accept that. Even after the introduction of the pension credit, which will benefit half of all pensioner households, state spending on pensions will rise by only about 1 per cent. of GDP over a significant period of time. We think that that is sustainable, and so does PricewaterhouseCoopers, which also had a look at sustainability.
The right hon. Gentleman talked in some detail about replacing the basic state pension with funded provision, but one danger is that the state is always the last resort if funded provision goes wrong. It would be difficult for a Government to say, "Here is your rebate for your funded pension. Go and get your own pension pot. If it all goes wrong do not come back to us." There is no doubt that pensioners would come back. It is not possible for the state completely to get out of pensions.
I know that the right hon. Gentleman and others are looking at that, but a man retiring now would have to build up a pension pot of more than £60,000 to get a pension equivalent to the basic state pension, which, it is important to remember, is not all of the state's provision. A woman would need more than £80,000. The rebate for a 16-year-old man would need to be £623 a year. For a woman of that age it would have to be more than £1,000. To fund those rebates would require an increase in national insurance contributions of between 2 and 3 per cent. It seems that the Conservative party is against increasing national insurance contributions at the moment, but it may look at that and think that it is good value for money. There is, however, no cost-free way in which to do that.
Staying contracted into the basic state pension provides the certainty of a particular retirement provision. If people had contracted out in the past two years, for example, and seen the stock market fall as it has, they might have become worried about their basic state pension equivalent. There is a guarantee from the Government at present that one will at least receive the pay-as-you-go provision. If that were contracted out, could the state really say, "Go away, we will let you starve"? I am not sure that it could.
Mr. Lilley: I offered the guarantee that if things went wrong, people could come back to the state. That is what the guarantee means.
Maria Eagle: That would put the cost through the roof. I do not have a figure for it, but if there were a major stock market crash, we might end up with a large bill. I do not have much time to say more.
Miss Anne Begg (in the Chair): Order. In fact, we have no time at all.

Drugs (Sport)
12.30 pm
Mr. Gareth R. Thomas: I am grateful for the opportunity to raise several issues concerning drugs in sport.
Sport has become very big business during the past 20 years, with growing media attention and, crucially, the possibility of growing rewards for the top performers. With those increasing rewards, new ways have been promoted to enhance an athlete's performance.
In my teens, I enjoyed watching Daley Thompson win decathlon after decathlon. I always remember him explaining that he trained on Christmas day because none of his rivals would, which gave him an advantage. For someone of my athletic capabilities, a second trip to the gym a week would undoubtedly enhance my performance, although I fear it would not get me any closer to playing elite-level sport. Others with more feasible aspirations look to coaches and doctors for the extra dietary information or the additional training routine to help them gain that split-second improvement in performance to launch them on to a medal podium.
Sadly, the truth is that a few contemplate artificial improvement in performance by looking to performance-enhancing drugs, such as anabolic steroids which might be used by athletes to increase muscle size, to train harder and for longer, or to increase their competitiveness and aggression. Other examples of drugs that might be considered to raise performance are human growth hormones, which stimulate muscle and tissue growth. Competitors may misuse erythropoietin—EPO—to enhance the body's oxygen-transport capacity and therefore endurance.
As awareness of the use of drugs in sport has risen, so have the demands on sports' governing bodies to do more to keep their sport drug-free and ensure that competitions are not won by drug cheats. Drugs taken to enhance performance can also cause the athlete health problems. Anabolic steroids can stop people growing properly. They can increase the chance of liver failure, heart attack, miscarriage and stillbirth. Large, prolonged doses of human growth hormone can lead to high blood pressure or diabetes, while the misuse of EPO carries severe risks because of thickening of the blood, which can overload the heart and increase the risk of blood clots, strokes, heart attacks, and even death in the very worst cases.
There are good public health reasons, as well as the moral and ethical desire for genuine, fair competitions, for challenging the use of performance-enhancing drugs. Research by the British Medical Association published two weeks ago highlighted evidence from GP and needle-exchange surveys, alongside interviews with anabolic steroid users, suggesting that anabolic steroid use in British gyms is sufficiently commonplace to he considered a genuine public health problem. Further research is needed on the potential adverse impact on the body of anabolic steroid use.
There have been few attempts to quantify the extent of doping in elite-level sport. As far back as 1989, two inquiries by committees in the American and Australian Senates highlighted the use of performance-enhancing drugs by athletes in their respective countries. The

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Canadian Government established their own commission of inquiry in 1990, concluding, sadly, that the problem of the use of performance-enhancing drugs was widespread not only in Canada but throughout the world.
The BMA report went on to note the comments of Anthony Miller, then research director at the Institute of Sports Medicine in Australia, who talked of an epidemic of drugs use in sport, and added that the problem was worsening. A British survey that is worth referring to is one that was carried out by the former Sports Council in 1996, which showed that almost 50 per cent. of British athletes thought that drug use in international competition in their sport was a problem. The figure rose to more than 80 per cent. for track and field athletes.
Fortunately, there have been few cases in the UK of sports people testing positive for performance-enhancing drugs, but we cannot afford to relax our continuing efforts to rid national and international sport of such drugs. It is certainly true that Britain has led the way in tackling the issue. The UK Sport anti-doping unit serves as a model for other countries to build on in their efforts to combat the use of performance-enhancing drugs. The publication and widespread acceptance of a national anti-doping policy, which was strongly backed by Ministers, is extremely positive, as has been the strong Government support for the establishment and operation of the World Anti-Doping Agency.
However, several issues still need to be addressed. There are genuine concerns about the number of drug tests that Britain can fund. The regulation and labelling of supplements is an issue that is worthy of further work. Funding for research into performance-enhancing drugs and legislation governing the role and supply of such drugs by coaches and doctors are required, and there is a continuing need for consistency among governing bodies in responding to positive drugs tests. In addition, the planned testing regime in the run-up to and during the Commonwealth games needs to be reviewed.
UK Sport's capacity for drugs testing has remained largely unchanged since 1991. The number of tests has not significantly increased. Without a substantial increase in funding, the number of drug tests may decrease, given their rising sophistication. For example, blood tests cost £1,000 each, yet they will soon be an accepted and normal procedure for rooting out cheats using EPO in international sport. Such tests are particularly important for endurance events. It was good to see EPO testing during the recent London marathon. The need for such testing was highlighted by the commendable protests of our own Paula Radcliffe at the world athletics championships in August last year.
I recognise that plans are in place for an extensive programme of drug testing, including pre-games testing, but I urge my right hon. Friend the Minister to make representations to the Commonwealth Games Federation to provide for a testing regime that includes blood testing for EPO before and during the games. Perhaps additional lottery funding could be released to help close the gap and to make the testing regime even more robust.
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Aside from the Commonwealth games, many other countries now undertake a far greater number of drug tests to reinforce their anti-doping rules. For example, I understand that there were 6,100 tests in the UK in 2000. That compares with 8,900 in France, 14,200 in Germany and 11,300 in Italy. In terms of hard cash, the UK spent £1.2 million on its drugs-testing regime in 2000. France spent the equivalent of £1.7 million, Germany £1.4 million and Italy £2.8 million.
The cost of drugs tests at UK and European laboratories has become a concern to many of our national sports bodies, which understandably want to maintain a robust drugs-testing regime but face financial pressures. The danger is that drugs tests will be conducted in laboratories that are significantly distant from the UK. I understand that the laboratory at King's college is the only one in the UK that is able to carry out tests to the level required. Clearly, a further facility is essential if we are to drive down the costs of drugs tests without compromising the process.
In 1999, there was a small but significant increase in the number of drugs tests showing nandrolone use. Reports emerged of a similar pattern from samples collected in other countries. Concern has focused on supplements used by athletes. Several athletes have successfully defended themselves over positive drugs test findings by citing worries about nandrolone in supplements.
A nandrolone review committee, which reported in January 2000 at the behest of UK Sport, gave strong warnings about the dangers of using supplements that may be incorrectly or inadequately labelled. Furthermore, research conducted in Aberdeen under the guidance of Professor Ron Maughan suggested a link between supplements and the presence of nandrolone metabolites. The link was confirmed through an analysis of bottles of supplements at the International Olympic Committee laboratory in Cologne.
The possibility of inadequate labelling or cross-contamination of supplements puts athletes at risk of using prohibited substances unknowingly, and it inevitably makes disciplinary investigations more difficult. Current rules rightly make athletes ultimately responsible for substances found in their urine or bloodstream. That position is crucial if the vast majority of athletes who are honest are to be protected from those who want to cheat by administering banned substances. Nevertheless, it is not impossible to envisage a situation in which an athlete is the innocent victim of a positive drugs test after having used supplements that, unknown to him or her, contained nandrolone metabolites.
Concerns were raised in the UK following the successful prosecution of the food supplements company Maximuscle in October last year for incorrectly labelling one of its supplements. Meetings have been held with the supplements industry, without real positive progress, to try to improve the standard of information available about products, and to achieve a higher standard of quality assurance. The industry does not want to pay for a quality assurance system. Given the level of advertising for food supplements, and the lack of rigour applied to labelling by some companies in the industry—both factors have been cited in recent positive drugs tests—it is entirely right that sports governing bodies should advise against the use of any

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supplements. However, given the potential health implications of performance-enhancing drugs, we cannot leave it at that.
I am not a fan of regulating business for its own sake, but the supplements industry must recognise that it needs to change. It is unacceptable that rogue companies continue to peddle products containing banned substances without proper labelling. Action must be taken. Independent verification of labelling and company activity is essential. Perhaps the Food Standards Agency or the Medicines Control Agency could be given responsibility to monitor that area. In its report two weeks ago, the British Medical Association recommended that all dietary supplements should be clearly labelled to prevent sports people from inadvertently ingesting banned substances.
In addition, there needs to be consideration of the role of coaches and doctors in the supply of performance-enhancing drugs to athletes. Their role was thrown into graphic relief by the investigations into widespread drug use during the Tour de France. A French study in the 1997 British Journal of Sports Medicine reported that 61 per cent. of those surveyed who were drug-using sports people cited their GP as the source of the drugs. There are several genuine and proper reasons why doctors would prescribe drugs to athletes, but that survey shows that the responsibility for the use of performance-enhancing drugs needs to be widened in some cases.
In Britain, the General Medical Council already has clear guidelines about a doctor's role, but that is not the case for the equivalent bodies among our European neighbours. Perhaps the World Anti-Doping Agency should consider that. Given the importance of the coach and doctor in the team that supports an athlete in elite sports, we must ensure that we have the legislative means to hold to account a coach or doctor who helps, and possibly pressures, an athlete into taking a performance-enhancing drug.
Further consideration must be given to policing the supply of performance-enhancing drugs. A monitoring company, Envisional, has highlighted the easy availability of prescription drugs over the internet. In the UK, the Medicines Control Agency has a responsibility, but the international nature of the internet makes policing more difficult. The easy availability over the internet of banned substances such as EPO has also been highlighted.
Concern has been expressed about the extent to which sport's governing bodies are consistent in how they enforce rules on performance-enhancing drugs. There are inconsistencies between governing bodies about whether the UK governing body or the relevant international federation has jurisdiction to hear the dispute. There are also inconsistencies between sports about the length of penalty imposed for the same breach of the same IOC medical code. There are even inconsistencies within sports between the constitution of the UK governing body and its international federation over the hearing of drugs issues. I commend UK Sport's attempts to link funding to whether a sport's governing body is willing to adopt rules and procedures on performance-enhancing drugs that are consistent throughout the UK. That work needs to be accelerated.
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I know that the Government take the issue seriously, and I commend the work of UK Sport's anti-doping unit. Nevertheless, I hope that the Minister will address the need for further action in several of the areas that I highlighted.
12.46 pm
The Minister for Sport (Mr. Richard Caborn): I congratulate my hon. Friend the Member for Harrow, West (Mr. Thomas) on having secured this afternoon's debate. It is an important issue. We all recognise that the use of drugs in sport is, ultimately, cheating and undermines that sport's integrity. Indeed, the use of drugs probably tarnishes sport more than any other problem. As my hon. Friend said, the Government, and I as Minister for Sport, are committed to the battle against doping in sport. I congratulate him on the work that he has done before the debate and with which he will continue. We shall join many others to ensure that doping is driven out of sport.
We regard the problem as a worldwide matter and are keen to work at national, European and international levels to combat it. As Minister for Sport, I am committed to ensuring a drugs-free environment in sport and to putting in place appropriate policies and procedures to achieve that, and I take on board my hon. Friend's points.
In the United Kingdom, we are committed to achieving a partnership between sport and the Government to tackle the problem. The UK is recognised as one of those at the forefront of the fight against the use of drugs in sport. Nationally, the Government fund the UK anti-doping agency, UK Sport, to implement the Government's programme to combat the use of drugs in sport.
We spend more than £1.3 million a year on ensuring the programme's quality and comprehensiveness. In 2000–01, UK Sport undertook 5,406 tests, of which only 110, or 2 per cent., showed positive results. The programme included 404 events organised by national governing bodies, and 156 international and European sports federation events.
UK Sport's anti-doping programme includes in and out-of-competition testing of athletes, the development of a national policy framework and provision of education and information services for athletes and sports governing bodies. The anti-doping programme is rightly regarded as one of the best in the world and is something of which we can be proud.
The need to respond to major changes in sport, such as the increasing availability of supplements, to which my hon. Friend referred, the use of blood testing and concerns about the adequacy and inconsistency of disciplinary procedures, recently added fresh urgency to the work of UK Sport in the field. Recent examples include setting up the nandrolone review, the continued development of blood-testing protocols and finalising national anti-doping policy. Earlier this year, I was proud to be present when UK Sport launched the new national anti-doping policy. I join my hon. Friend in thanking the staff of UK Sport for the professional and effective job that they are doing. The organisation is recognised around the world as one of the leaders in the field, and I want to ensure that that continues.
UK Sport has worked with national governing bodies to develop a new policy that promotes greater consistency in procedures and decision making on anti-

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doping across governing bodies and sports federations. It also sets out clear minimum standards that need to be achieved, with clear lines of responsibility for those involved at each stage of the anti-doping process. That includes independent review, disciplinary and appeal procedures. In short, the new policy provides a consistent and transparent system that benefits athletes, governing bodies and sports fans alike.
The national anti-doping policy is not the only new initiative being undertaken by UK Sport. The drug information database is the latest in a range of information tools available to sport. It provides athletes with online up-to-the-minute information about which medications in the UK contain prohibited substances and which contain substances that are allowed under the regulations of sport. It is a very comprehensive and effective user-friendly instrument that can be used by all those involved in sport. Athletes can check the medicine that they are thinking of taking anywhere in the world using the internet. Pharmacists and doctors will be able to help athletes select the right kind of medication to allow them to continue to train and compete without worrying about whether they are likely to fail a test. That is another example of real help that the Government are giving to athletes through UK Sport.
The problem of doping is not only damaging the image and the value of sport; drug misuse can be harmful to an athlete's health, as well as to those close to the athlete—family, friends, colleagues and fellow competitors. Athletes can also be influential role models for young people. If we are not careful, the sporting world will become tarnished, and we will start to lose the potency of that influence with young people. The behaviour of top athletes can have a significant impact on young people as they aspire to emulate their sporting heroes. We need to take action on a number of fronts to address the problem.
Part of UK Sport's anti-doping remit is to ensure the development of extensive information and education programmes for athletes, coaches, officials, administrators and parents on anti-doping. Through these schemes the Government can ensure that, throughout the UK, athletes and people who provide them with support are aware of the dangers involved in drug abuse. Next week, I shall be opening the British Medical Association's conference on drugs in sport. The conference, which aims to build on the excellent work already being undertaken in the UK, will focus on the roles and responsibilities of health care professionals in tackling drug abuse at all levels in sport.
Health care professionals can play a key role in ensuring that sport in the UK takes place in a drug-free environment. By alerting those who work in the medical profession to the risks involved in using drugs in sport, we can also draw attention to the wider public health implications of drug abuse in our society. Under the Misuse of Drugs Act 1971, the UK has strict control over the supply of substances such as steroids. It is an offence to produce, supply, possess with intent to supply and import or export with intent to supply such substances. Those controls are aimed at suppliers and traffickers who profit from selling and supplying those substances to not only sportsmen and women but others such as bodybuilders.
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Lessons learned from sport and the action taken can help to address drug problems faced elsewhere in our society. Indeed, only recently, in response to concerns in sport—similar to those that my hon. Friend raises—and to advice from the Advisory Council on the Misuse of Drugs, the Home Office took action to extend the list of substances controlled under the 1971 Act. Those are all substances that are included on the International Olympic Committee list of prohibited substances and include nandrolone- related metabolites.
Of course, many substances prohibited in sport are in use in wider society for perfectly legitimate reasons, including, for example, supplements. That means that it would be impossible to make the supply of all substances regarded as performance-enhancing a criminal offence. Doping in sport is prohibited because it is cheating. Substances are prohibited because they give those who take them an unfair advantage over competitors. The criteria applied to determine what substances are prohibited relate to fairness in competition rather than health or crime. It is important to keep that in perspective when examining what we are trying to achieve. Sometimes, in the international arena, and especially in the European arena, we see the issue of drugs in sport used to make pronouncements about the ills of society. However, we are focused on making sport free of performance-enhancing drugs.
The only practical way of dealing with the use of banned substances is through the action of sport itself. Contravening anti-doping regulations is a case of professional misconduct in sport, and the decision to ban an athlete as a result of a positive drug test is a matter for sport's national governing bodies and international federations. Criminalising what is professional misconduct is not, therefore, an effective option. In the United Kingdom, we favour a non-legislative approach focusing on the standardisation of doping lists, sanctions and procedures within the sporting framework. The national anti-doping policy gives sport the focus to put in place procedures that are consistent, accountable and transparent. Sport itself must continue to own the problem of drug misuse in sport.
Of course, doping is a global rather than national problem that requires co-ordinated action at an international level. The UK has played a role in that action. We proudly achieved ISO certification under the international standard for doping controls in 1997—the first country to do so—and we were one of the first signatories to the international anti-doping agreement.
The Government have been fully supportive of the development of the World Anti-Doping Agency since its inception in 1999. The establishment of WADA has moved international co-operation against doping to a new level and given added impetus to our work. The Government firmly believe that WADA is the appropriate body to promote co-operation in this field.
I recently attended a meeting in Brussels between European Union Ministers, the President of the IOC, Jacques Rogge, and WADA officials, where we discussed how best to move forward the agenda. In informal discussions, the IOC president was keen to ensure that the UK was fully on board in relation to involvement in WADA as well as the IOC because of the expertise and respect that we have in the field. It was pleasing to hear him say that. I can confirm that, along

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with other national Governments, the UK will contribute to WADA's core costs in 2002. As my hon. Friend probably knows, there has been some wrangling about that issue. We believed that procrastination on the funding regime was unacceptable, so we took unilateral action. I am pleased to see that many others have now followed in the funding of WADA from Europe.
We regard the development of WADA's anti-doping code as the most appropriate way in which governing bodies and federations can be aligned to internationally agreed standards on anti-doping. The adoption of the code will be a significant step towards collective action and will provide a powerful weapon in the worldwide fight against doping in sport. Without the inconsistency and inability to regulate and set standards internationally, WADA can now move towards development of the code. If it is achieved, a significant step forward will have been taken and we will have a basis on which to start policing cheating and fraud in sport globally. Indeed, the national anti-doping policy has been developed mindful of the international standards and procedures endorsed by WADA. We are one of the first countries to produce a national policy that fully complies with international standards on doping control.
The initiatives serve to highlight the fact that the UK continues to lead the way in the fight against the use of drugs in sport. However, we cannot be complacent and are determined to ensure that the UK anti-doping system, while retaining the respect of competitors, also retains the support of members of the public, who need to be assured that the results that they see in sport are genuine and fair.
I shall write to my hon. Friend on any of the specific points that I might have missed. Final decisions have not been made on the Commonwealth; they rest with the Commonwealth Games Federation, and we shall be talking to those involved. I have no doubt that, in time-honoured fashion, my hon. Friend will challenge us again in written questions. Again, I thank him for bringing to our attention an important subject that needs to be aired from time to time.

Hospital Hygiene
1 pm
Dr. Vincent Cable: I am grateful for the opportunity to debate this subject. The methicillin-resistant staphylococcus aureus or MRSA problem and the broader matter of hospital hygiene are strongly connected. It is appropriate that, in a week when we have been discussing the substantial and extremely welcome increase in resources for the NHS, we should discuss also how to reduce the great waste of resources—the waste of nursing staff and of beds, and the human and financial costs of infection.
My interest in the subject goes back five years to shortly after I was elected to Parliament. A case was raised with me within weeks of May 1997 by a distressed constituent. She was a middle-aged cancer patient being given chemotherapy at her local general hospital, who contracted MRSA in an outbreak of the infection. Her treatment had to be interrupted, and given the severity of her condition, it could have been a life-threatening problem. I did not then appreciate the fact that infection control in hospitals was a major problem. I was brought up to believe that hospitals were inherently clean places, where antiseptics and disinfectants were widely used. However, as a result of the publicity that resulted from that case, I realised that it was indeed a major problem, both locally and nationally.
I appreciate that a great deal has happened on the policy front during the intervening five years. I do not want to rehearse all the Government intervention and the study since then, but I know of the Public Accounts Committee's report and the Government's response and of the helpful work of the National Audit Office, with its follow-up report. The Government have taken a series of welcome initiatives, including mandatory reporting, the setting of standards for hospital trusts and the introduction of guidelines—and have made the cash available. The tranches of £30 million that have gone to hospitals, including my local hospital, will make a welcome contribution. I acknowledge that, and I am not using this debate as an opportunity for bashing the Government for not doing things. I appreciate that policy has been progressing.
I am prompted to raise the subject again because of local experience and a feeling in local hospitals that the problem remains serious. I have two local district general hospitals in my constituency, the West Middlesex and the Kingston. The latter has a generally good record on infection control, and the preliminary statistics on MRSA show that it is pretty low in the national league tables. However, a few weeks ago I learned from a constituent that his mother, Mrs. Tarrant, had died of MRSA during an outbreak at the Kingston hospital.
The West Middlesex hospital has altogether more serious problems. It was the subject of a scathing report by a Government inspection team on hygiene grounds a few months ago, and almost weekly I hear anecdotes and receive letters describing the problems of hospital infection that derive from bad practice on the wards. I shall describe a couple of cases. In a letter to the hospital

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general manager, one gentleman makes a series of complaints about the hospital. He states:
"You make no comment about the poor level of infection control on the ward that extended to urinals not being emptied, one of which eventually disintegrated, and to soiled dressings being left around the ward, including on beds."
Another local resident, who belongs to the community health council, recently observed, in the course of passing through the hospital, an event that was eloquent testimony in itself. A ward was isolated because of MRSA, with a clear sign saying "Barrier Nursing Do Not Enter". A cleaner promptly walked through the barrier with a cloth and cleaned all the tables in the isolated ward, then took the cloth and used it in other wards. I am reluctant to be too damning and critical about that hospital; it has serious problems and is being rebuilt under the private finance initiative, which I welcome. I hope that a lot of its problems, which stem from antiquated, badly designed fittings will be solved. Nevertheless, I represent two district general hospitals in which bad reports of hygiene, specifically of MRSA, surface weekly. That is what prompted me to seek this debate.
I do not need to rehearse all the arguments about MRSA and hospital hygiene. They have been set out in the NAO reports. Let me just return to the dichotomy between the two issues. MRSA is a distinct problem caused by the overuse of antibiotics and the building up of resistance. It is something that most of us carry around on our skins, not inherently an infection. However, in a hospital it can be very damaging. A great deal more is now known about it. The House of Lords report on resistance to antibiotics has advanced the science considerably and data have emerged revealing the extent to which MRSA is a severe problem, particularly in London. Statistics for the quarter April to June 2001 show that five London hospitals—including some of the most highly regarded such as Guy's and St. Thomas's—had more than 20 incidents of MRSA in that three-month period.
We now know more about MRSA. It is a serious problem in the general area of hospital hygiene. Why is it a problem? First, it is because of its sheer scale. Recent figures have indicated that one in 11 patients acquires an infection in hospital. I believe that statistics are now emerging—partly prompted by the Government's emphasis on monitoring—that suggest that a third of cases have hitherto been undetected, so the real figure is substantially more than one in 11. That translates into about 100,000 cases a year. Some 5,000 deaths a year are directly attributable to hospital-acquired infection. There are bound to be problems of interpretation: one of the complicating factors is that patients are, by definition, vulnerable. However, hospital-acquired infections kill more people a year than, for example, car accidents.
There is a big cost to the NHS as a result of people having long stays in hospital and operations being cancelled. The NAO estimates that it is about £1 billion a year, some of which is unavoidable, because vulnerable people will acquire infections even in conditions of perfect hygiene. However, between 15 and 30 per cent. of that £1 billion could be saved if practice was improved.
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I should like to ask three groups of questions about where some of the Government's current initiatives might be leading, and about follow-up. The first is about the system of surveillance and monitoring, the second about how national standards operate and can be improved, and the third about resources.
I appreciate that the Government now require hospital trusts to report on internal infections, and specifically on MRSA. I believe that a surveillance exercise was due to be published this month. Is it now available, and if so, in what form? I have two specific questions about monitoring and surveillance. First, is it now possible to get meaningful and useful data on post-discharge infections, which are an important element of the story? Secondly, is it now possible, as a result of international work on the issue, to make meaningful comparisons between British standards and those overseas? I have heard conflicting views in that regard, and while some people say that British hospitals are the dirtiest in Europe, others suggest that they are about in the middle among developed countries. I have no objective basis on which to judge which of those propositions is true, and it would be helpful to know what analysis is being done and what conclusions are emerging from it.
The Government made a big breakthrough a couple of years ago, when they set national standards and tried to push them through at the hospital level, but I have several questions about that. First, do we have any indication whether some of the basic principles of hygiene are being applied in hospitals? I was shocked by comments in the National Audit Office report, which referred in slightly arch language to "a culture of noncompliance" as regards handwashing. The fact that doctors, in particular, rarely wash their hands struck me as rather shocking, perhaps because I was brought up in a traditional way. Clearly, patients and staff are not following elementary practices, and that is responsible for much cross-infection. It would be interesting to know how far the attitude to such practices is changing.
A more important question under the heading of basic hygiene is what happens under the Government's standards in cases of blatant non-compliance. What would happen if my local general hospital was given a caning by an inspection team? Clearly, it would make an effort to improve, but what sanctions could be put in place? Have any been used, and how does the Minister envisage that happening?
On institutional arrangements, the Government's response to the Public Accounts Committee acknowledges that there has been a big improvement in the involvement of chief executives, for example, in infection-control debates in hospitals, which is clearly an advance. Is there, however, any indication that infection-control teams are much more systematically involved in key decisions in hospitals? I noted from one report that a quarter of all infection-control teams are not allowed to have an input into cleaning and catering contracts, which are the heart of the transmission mechanism.
Is there any indication that the structure and organisation of wards is being changed in the way that the Royal College of Nursing strongly advocated? There is a belief that senior sisters should be unambiguously in charge of all activities on their wards, including

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cleaning, that responsibility should not be fragmented and that someone should have overall charge of standards.
Finally, under the general heading of standards, what is the Government's assessment of the utility of screening? I know that it is not a straightforward matter and that costs are involved in screening staff and patients to discover whether they are carrying infections when they come into hospitals. However, is there a potential advantage in terms of cost-effectiveness in extending screening programmes, given the severity of the problem and the associated costs?
My last set of questions relates to resources. I appreciate that more resources are going into the NHS in general and that there has been a specific allocation of funding for infection control, which is welcome. Do the Government have a view on the optimum level of infection-control nursing, and how close are we to achieving it? Will the big new injection of cash into the NHS help with that? Is the issue specifically highlighted, and are the Government trying to achieve a particular target?
On bed occupancy, one reason for the high instance of hospital infection is that beds are being used constantly. There is a rapid turnover in patients with little time for a break. Sheets are changed, but infections can hang around. With less pressure on beds it should be possible to reduce some of the infections associated with intensive use. Have the Government formulated a view on how their big investment programme will affect bed occupancy levels? Is it expected that bed occupancy levels will fall, building some spare capacity into the system? Will the £30 million programme, which has now run for two financial years, continue, and what lessons have been learned from it?
This issue is not politically contentious. I am aware that progress is being made, but it is a matter of real concern. I continue to be shocked, as do many members of the public, to encounter major examples of very poor hygiene and malpractice in public hospitals, and I want to be assured that the Government are on top of the issue.
1.15 pm
The Parliamentary Under-Secretary of State for Health (Yvette Cooper): I congratulate the hon. Member for Twickenham (Dr. Cable) on securing this debate and choosing to discuss hospital hygiene and MRSA. I know that he has a long-standing interest in these important issues and has raised them before. I welcome his approach to the debate, and many of his points, and I will try to respond to his questions. Some of them I can respond to now—they concern systems that are already in place—and others concern issues that are currently being considered as part of a programme of developing work. I will try to explain where we are on the matters about which he is concerned.
As the hon. Gentleman rightly said, hospital-acquired infection in general and MRSA in particular are serious problems for the NHS. These infections associated with health care are difficult and expensive to treat and directly affect patients, causing acute and chronic illness, pain, anxiety, depression, longer stays in hospital—with implications for NHS resources—and sometimes death. They have serious consequences in terms of health care.
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For those reasons, we need to tackle this serious problem. There is much ongoing work to improve the current arrangements for surveillance, infection control, monitoring and action to reduce hospital-acquired infection. As the hon. Gentleman pointed out, the National Audit Office has examined the issue. It estimates that the potential avoidable costs are around £150 million annually. We should treat those figures with caution, because they are based on a study performed in just one hospital and then extrapolated across the NHS, but the issue clearly has a serious impact.
Some hospital-acquired infection is generally viewed as an inevitable consequence of many serious illnesses being treated under one roof and the vulnerability, for different reasons, of patients to infection. However, it is also widely accepted that some of the hospital-acquired infection currently occurring is avoidable and could be prevented through strengthened arrangements. That is what we should aim for.
The hon. Gentleman is right that many people carry the staphylococcus aureus bacterium without any harm being caused. The serious problem arises when methicillin-resistant staphylococcus aureus—MRSA—spreads rapidly in a hospital environment where patients are seriously ill and susceptible to infection and where the use of catheters and other invasive devices allows the bacterium an easy route of entry.
Also, rates of MRSA vary across different NHS trusts. The statistics can be affected by the nature of the patients and conditions being treated. Trusts with more vulnerable patients and those that undertake more invasive and high-risk specialist care are more susceptible to higher rates of MRSA. However, that does not entirely explain the wide variation in levels of MRSA across the country.
What action needs to be taken about the problem? The hon. Gentleman grouped his concerns around surveillance, national standards and what happens when there is non-compliance. He is right in saying that extensive work is being done on surveillance. We should not underestimate how important good surveillance is for serious action to reduce MRSA and hospital-acquired infection. The fundamental element of any strategy to improve the situation is to collect proper data about the level of MRSA and the surveillance operating throughout the country. Since April last year, we have required all acute trusts to collect data on MRSA bloodstream infections. When the hon. Gentleman referred to information to be published in April 2002, I think that he was referring to those data, which were published in February.
The information allows trusts to identify problem areas for more detailed investigation and allows national monitoring and action to tackle the problem. It also provides a base line against which we can measure improvements in hospital-acquired infection. That is the first phase of a compulsory national surveillance system for a broad range of infections associated with health care. It is more comprehensive than systems used in other developed countries and provides us with important information.

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The hon. Gentleman referred to international comparisons, which are in place, but the United Kingdom system is the more extensive, and that has an impact on international comparisons. I am willing to write to him further on the subject.
The data need to be interpreted cautiously because the reasons why there are different levels of MRSA can vary. Trusts may import MRSA from other hospitals, and the many patients who move through tertiary centres as they go between hospitals may bring with them MRSA and other problems. That problem may have affected the London teaching hospitals to which the hon. Gentleman referred.
We have established a programme of work to improve the surveillance system, which involves extending compulsory surveillance and carrying out alert organism surveillance to collect information routinely on specified micro-organisms causing MRSA and other infections. We also intend to monitor adverse patient incidents due to infections, such as outbreaks of salmonella food poisoning in hospitals, and link that to the National Patient Safety Agency. Other systems are in an early stage of development for surgical site surveillance in conjunction with orthopaedic surgeons and surveillance of infection occurring after patients are discharged from hospitals. The hon. Gentleman referred to that post-discharge issue, which is complicated and difficult but important to measure. We shall consider, too, levels of MRSA and health care-acquired infection in the community, which is more difficult to measure than the levels in hospitals but represents an important part of the picture.
The hon. Gentleman asked about national standards. There are two relevant sets of standards. First, the controls assurance standard on infection control requires chief executives to ensure that effective policies to tackle hospital-acquired infection are in place and are implemented. The standard requires acute NHS trusts to ensure that people work in a managed environment in which the risk of infection to patients, staff and visitors is minimised. There are 15 supporting criteria for hospital infection control, including the work of infection-control teams and their supervision by local infection-control committees that incorporate local consultants in communicable disease control.
Secondly, all hospitals were required to introduce national standards of cleanliness for the NHS by February and to implement a regular programme of monitoring to ensure that the standards are met. All trusts with in-patients in England received guidelines on implementing the standards, which will be added to the performance assessment framework in July. The NHS plan recognises that hospital cleanliness is a major issue for patients, their families and visitors. That is why the clean hospitals programme was launched. We should recognise that there is not a strict relationship between hospital cleanliness and MRSA. Of course, it is an important consideration, but there are many other complicating factors involved.
To support those standards, extra investment is being put into the NHS. The hon. Gentleman referred in particular to investment to support the clean hospitals programme and to improve the patient environment—
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£62 million over two years is being provided. Another £200 million is being provided to improve standards of decontamination. In addition, there has been broader investment in the NHS. Substantial additional investment has already been made over the past couple of years, but the extra investment set out in the Budget will provide for an increase in the capacity of the NHS.
The hon. Gentleman asked about capacity. Local flexibility is necessary, because trusts need to be responsive to the nature of the problems that they confront. The capacity that they need will depend, in part, on the level of their problems, but also on the sort of hospital or unit involved. It is important to provide national guidelines on infection control and hospital-acquired infection. Although a considerable number of guidelines are already in place, and work undertaking infection-control audits against standards of national guidelines is being carried out to update local guidelines for hospital infection control, it is important to take stock now of the work that has gone on so far and to consider what further action needs to be taken. That is where much of the work being carried out as part of the chief medical officer's strategy for combating infectious diseases comes in, and I shall say a little more about that in a moment.
The hon. Gentleman also asked what happens in cases of non-compliance, where hospitals are clearly struggling with MRSA or doing badly compared with similar hospitals. Action is already under way, but we need to review that as part of the chief medical officer's strategy. Regional directors of public health play an important role. They have already been instrumental in collecting and collating data from trusts in their regions, and they arrange peer review visits, in conjunction with the regional epidemiologist, regional meetings with infection-control teams and support from regional infection-control nurses. Where MRSA rates give cause for concern, regional directors of public health will work with a trust to review its infection control arrangements.
A range of enhanced initiatives are under way, which include reviewing the adequacy of infection-control resources; raising awareness of health care-associated infections and control measures in hospitals, reinforced by training and education of staff; undertaking infection-control audits; updating local guidelines; reinforcing specific measures, such as handwashing, which the hon. Gentleman mentioned; promoting ward cleanliness initiatives and training; equipping wards for better handwashing and cleaning; and assessing the degree of importation of MRSA from the community. One of the 10 responsibilities of modern matrons is to prevent hospital-acquired infection by ensuring that infection-control measures are properly applied by all staff.
Much work is already being done, but there is an extra enforcement and inspection role to be undertaken by the Commission for Health Improvement and by the new Commission for Healthcare Audit and Inspection. We have tried independently to review and monitor the uptake of the national controls assurance standards for hospital-acquired infection during the routine reviews of an organisation's system and processes for monitoring and improving services. Obviously, the work done in that inspection process feeds into the national enforcement system and the wider programme.

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As I said, there is forward-looking work to be done, as part of the chief medical officer's strategy for combating infectious diseases, "Getting Ahead of the Curve", published in January 2002. The chief medical officer has identified a small number of priority areas including health care-associated infection and antimicrobial resistance, and said that we need particular additional action in those areas. New updated action plans are currently being drawn up for health care-associated infection and three other areas, which will be ready by the end of the year. For each action, they will set out who is responsible, who is to implement it, what the output will be and in what time scale it will happen. That important further action builds on the progress that we have made so far on an important matter that is of concern to people throughout the country.

Regeneration (Great Yarmouth)
1.30 pm
Mr. Anthony D. Wright: I am extremely grateful for the opportunity to raise the effect that some of the Government's regeneration initiatives have had on my constituency, Many colleagues have been genuinely surprised when I have raised in the House some of the problems that Great Yarmouth has faced for several years—high unemployment, high benefit dependency and other indices of an area of deprivation.
Those problems were highlighted by the national index of multiple deprivation drawn up in 1998 and 2000 by the Department for Environment, Transport and the Regions. That study examined 8,414 borough council wards in England using the following indicators: income deprivation; employment deprivation; health deprivation; education, schools and training deprivation; housing deprivation and geographical access to services. Great Yarmouth came out as the fifth most deprived in the whole United Kingdom.
In 1996, when I was leader of my local authority, we commissioned a report that highlighted how bad the situation was, based not only on benefit dependency, but on figures that came to light such as average household income—which, at about £8,000 per annum, was about 50 per cent. of the regional average—and our higher than average mortality rate among young and old alike. We knew then that we had to take action, and began the long journey to improve the lives of the people living in and around Great Yarmouth. Recognising the need for a plan of what we had to do to create a more prosperous borough, we decided on a document entitled "2020 Vision" to give us a vision of our borough in the year 2020.
That is just a rough snapshot of where we were five or six years ago. We have come a long way since then, not least because of the way in which everyone has pulled together. The public and private sectors and voluntary and charitable organisations joined in a partnership approach and the Government recognised that something had to be done to eliminate poverty. Regeneration can mean different things to different people. It includes regenerating industries—manufacturing and tourism—regenerating our education system and health service and regenerating in people the hope that they can improve their lives, by giving them opportunities that they have not had before. In Great Yarmouth, we are well on the way to achieving all that, but I stress that we still have a long way to go.
I have mentioned "2020 Vision", our blueprint for the future. It was not long into my first term as a Member of Parliament that our first major project was realised—our new gas-fired power station. That project was first applied for in early 1996, but it was not until late 1997 that the Minister for Energy gave the necessary permission to proceed. On the face of it, that might seem an easy decision but it was not because we were in the period of a gas moratorium. Permission was given because of the problems that we faced. The prospect of the largest single inward investment that we had seen, more than £160 million, with the resulting economic benefits, was enough for the Minister for Energy to accept the need for that investment, despite the moratorium.

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The second major project to aid our regeneration was the reinstatement of the dualling of the A47 Acle straight and an acceptance of the need to construct a new road connecting the A47 to the A 149. That project had been removed from the previous Administration's roads programme back in 1996. Although the Government had been persuaded of the need to carry out a study as part of the roads review, the consultants unfortunately came to the conclusion that, on balance, the environmental issues were more important than safety and economic problems. That report had to go to the regional planning body, which, thankfully, agreed with our views and asked for a further study to take the economic case more fully into account. I impress on my hon. Friend the Minister that the overwhelming view of the vast majority of my constituents, both businesses and individuals, is that, on safety and economic grounds, that stretch of the road should be dualled.
The third, and most ambitious, project is a new outer harbour. The project has been around for several years, but since the formation of a new company, Eastport, under the stewardship of Richard Jewson and with support from Great Yarmouth, the county and the region, it has never been closer to coming to fruition. The fact that the regional development agency has agreed to invest in the project, subject to certain conditions being met, has given it a welcome boost.
Another welcome boost came last week, when in a written answer the Minister gave permission to Powergen Renewables to construct a large offshore wind farm just off our coast on Scroby sandbank. Alongside our oil and gas connections, that gives us justification to consider ourselves as the centre for energy in the southern North sea.
Before I move on to the direct Government help that we have received, the final project that I want to mention is our new business park. That project, which started as a vision about 15 years ago, has now been brought to reality by a partnership approach between the East of England Development Agency and many local businesses. The first building, an innovation centre, is due to be opened in May and will be of significant help to both existing and new businesses. It would not have been possible without regional help and will help enormously in our quest to encourage new, high-tech industry to set up in Great Yarmouth.
Everything about which I have just spoken, with the exception of the roads issue, was started under a Labour administration in Great Yarmouth, but equally everything has also received some assistance from Government sources, but only since 1997. As I said earlier, regeneration can come in different ways, and I want to discuss some Government-inspired projects that have been up and running for a little while, as well as some that are just starting.
Because of our social and economic problems, we have had significant help from the Government in the past few years. That help has included single regeneration budget funding, which, when all the schemes are finished, will have brought in about £12 million of Government awards. Those awards will cover areas throughout the borough, but mainly those that needed the regeneration most, such as South Denes,
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Cobholm and Lichfield. In addition, we have been awarded £4.2 million for our sure start project, and our latest award was from the neighbourhood renewal fund for £4.5 million, with a further £500,000 from the community empowerment fund and the community chest.
Our new education action zone is the largest nationwide, and has been awarded £3.75 million to cover 33 schools. In its first year, we are already seeing a great deal of progress, with improvements in 70 per cent. of the key stages and increased attendance levels with a marked reduction in exclusion. There has been further funding through assisted area status, European Union objective 2 and 3 status, East of England Development Agency investment programmes, English Partnerships investment programmes and lottery support.
The story does not end there because much more is going on. There are two new resource centres, which cost approximately £1 million each. A new museum, which cost £4.25 million, recording Great Yarmouth's fishing industry, has opened at a former fish curing works. A new Nelson museum has opened on our historic quayside, and new community centres are planned for the future.
When I began the debate, I painted a picture that was far from rosy when I, along with Labour, came into office in 1997. Five years on, I have highlighted areas in which the Government have helped in the regeneration of Great Yarmouth after years of neglect. In the few areas that I have covered, the Government have granted more than £30 million of direct or individual help, but there is even more going on with bids from our seafront partnership for European money, which would not be available without the help of my hon. Friend the Member for Rossendale and Darwen (Janet Anderson), who visited Great Yarmouth when she was the Minister responsible for tourism and pushed hard for the inclusion of seaside resorts under the objective 2 review.
Finally, one area that has been extremely helpful to the local authority is the extra Government money in grants to offset council tax. During the final four years of Tory Government, we had an average £50,000 a year increase in our external funding, whereas for the past four years my authority has had on average an extra £250,000 a year. That has allowed the new Tory council, which was elected two years ago, to reap benefits that were not available to the Labour council. The Government have certainly responded to a lot of our needs.
I must also point out to my hon. Friend the Minister that I have received one criticism—there was only one—of the need to form fill and to have checks made on certain funding and spending for, for example, one individual. My colleague states that in the document on community empowered funding grants, the Government said that they must be prepared to take a risk on empowering local partnerships to deliver. His plea to them is to take the risk that they said they would take, and be prepared to empower those who they wanted to empower.
One area that groups in Great Yarmouth are trying to address is the acute skills shortage. If we are to attract inward investment, we need skilled personnel. I know of one scheme at the Oriel high school in Great Yarmouth.

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It has applied for engineering status but is still waiting for the response. I have been involved in the education action zone attempts to encourage youngsters in the Great Yarmouth area to gain engineering skills. An organisation called ProTrain is working very hard to attract youngsters—male and female, I hasten to add—to engineering, which is a skill for the future.
I took a great deal of encouragement from a letter that appeared last week in my local paper, the Great Yarmouth Mercury. It gives a perception of the Great Yarmouth economy:
"Figures show that unemployment in Great Yarmouth is falling and has been for the last two years. The February figures have again showed a marked improvement with 633 fewer unemployed compared to last year. The future looks bright for further economic development with several projects set to create more full time sustainable employment in the coming year … Overall the economic prospects for Yarmouth are very positive and we should be looking to the future with confidence … Yarmouth will enjoy a period of invigorated and expanding prosperity leading to even lower unemployment and a continuing reduction in deprivation."
Those comments came from the Conservative economic development member on Great Yarmouth borough council, so I can only take that as a ringing endorsement of the Labour Government's policies.
I have tried to demonstrate the benefits that have resulted from the Government's many regeneration initiatives in Great Yarmouth, which are working well. However, as I said, there is still much more to do. We must create employment opportunities. We in Great Yarmouth are able to deliver. All that we ask is that the Government continue to help our area so that we can enjoy the economic benefits experienced in other parts of the UK.
1.41 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 Great Yarmouth (Mr. Wright) on securing the debate. I am aware of the challenges that Great Yarmouth faces. My hon. Friend is an outstanding advocate for his constituency and has left no stone unturned in making sure that the Government understand the challenges, and the success that the area has had in achieving its goals. I am pleased to hear about the most recent developments, particularly the wind farm and the business park. It is also excellent to hear that the funds and programmes that the Government have designed and have targeted at the kind of problems that his area experiences are getting to the communities and making a difference, and it is especially good to hear validation from people who are not normally our political allies.
However, my hon. Friend is right to say that much remains to be done. The index of local deprivation 2000 confirmed that Great Yarmouth is the 43rd most deprived local authority area in England. On intensity and depth of deprivation, the borough scored the fifth highest level in the country. It is the only seaside town in the top 50 disadvantaged boroughs, although we recognise that other seaside towns have difficulties because of the particular economic pressures on them. The index confirmed what we knew before its publication.
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Before setting out what the Government are doing for Great Yarmouth and the effect of the initiatives, I want to draw attention to, and commend, what is happening locally. I know that the borough and other partners have long been aware of the issues that had to be addressed. Even before ID 2000, they had established a social strategy, coming under the framework of the "2020 Vision". Its specific aim was to bring a multi-agency response to deprivation. I am pleased that the strategy is not owned by any one agency but is a shared view of local issues signed up to by the statutory and voluntary agencies in the borough. I shall say more later about how the Government are working with and through the arrangements, but shall mention now that the way in which the borough has drawn together all the players and partners to tackle the problems is a model for towns elsewhere.
The borough has benefited considerably from the single regeneration budget. A seven-year round 2 scheme, worth £8.7 million, began in April 1996 and focused on the South Denes area. Projects are increasing the local community's awareness, involvement, and sense of pride in the area and helping to generate employment and training opportunities and to encourage business growth. Those include a nationally respected young mothers project, which enables them to gain skills and qualifications.
A seven-year round 5 local regeneration scheme, worth £2.4 million, began in April 1999 in Cobholm and Lichfield is delivering improvements to education and skills through the colleges, education service and the local Learning and Skills Council. It will also develop business opportunities and the local economy by way of business advice and the establishment of a credit union.
A four-year scheme worth £1.3 million across the whole of Great Yarmouth aims to widen participation in community-based learning, improve vocational skills and enhance employability, empower individuals, invigorate the local economy and ensure the social and cultural regeneration of the community. I am pleased to hear from my hon. Friend that the funding is having good results for his constituents because that is exactly what was intended.
One of the key issues in any regeneration project is crime and community safety. A year ago, the Prime Minister announced a street wardens programme to make streets in villages, towns and neighbourhoods cleaner, safer and better places to be. Great Yarmouth was successful in bidding for a scheme and I was pleased to hear that in the past few days, three wardens began their patrols around the town centre. There was a lot of competitive bidding for the schemes. They were very popular, and the fact that Great Yarmouth was successful was a tribute to the amount of care that went into the preparation of the bid and the quality of the scheme that was put forward. The new wardens will concentrate on preserving the physical appearance of the town centre but their uniformed presence will also help to deter anti-social behaviour and the fear of crime. That is particularly important for an area that is looking to increase its tourism trade.
In the past two years, £591,220 has been allocated for three closed circuit television projects in and around Great Yarmouth. The capital modernisation fund is

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also helping small retailers. Nearly £90,000 has been allocated for the communities against drugs initiative. The Great Yarmouth crime reduction partnership has received funding to increase its capacity to reduce crime. The safer communities initiative is assisting the partnership in tackling crime and disorder to meet national crime reduction targets and other local priorities. A lot is going on in Great Yarmouth to ensure that issues concerning crime and community safety are not acting as a brake on economic regeneration, and that the creation of a safe and secure community is fostered.
In his speech in the February debate, my hon. Friend drew attention to the success of the education action zone in Great Yarmouth. Key stage 3 and 4 results were higher than the national average, attendance levels improved and 80 per cent. of pupils showed measurable progress in reading. It has also been successful in setting up partnerships with a number of local businesses for sponsorship and workplace training. The EAZ has also been awarded an extra £260,000 by the East of England Development Agency for an innovative programme for key stage 4 pupils. From April 2005, the EAZ will become an excellence cluster increasing funding to £1.8 million a year. My hon. Friend is right to highlight the need to improve the skills and education base as an essential part of the economic regeneration of his area.
My hon. Friend mentioned the sure start programme and the success that that has had in Great Yarmouth with its funding of £4.2 million until 2004. A new £500,000 nursery was opened in February. I would particularly like to commend the programme's community parent scheme. Its course has achieved accreditation to the Open college, and it has been adopted as a model of good practice by several other sure start programmes.
Wider economic funding initiatives have also been used to good effect, including for objective 2, the East of England Development Agency investment programme, English Partnerships investment programmes and lottery support.
I have time to refer to only a selection of the major initiatives that address the challenges facing Great Yarmouth. Work is being carried out in the context of the national strategy for neighbourhood renewal, which was launched by my right hon. Friend the Prime Minister in January 2001. That is a new approach, which attacks the core problems of deprived areas, such as weak economies and poor schools, harnesses the powers of all sectors to work in partnership, explicitly focuses services and resources on deprived areas, and gives local residents and community groups a central role in turning their neighbourhoods round.
To deliver mainstream services better and to involve communities are the two purposes behind local strategic partnerships that bring together residents in the public, private and voluntary sectors to identify local problems and deliver local solutions. We were pleased to announce on 28 February that the Great Yarmouth local strategic partnership—comprising the Great Yarmouth economic, environmental and social forums, overseen by the 2020 forum—has been officially
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accredited. To achieve that status, it had to fulfil several key criteria. The Great Yarmouth LSP well demonstrated all those characteristics.
As I have said before, we have been struck by the strong partnership working in Great Yarmouth from the outset. The common sense of purpose bodes well for its future development and we believe that it has much to teach other LSPs. As a result, a payment of a further £1.4 million of neighbourhood renewal funding was approved for 2002–03, in addition to almost £1 million approved for 2001–02. A further £1.9 million will be available in 2003. That money can be spent in any way that will tackle deprivation in the most deprived neighbourhoods. Already, community development workers have been introduced into six key areas through the grant.
The involvement of local communities is key to making everything work. We will support, encourage and enable that in several ways, such as the community empowerment fund, the community chest and the community learning chest. Funding is being provided at £115,000 a year for three years. The community chest and community learning chest will provide small grants totalling £375,000 to formal and informal community groups to support community activity and mutual self-help.
The key task of any LSP in the context of neighbourhood renewal is to prepare a local neighbourhood renewal strategy, and Great Yarmouth LSP has submitted a framework for such a strategy. A notable factor, to which my hon. Friend referred, was the strength of input from all sectors of the community, and the fact that they have been able to forge partnerships ahead of time. That stands the town in good stead as regards attracting funding and, more importantly, delivering its strategies.
I shall deal now with specific issues that relate to economic regeneration, and particularly to two schemes, which I suspect are the most pressing for my hon. Friend's town, and on which decisions and actions have yet to be taken. He left me in no doubt, both today and on previous occasions in the House, of the local worry about the development of the Great Yarmouth outer harbour. That debate has been going on for 30 years. I know that Eastport, GO-East and the East of England Development Agency have had exhaustive discussion about bridging the gap between the full project costs and the likely commercial and local government support. It is vital that Eastport takes heed of the advice that it has been given, and, in particular, that it meets all its targets during the early preparatory stages. We cannot take it for granted that approval for any further European funding will be forthcoming, and behind all of that we must be conscious of the rules on state aid, which are becoming an increasing factor in economic regeneration.
Looking at the east coast, we cannot avoid comparison being drawn with Immingham, where Associated British Ports has secured funding on a commercial basis to underpin further expansion in ro-ro. Other ports, not only in the UK, have aspirations to expand in the same way as Great Yarmouth. There is a process to be followed and all cases will be judged on their merits. I am sure that my hon. Friend will assist

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and encourage all agencies involved locally to focus on working through the process to meet the various targets required along the way.
My hon. Friend also emphasised the need for the dualling of the Acle Straight, which has been a longstanding issue. The regional planning body has endorsed most of the recommendations of the Norwich to Great Yarmouth roads-based study, and I will write to my hon. Friend as soon as any decision is taken on future investment in that road. Led by the Government office for the east of England, we are committed to strengthening collaborative working between
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Government Departments to support neighbourhood renewal, thereby assisting the further regeneration of Great Yarmouth.
I congratulate my hon. Friend again on both the persistence with which he has brought up all the issues that relate to Great Yarmouth and the careful presentation that he gave of successful local achievements, the challenges that the town still faces and its strengths in work across different sectors, and the political divide to make sure that its economy delivers a better future for its people.
Question put and agreed to.
Adjourned accordingly at three minutes to Two o'clock.