Westminster Hall Sitting of 12 March 2002

Preamble
[SIR ALAN HASELHURST in the Chair]

Consignia
Motion made, and Question proposed, That the sitting be now adjourned.—[Mrs. McGuire.]
9.30 am
Mr. Lindsay Hoyle: I thank you, Mr. Deputy Speaker, for giving up your time this morning to enable this debate to take place; I also thank the Minister. I know that many Members will wish to speak this morning, and I think that, by reducing the length of our speeches, we should try to ensure that everyone has a chance to do so. It is unfair that hon. Members should have to wait so long, when we often seem to repeat ourselves.
I emphasise the importance of today's debate, which is about the future of Consignia and postal services—the name Consignia is not appropriate, but we have to use it, at least for today.
Proposals for the introduction of competition in the United Kingdom postal services, forwarded by Postcomm—the Postal Services Commission—are currently out for consultation. The closing date is this Friday, 15 March. If the proposals are not altered—and all the indications suggest that they will not be—they will have a huge impact on our postal services. I, and other hon. Members, many of whom are here today, have a number of concerns that need to be highlighted.
I shall give the Chamber a good example of why I believe that Postcomm is not for change and does not want to extend the consultation period. One of my local councillors, Mr. Molyneaux, is a member of Chorley district council, which covers a rural area. He wrote to Postcomm asking it to consider extending the consultation so that everyone would have time to digest its proposals and put forward their views. The sympathetic listening ear of Postcomm replied, "Sorry, no change." That is not good enough, as it sets us worrying about the future of the people involved.
It is necessary to run through Postcomm's proposals first. In phase 1, from 1 April 2002, Postcomm will grant licences for operators wishing to provide large bulk mailing services with a minimum of 4,000 items. In phase 2, from 1 April 2004, licences will be granted for operators wishing to provide large mailing services with between 500 and 1,000 items. Phase 3, from 1 April 2006, will see the complete liberalisation of all UK postal services. In practical terms, phase 1 will open up the market to the extent of 30 per cent. of Consignia's inland letters revenue—40 per cent. of its volume—and phase 2 will open it up for 60 per cent. of inland letters revenue, or 70 per cent. of its volume.
Two questions, which are linked, arise immediately. First, one must seriously question the pace at which competition is being introduced. Secondly, the way in which the market is to be liberalised will, in my opinion, cause far more damage to the consumer and the Post Office. We are opening up the most profitable part of the
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postal service at the expense of the least profitable part. Logic should apply, and there should at least be a balance. In my opinion, the unprofitable part should be tested first. In any event, Postcomm should certainly not allow cherry-picking. That is the danger; that is why Postcomm is wrong.
I have grave concerns about the impact of competition on our postal network. Private companies will want to operate only the profitable services, which will result in cherry-picking. The unprofitable rural services will then lose the cross-subsidy from the profit made by the urban services, and prices for consumers will inevitably rise. That will be combined with a fall in the standard of service. In simplistic terms, in rural areas the price will rise and the level of service will drop. That is where the suffering will start.
The universal postal system, with its uniform tariff, is something that we should cherish. We should not allow it to be abandoned under Postcomm's proposals. Postcomm will argue that everything is in writing so we need not worry, but it cannot say how the service can be sustained. It worries me that Postcomm seems to think that it can sustain the cherry-picking of the most profitable areas, expect next-day delivery in all the rural areas, and still make a profit somehow. Only two things can happen. Either the rural service will begin to drop away or the price will go up so much that we will have to have a uniform price of about £1. That is when the cherry-picking will start, with competitors coming from outside to provide services much more cheaply.
Mr. Patrick McLoughlin: So far, the hon. Gentleman has been very persuasive in his anger at the regulator's suggestions. Will he explain, therefore, why he voted to set up the regulator? There was no regulator until the Government introduced the legislation under which the Post Office currently operates.
Mr. Hoyle: I am pleased that the hon. Gentleman can still make political points, even if he came here to be constructive and helpful. Never mind; if he wants to play politics, let us deal with his point. We knew that there would have to be competition, and that something like Postcomm would come along. We set up Postcomm in the belief that it would help the consumer. That was the idea, but Postcomm has got it wrong and is working against the postal service and the consumer. We did not realise that it would understand its terms of reference differently from everyone else. I think that that deals with the silly point that the hon. Gentleman made.
One does not have to look too far to see that there will be problems. There are harsh lessons to be learned from countries that have already introduced liberalisation and competition. Sweden is a good example. Since 1993 the number of post offices there has fallen by 52 per cent., the public letter price has increased by 60 per cent. in real terms, and the Swedish post office is in financial crisis, having lost 1 million kronor in the first quarter of 2001. Since 1990, people in the smaller towns in New Zealand have been waiting an extra one, two or three days for mail. The market in Spain—for which the Government seem to have an affection—has been fully liberalised since 1960, but less than 70 per cent. of letter mail was delivered on target in 2000.

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We should let those examples speak for themselves; they should act as a warning to Postcomm not to let such things happen here. Unfortunately, that warning has so far gone unheeded. We have all begged for an extension of the consultation period. Let us hope that ears are listening today.
I do not see how the problems that I have described can be avoided under Postcomm's present proposals. Indeed, Consignia has already let it be known that, on the basis of experience in Sweden, competition in the UK could increase the price of the first-class stamp from 27p to 40p and that of the second-class stamp from 19p to 30p. People may be willing to pay more if they get a better service, but that will not happen, particularly if they live in rural areas. If the profitable services are removed, Consignia will be left to pick up the pieces of the unprofitable services; unlike its competitors, it will be unable to refuse delivery. That will add further to the losses incurred over the past two years, and to the possibility of large job losses and post office closures. We are all well aware of that.
The Government, too, have a role to play. They are the major shareholder, and I urge the Minister to consider suspending their dividend requirement to help Consignia through this testing period, because Consignia is being hammered from both sides. Postcomm in helping no one—neither the postal service nor the consumers. The Minister should withdraw Consginia's obligation to pay off the Government every year, so that it will be able to use plenty of financial muscle in taking on the competition.
It should be remembered that such concerns are held not only by hon. Members here today; both the trade unions and Consignia have grave reservations about Postcomm' s proposals. A National Audit Office report entitled "Opening the Post" stated:
"the introduction of competition could result in a breakdown in the delivery of the universal service at a reasonable uniform price".
The NAO was sending everyone a warning shot. The report stated further that Postcomm needed to make a
"convincing case to demonstrate that any steps they take to introduce competition will not endanger the continued delivery of universal service."
An article in The Economist stated:
"By exposing Consignia to competition so quickly, Postcomm runs the risk that it will further weaken an already shaky service by allowing a challenge from strong European competitors…whatever Postcomm says, the price of sending a letter would increase significantly, while profits would go abroad."
Those concerns have rightly been voiced about the pace of change and the way in which competition will be introduced. The European Commission proposals for liberalisation are different in two fundamental ways. First, the Commission has introduced competition by lowering the weight and price threshold, which covers all categories of mail and user, whereas Postcomm is opening up bulk mailing. That conflicts with the Commission's approach and relates only to large business. Secondly, the pace of liberalisation is more gradual, which I believe needs to be the case in the United Kingdom, given Consignia's present position.
Sir Robert Smith: When the Select Committee on Trade and
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Industry visited the Commission recently, the Commission said that it was not up to it to tell any country how to run its service. However, it observed that the pace was much faster in the UK, and suggested that we might ask the Government how they expected a company that lost £ I million a day to sustain a universal service obligation.
Mr. Hoyle: I am pleased that the hon. Gentleman has highlighted those worries. We all share them, and I know that he has talked about them recently.
Although I am not wholly convinced by the proposals forwarded by the Commission, in terms of the mechanics and the timing, they are greatly preferable to those that we are currently considering. That is another message to Postcomm. Its proposals for competition, and eventually full liberalisation of the postal network, constitute a major threat to the universal postal service at a uniform tariff. I have grave concerns about the future of Consignia if the present proposals are allowed to go through.
If we are not careful, Postcomm could turn a great public service into another Railtrack. I therefore urge Postcomm initially to extend the period of consultation so that more time can be taken to consider in detail the proposals and all replies from interested parties, which are still being written to Postcomm. We must ensure that the present proposals are altered, so that companies cannot cherry-pick services and leave others to suffer.
I urge the Minister to use his influence and powers, and those of the Secretary of State, to ensure that Postcomm reforms its present proposals, so as to help the Post Office by supporting local post offices and avoiding more closures. An equal service in towns and rural areas must be assured. I also urge him to use his influence to scrap the name Consignia. The Royal Mail is the best known name in the UK after Coca-Cola, and it still sticks in my throat to say Consignia. Consignia the name to the dustbin and bring back the Royal Mail.
I urge the Minister to suspend the Government's requirement for the dividend and work with Consignia, the trade unions and Members of Parliament to build a constructive relationship, so that the Post Office can again be a successful, profitable company that delivers an essential and much cherished service.
Mr. Gareth R. Thomas: I understand that my hon. Friend was motivated to introduce the debate because he represents a rural area. Does he understand that there is considerable concern in urban areas, such as my constituency, too? Although the quality of Royal Mail services is improving in those areas, there is still concern about it, which has been exacerbated in our area by Consignia's apparent plans to slash the number of pillar boxes so as to save £1 million.
Mr. Hoyle: I agree with my hon. Friend. The problem that we face is that there is no relationship between the consumer and what is taking place; that is my worry as well.
I represent a rural area with an urban core—a town of 35,000 people—so I shall take Chorley and the districts around it as typical, and outline the situation that I do not want to see. I am sure that everyone can envisage it.

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In the commercial sector, lots of people will be running up and down in different coloured striped suits and different hats to deliver the mail at different doors. Then one or two of those people, in their different outfits and different little vans, might bring competition to the areas just outside that sector; Postman Pat might be consigned to them as well—but who will want the rural areas? Who will want to deliver to a farm on the moor near Chorley? No one.
All the firms will want the commercial sector, and that is where all the competition will be, as it was when the buses were deregulated. In the city centres one could not move for bus after bus, whereas the rural services were like a forgotten species. The same thing will happen with postal services if we are not careful, and that is why I hope that we will change direction—that we will scrap the name Consignia, bring back the Royal Mail brand and ensure that all services are protected in both urban and rural communities. We must ensure that the services provided by the good people who work for the Post Office in Chorley can continue, without the worry that Postcomm is causing them.
Several hon. Members rose—
Mr. Deputy Speaker: Order. It is evident that many more hon. Members wish to speak than signified a wish to do so before the debate. I remind hon. Members that notification is helpful, because it allows some selectorial wisdom to be applied.
9.45 am
Mr. Patrick McLoughlin: I congratulate the hon. Member for Chorley (Mr. Hoyle) on raising this important subject, which is of concern to many hon. Members, as the attendance at today's debate shows. However. I also gently chide the hon. Gentleman, because when he talks about Postcomm being his Government's Railtrack, he must remember that the man who wound up Railtrack is the same man who, when he was Secretary of State for of Trade and Industry, originally created Postcomm. That man is presently the Secretary of State for Transport, Local Government and the Regions, and he has a track record of this sort of thing.
It is no pleasure to anybody in the House to see the Post Office in the state that it is today, with the problems that it faces. Those problems are disturbing because, as has rightly been said, the universal service is well regarded throughout the country, and its continued maintenance is considered essential. When the Minister sums up the debate, no doubt he will tell us that we should all relax, because for the first time, the universal service has been enshrined in legislation. However, its provision was never in doubt before, whereas now there are doubts about whether the Post Office will still be able to afford it.
I am sorry—I keep referring to the Post Office, but I should, of course, be saying "Consignia". I join the hon. Member for Chorley in his plea about the silly name that the organisation has adopted. Nobody recognises it, and the change was a useless waste of money. Perhaps the organisation could go back to its original name, which was well understood and respected.
Mr. Nigel Waterson: Does my hon. Friend agree that in many parts of the country people
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are not receiving the basic universal service at the moment, because of union intransigence, managerial incompetence or a subtle combination of both? Indeed, Consignia is in danger of being penalised by the regulator because it is already failing to provide the service that people have a right to expect.
Mr. McLoughlin: I always agree with my hon. Friend. He is right about the services in certain areas of the country with specific problems. In my constituency, which is a large rural one, the Post Office is held in high regard and so are the postmen who deliver our mail. The uncertainty that they currently face is very worrying for them.
The situation has not been helped by certain remarks. The Secretary of State, in a recent debate on the Floor of the House, accused some Conservative Members of scaremongering about the future of the Post Office—but the scaremongering has been done by some of the senior management in the Post Office. When the chief executive appeared before a Select Committee just before Christmas, he let slip that there might be 30,000 redundancies. If that was not scaremongering, I do not know what is.
I want to keep my contribution short and to the point. The Post Office provides a good service, but that does not mean that it cannot adapt. It needs to adapt. Some time ago, when I occupied the position now occupied by the Minister, I had responsibility for it and it was well aware of the challenges presented by e-mail and the faster communications that we all want. How the organisation raises its game to respond to that challenge is vital, and I urge the Minister to treat the management of the transition with great care. Perhaps he will tell us what powers he has over Postcomm, the regulator. I know that that is a moot point; one is never sure what powers Secretaries of State have over regulators. Listening to the Secretary of State for Transport, one might think that he had never interfered with Tom Winsor, but Tom Winsor gives a different account. It will be interesting to hear what the Minister says.
The speed of change worries the many postmen who deliver our service, and who are welcomed when they do so. The Government must keep that in mind; it is no good their saying, "It's the regulator," because they created the regulator in the first place. Some hon. Members who are complaining about the regulator now voted to have one, and for this system of running the Post Office. What we have now is the Government's great third way, which they are coming to regret, because it does not seem to be working very well.
There is also great concern about the future of the post office network. I hope that the Minister will be able to reassure us about the speed of post office closures, which has increased dramatically over the past few years. The Government will say that there were many closures during 18 years of Conservative Government—but I have never argued that post offices would never close. They will close because people retire and sell the premises, and it is sometimes difficult to replace them. However, the number of closures last year—some 500—is way beyond what happened before. If the Minister chides me about the number of closures under the Conservative Government, I shall reply that over the five years that this Government have been in office,

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closures have run at double the rate that they did at any period during our 18 years. The Government's record is not good.
There is wide support for the Post Office in the House. However, that does not mean that it does not have to recognise and manage change and become more competitive. If it does not, the huge price rises that the hon. Member for Chorley suggested might be in the pipeline as a result of the changes that the Post Office faces will take place, and it will go into terminal decline. That will not be good for the country, and it certainly will not be good for the many rural areas that rely on their postal service.
9.52 am
Dr. Gavin Strang: I am afraid that time will not allow me to respond to all the interesting points made by the hon. Member for West Derbyshire (Mr. McLoughlin). I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on having initiated this timely debate on the Post Office and the Royal Mail, and thank him for the tremendous job that he has done in campaigning to try to retain this vital public service. He has articulated the sense of alarm and foreboding that pervades the people of this country at the prospect of the road that we are taking. There is a fear that enormous damage will be done, and a British institution that provides a great public service will wither away. The concern not only is felt by trade unions and people in the Labour party, but extends throughout the population.
I shall quote a paragraph from a document produced by Postcomm in June 2001, called "Promoting Effective Competition in UK Postal Services":
"In introducing competition, Postcomm must act in a manner best calculated to ensure the provision of a universal service. Postcomm notes that this is not necessarily the same as ensuring Consignia provides a universal service if it could be provided in other ways, nor does it imply that the universal service is equivalent to Consignia's current range of products. For instance, Consignia's current operations and range of services generally do more than the minimum required to satisfy the universal service requirement in the Postal Services Act 2000".
I repeat:
"Postcomm notes that this is not necessarily the same as ensuring Consignia provides a universal service".
What does that mean? I grew up in rural Scotland, and my hon. Friend is well aware of the situation there. Does it mean that in rural areas the royal mail will be delivered by someone who is not a postman or postwoman? Are we talking about privatisation? That would be utterly unacceptable to the overwhelming majority of people who reside in rural areas.
We have heard alarming stories to the effect that some people's post may not be delivered to their doors, so presumably some pensioners will no longer receive that universal daily service. I do not believe those stories, but it is important that my hon. Friend the Minister should knock any such rumours on the head today, and confirm that the Government will not allow postmen and postwomen to be replaced by people from a private company. It is vital that the universal service, at a universal price, should remain.
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The Minister may have read the article in The Scotsman the other day by Bill Jamieson, a great liberal free-market thinker. He says:
"Scare stories abound of no post before lunch-time (a state some say has already arrived), of 70p letters and the end of all mail deliveries north of Watford. Why can't the Post Office just stay as it is? Because it's bad, its broken, and its bust. That's why."
The majority of British people totally reject that. My experience of the Royal Mail in my constituency, where I have lived for more than 30 years, is that it provides an excellent service. I have lived in two locations and our mail has always been delivered in the morning. In fact, most people in Edinburgh have their mail delivered in the morning. We do not have a second delivery at Newcraighall, although there was one at Portobello. I am very much in favour of a second delivery, which should be introduced in areas where it is not already provided. The internet is fine, but it is no substitute for a decent Royal Mail delivery. We cannot possibly argue that we are delivering better public services if we eliminate the second delivery in some areas. Providing better services means extending the second delivery as far as is practical, although I accept that will happen only in densely populated areas within a certain distance of the local post office depot.
Ever since my right hon. Friend who is now the Secretary of State for Transport, Local Government and the Regions made his original announcement, I have maintained a long correspondence on the future of the sub-post office network. The most recent letter that I received from the present Secretary of State for Trade and Industry is dated 22 November 2001. It relates to a concern of which the Minister will be aware, because of the situation in his own constituency—the fact that although the Government have taken significant action on rural post offices, they have not done the same for the sub-post offices most at threat. Those are the sub-post offices a high proportion of whose business is benefits business, and they are often on peripheral council estates, where the whole business depends on the footfall—to use the jargon—generated by people coming to claim their pensions and other benefits.
I am worried about the fact that a reduction in the geographical distribution of the sub-post office network is envisaged. My aim—and, I am sure, the objective of other hon. Members in the Chamber—is to ensure that that does not happen. The Prime Minister sent out the message that the Government's objective was not only to halt the decline of rural post offices but to deal with the problems affecting urban post offices.
I wanted to talk about the universal bank, plans for which have been curtailed, and to say something about making Post Office services universal, because some sub-post offices offer some services and others offer other services. However, time does not allow me to go into those matters, so I shall conclude by saying that the Post Office is a great British institution. That is not to say that it cannot be improved—but I trust that we will not go down the road proposed by Postcomm.
9.59 am
Sir Robert Smith: Fortunately, a last-minute change in my diary enabled me to be here, because I want to congratulate the hon. Member for Chorley (Mr. Hoyle)

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on the excellent timing of the debate. The Minister has some questions to answer, which could help at least to reduce some fears.
Mine is a rural Scottish constituency in an area where there are many other rural constituencies. Hon. Members have already outlined how worrying Postcomm's proposals are for us and our constituents, and have talked about our great respect for the individual people in Royal Mail who deliver the post and provide a good service. In speaking of the universal service obligation, it is important to recognise that such areas are already penalised by the digital divide, as the Minister knows only too well. Yesterday, a constituent at my surgery said that BT had told him that the fact that his computer hangs up all the time on a bog standard modern was not its problem. Apparently, BT only has to get his voice through the line, because that is its universal service obligation. The worry is that competition will lead to the downgrading of the universal service obligation.
That is the most feared part of the current consultation. If one presses the regulator on how the circle will be squared if Consignia cannot cope after losing so much money, and on the fact that its understanding of how competition works will damage the universal service obligation, the regulator's terrifying response is, "We can always redefine the universal service obligation"—the obligation to our constituents, that is—"and reduce the burden." The idea that there is a threat to reduce the service to our constituents is not scaremongering; it comes from the consultation document.
Even more frightening for sensible, rational decision making, is the fact that the Government have published a document that is meant to guarantee the universal service obligation when there is competition, yet they have still to consult on how that obligation should be defined. That will be addressed in the next phase of consultation. It would be far more sensible to consult the public about what they require from the universal service obligation, and then consider how that can be delivered and maintained.
I confirm what has already been said by the European Commission: it is perfectly in order to levy the other operators that are allowed to compete to cross-subsidise the universal service obligation, if that remains with Consignia. Apparently the regulator does not have the power to do that at the moment, and it would be helpful if the Minister confirmed how such a power could be provided. Would primary legislation be necessary to confer it, or could that be done by statutory instrument? It would be even more reassuring if the Government confirmed that they are drafting the necessary legislation at least to ensure that the full range of options is available.
Finally, it is important that the Minister should explain in what form the Government envisage the universal service obligation surviving. Will he confirm that it will be retained—and not merely as a basic minimum to keep everyone happy and enable the Government to tick the box that says that there is a universal service obligation? We want a real universal service obligation that delivers to our rural constituents.
10.2 am
Geraldine Smith: In making this brief contribution, I shall confine my remarks to the Postcomm proposals that are currently the subject of consultation. I firmly believe that the proposals are ill founded and premature, and if implemented, will have a devastating effect on British postal services. Both the universal service obligation at an affordable price and the Post Office Counters network will be put at risk. Equally important is the fact that thousands of postal workers' jobs will put in jeopardy. Let us remember that that is in addition to the 30,000 jobs that are already threatened—a threat that has nothing to do with the postal regulator. Extra job losses would arise as a result of the regulator's actions.
As I said, the proposals are premature and will be implemented well in advance of the European proposals, which extend at least until 2009, and would provide for some sort of review before full liberalisation went ahead. That is not the case with Postcomm's proposals.
Postcomm's proposals come at a time when Consignia's financial position is already unsustainable. It is losing in excess of £1 million a day—the latest figure that I saw was £1.5 million—because it costs 28p to sort, distribute and deliver a letter bearing a 27p stamp. Yet when Postcomm said to the regulator last year that it wanted to put up the price of a first-class stamp by a penny, the regulator refused to allow that.
Sweden is often cited by Postcomm as an example of a liberated market that retains the universal service. If we followed the Swedish example, the price of a first-class stamp would be about 39p, but Postcomm has not said how much the ordinary public should pay for a stamp if competition is introduced into the postal service.
When the Post Office is losing money, it is ludicrous to propose that it open up one third of its most profitable business to competition in April. Let us be clear: we are not talking about fair competition, or ensuring a level playing field. The Post Office's competitors will not be required to provide a universal service at a uniform affordable tariff, nor will they have to sustain the unprofitable network of sub-post offices—not to mention the post bus service and all the other activities that the Post Office has taken on. On the contrary, they will be allowed to cherry-pick the most profitable town and city services that currently fund the unprofitable areas by cross-subsidy. Those competitors could include European postal operators, who will be able to cherry-pick our best services, yet their markets will still be closed to us. Their markets will not be opened up by European liberalisation. In my view, that demonstrates yet again the ill conceived nature of the proposals.
I am well aware that the Government take the view that the universal service obligation is not at risk because it is enshrined in legislation. They have formally committed the Post Office to maintaining a network of rural post offices and to preventing avoidable closures. I am sure that the Minister will reiterate those points in his reply to the debate. Upon examination, however, those commitments are not quite as good as they are cracked up to be. The standard of service apparently offered under the universal service obligation is substantially below that currently provided by the Post

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Office. The obligation requires only one collection from all post boxes on every working day and one delivery to each home or premises in the United Kingdom.
All hon. Members will be aware that the vast majority of post boxes are cleared several times a day, especially those in major city centres, where boxes are cleared almost continually. The primary reason for clearing post boxes is not because they would overflow with mail if not cleared, but because it enables mail to be processed and sorted ahead of the evening peak period. If mail could not be cleared throughout the day, the postal service would not be able to cope with the evening peak, which would cause delays in delivering mail.
Although the other obligation is to provide a daily delivery to homes and premises, most urban areas, including Morecambe and Lancaster, in my area, receive two deliveries a day, not one, so the obligation would guarantee only a reduced service. That is all that the universal service obligation would give us, so it cannot be claimed as a benefit.
Mr. McLoughlin: One of the other Post Office proposals is for later deliveries to households. Does the hon. Lady agree that that would be dangerous for the small businesses in our constituencies? It would be yet another argument against small businesses locating in the countryside. They would want to be in the towns, which goes against some of the Government's other policies that are intended to spread the load in the rural areas.
Geraldine Smith: I agree. The hon. Gentleman makes an excellent point. That would lead to a reduction in services, and businesses would feel it.
We should remember that under the universal service obligation, the average household would be lucky to receive a delivery every other day, because mail would be caught up in the system. The primary duty of the regulator is to protect the universal service obligation, and to introduce competition only if it could benefit the consumer. We need to send a clear message to the regulator, to ensure that the Post Office's competitors are not businesses that are simply looking for an easy profit. It is my constituents, and the vast majority of British citizens throughout the United Kingdom, who rely upon the postal services. They are the real consumers. They do not want to see the postal service run down or post offices closed, nor do they want to see postmen and postwomen thrown on the dole.
I make my final point directly to the Minister. The Post Office is a publicly owned company, and the Government have responsibilities. It is not good enough for them simply to say, "There's an independent regulator so we can't do anything about it." I hope that he will tell me that he has made strong representations to the regulator, that common sense will prevail and that the British postal system will provide an excellent service to the public.
10.10 am
Mr. Michael Weir: I too congratulate the hon. Member for Chorley (Mr. Hoyle) on securing this excellent debate. It must be rare to have near unanimity in the Chamber, and I hope that the Minister takes note of it.
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Those who argue for greater competition within the postal service should reflect on how many operators are likely to want to take on deliveries to rural areas, especially the highlands and islands of Scotland. There may be a universal service obligation, but there is probably already much less of a service in those areas than in many other rural areas. In some island areas, the universal service obligation is little more than a joke.
Mr. Alistair Carmichael: Is the hon. Gentleman aware that several island communities, including some in my constituency, are already exempt from the universal service obligation? We are concerned, because we see the deregulation proposals as the thin end of the wedge.
Mr. Weir: Indeed, I was referring to that.
Even firms that already deliver parcels to the highlands and islands of Scotland charge much more than the charges in urban areas. That can only become worse under Postcomm's proposals. The universal service obligation may be enshrined in statute, but it is doubtful whether even that restricted obligation could survive the present proposals. In any event, current legislation would not prevent a substantial rise in prices or cut in deliveries. Consignia is no angel, as it has already considered ways of cutting deliveries, and one suspects that it would not be entirely unhappy if the universal service obligation were restricted. We are here to defend the Post Office and the delivery service, not Consignia.
I appreciate that the Government have suggested that they would insist on the retention of the universal service obligation, but I ask the Minister specifically: how will that be done if Consignia is losing business and haemorrhaging money? In the face of full-scale competition in which competitors cherry-pick the profitable parts of the business, how would one insist that a carrier continue with that obligation? Would the Government be prepared to give massive subsidies to a private company to continue that service? If the proposals go ahead, after Railtrack we could have Mailtrack.
The international comparisons are not encouraging. The Swedish example has already been cited. Prices there have increased by 72 per cent., and deliveries in rural areas are not made to the door, but residents collect mail from cluster points on the postman's route. The number of post offices in Sweden has halved from 1,900 to 900 in 10 years. The profits of the Swedish post office peaked in 1999, but it now runs a deficit that approaches £20 million a year, and staffing has been reduced by 20 per cent. In New Zealand, which is similar to Scotland in many ways, people in smaller towns now wait an extra day or two for mail.
The changes proposed by Postcomm would have a dramatic and detrimental effect on the rural areas of Scotland, which have suffered badly from the impact of foot and mouth and the downturn in the tourism industry—and I suspect that that is true of other parts of the United Kingdom as well. It is hard enough to find alternative employment in such areas, without our sacrificing services that already exist.
The Post Office is part of the fabric of rural life. We have already heard about the continuing threat to sub-post offices. It has been calculated that 80 per cent. of

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rural sub-post offices could go in some areas of Scotland, as a result of a combination of Postcomm's proposals and the proposals for automated credit transfer.
As the hon. Member for Morecambe and Lunesdale (Geraldine Smith) said, the Post Office runs a post bus service in many rural areas. The impact would therefore be not only on the postal service but on rural transport services. Under the proposals those would go, because they would be uneconomic for Consignia to continue. How do the Government propose to upgrade transport in rural areas to take account of falling services?
The proposals for the future of Consignia are thoroughly bad and should be rethought. The idea of a cheap universal postal service was introduced in 1840 because of the number of individual carriers who charged what they liked and caused distress. That postal service is now under threat, and ending it would be a disaster for Scotland.
10.15 am
Mr. John Grogan: I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on his vigorous and passionate introduction to this debate. I shall make three brief points on Postcomm, Postwatch and good practice in Selby.
The hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) had it right when he said that Postcomm's first duty and responsibility should be clearly to define the universal service obligation and how we deliver it at an affordable and geographically uniform price. The idea that consultation should follow in the autumn clearly gets things the wrong way round and beggars belief.
I disagree with my hon. Friend the Member for Chorley in that I believe that there is still hope of persuading the regulator to change its mind. Indeed, there must be hope, because the regulator must listen to parliamentary opinion, whether it is expressed here or in the three early-day motions. We want a steady-as-she-goes, cautious, unspectacular regulator that carefully and cautiously opens the postal market to competition. We do not want a gung-ho regulator. The decisions that the regulator makes in the next few weeks will define its role and how it is seen.
There is hope. The Financial Times carried a quote from Graham Corbett, the chairman of Postcomm, but no relation to Railtrack's Gerald:
"I don't think we are going to stand absolutely rigid…if we are presented with good reasons for changing our minds."
The article goes on:
"Postcomm said there had been discussions with civil servants at the Department of Trade and Industry, but insisted no direct pressure was applied."
I hope that those discussions were, and continue to be, robust. Indeed, the language beloved of Richard Mottram might not be entirely inappropriate, because it is crucial that Postcomm listens to parliamentary opinion.
An organisation called Postwatch is the voice of the consumer, and it, too, must be much louder and clearer in the next few weeks. Postwatch has nine regional councils, and I rang the northern council in Bradford yesterday. It is administered by the Bradford chamber of
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commerce, which is a fine, upstanding body that does a great deal for the city. It is crucial that Postwatch in the north shows that it is not a prisoner of big business interests, but that it will represent the whole north. I note that Postwatch has particular responsibility o serve the interests of the disabled, the chronically sick, pensioners, people on low incomes and those who live in rural areas.
Postwatch in the north of England has invited all Members of Parliament to its annual public meeting on 19 March—next week, after the consultation ends. I asked what views it would put to Postcomm, but it said that it could not tell me because it was going to feed them to national Postwatch, which would amalgamate those with other regional views and pass the results to Postcomm. I call on Postwatch in the north clearly to declare its regional views, because the age of devolution has come. It must present those views to next week's public meeting. There are rumours in the north that Postwatch there takes a slightly less gung-ho attitude than national Postwatch, which, however, seems to be a bit of a lapdog in certain respects. Let us prove that and get those views out in the public domain.
I want to draw attention to an example of good practice from Selby, because this has been a rather pessimistic debate in many ways. I must praise a gentleman called Bill Earnshaw, who is the business development manager—I think that is his title—for Consignia in the north. His job is to act as an entrepreneur and to reopen rural sub-post offices. In the Selby area, he regularly holds meetings with the Countryside Agency and the Village Enterprise and Rural Shops Association, which is run by a lady called Dorothy Muir and aims to help village post offices and shops. As a result, action is being taken on the three post offices that have closed in my constituency since 1997. One has reopened in Drax. We are having a meeting about another—Appleton Roebuck—on Friday and there are still problems with finding a new postmaster or postmistress for Sillingfleet. Co-operation between agencies can make a difference, and the Post Office is to be commended for that. The danger is that such initiatives will be swamped if the proposals go through unamended.
10.19
Hywel Williams: In the 1960s and 1970s, people in Wales campaigned tirelessly to have swyddfa post, which means post office in English, studded above the door. That is understandable. Consignia, however, is a nonsense word, and I do not know what it means in English, let alone Welsh. While Consignia is a nonsense word, the Postcomm proposals clearly are not nonsense. As other hon. Members have said, they are a threat to the universal service and the universal tariff. I want to consider the effect on rural areas such as my constituency, Caernarfon.
Under legislation, there must be a delivery and a collection every working day, but what does that mean for small, rural businesses such as those in my constituency? People who have set up new businesses there represent the cutting edge of rural life—they are the entrepreneurs of the future and they depend on the post—but the proposals are a serious structural threat to those businesses.

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The problem is not just the cost of individual letters, but the fact that the terms will be skewed. There will not be a level playing field. The situation in my constituency regarding sorting and delivery is bad enough. Community councils and individuals in my area have raised the issue of the number of letters taken to Chester—and, at the weekend, to Manchester—to be sorted. A letter from a community such as Sarn Mellteyrn is delivered to Rhoshirwaun, just up the road, after being taken to Chester or Manchester.
Chris Ruane: I, too, represent a north Wales constituency and I know that the postal service in north Wales has been centralised in Chester. Will the hon. Gentleman congratulate Consignia on having made some sop to Welsh pride? It has located the toilet block for the Chester offices in Wales.
Hywel Williams: That is welcome, if minor, news.
Will a commercial organisation cherry-pick the service? Would the French, the German or even the Swedish post office deliver a letter from Rhostryfan to Rhosgadfan for 27p? I doubt it tremendously.
The other effect that I worry about is that on sub-post offices. After a huge effort, the people of Llithfaen in my constituency bought their local post office and shop. This is not a private finance initiative venture or a public-private partnership; the local community is taking responsibility and working to counter out-migration and to revitalise the community. People from other communities in Wales visit Llithfaen to see what is happening there—some came from Cefn Pennar recently. It is a model for small, rural communities, and it is under threat.
Sweden is quoted by some as an example of which to beware, but is discounted by others. The discounters—the supporters of liberalisation—say that Sweden is a small country. So is Wales. Sweden, they say, has a large rural hinterland. So does Wales. They also say that Sweden has a right-wing Government who are fundamentally at odds with the values of the community that they govern. I shall say nothing about the situation in Wales.
The Minister will reaffirm the Government's commitment to the vitality of rural life, but the Postcomm proposals represent one more pressure on rural communities. They are not welcome in Wales and they should be withdrawn.
10.23 am
Geraint Davies: Consignia faces losses of £1.5 million every day, as well as the loss of 30,000 jobs, and the regulator is to introduce changes in April—a year ahead of the European Union. It is estimated by Consignia that the EU liberalisation measures alone will cost the company £500 million a year. On top of that, the UK regulator will cost it an extra £250 million. Those extra costs are additional to the job losses that have already been announced. Although our European counterparts are ready to go in April, there will be no reciprocal opportunity for Consignia to compete in mainland Europe. Frankly, that smacks of unfair competition in its worst form.
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Studying the EU proposals, one finds that they are characterised by progressive lowering of prices and weights in order to introduce competition gradually so that the impact on universal provision at a uniform price in terms of the customer can be examined over time. If one compares that approach with that of the regulator in Britain, the difference is that between a gradualist, sensible approach with the customer in mind and a big bang, the outcome of which is unclear in terms of market meltdown, services and prices. The regulator should definitely think again.
The National Audit Office has already done some work, which resulted in the report, "Opening the Post: How Postcomm are Regulating Postal Services", which suggests that the current regime of reducing real prices, requiring universal provision at a uniform tariff and accelerating competitive access will not hold up. It asks many questions about the sustainability of the universal service.
The regulator is completely unsatisfactory, even on the question of who would pick up the pieces in the event of Consignia's collapse. He seems to think that someone would pick them up, realising that there was a real opportunity. Martin Stanley, chief executive of Postcomm, said that cherry-picking would be impossible, because of the requirement to deliver to all households. When a member of the Public Accounts Committee pointed out that one simply had to deliver 90 per cent. oneself and the remaining 10 per cent. through Royal Mail so as to cover the rural areas, he seemed surprised at such great business insight on competitive activity.

I have no faith in the regulators; the propositions are completely untested and constitute a massive risk to the British public. There are no safeguards akin to those elsewhere in the EU and the Government should demand harmonisation with our EU counterparts in terms of liberalisation of the marketplace, so that we have a level playing field.
It is outrageous of the regulator to allow only six weeks for consultation, in breach of the Government guidance, which stipulates 12 weeks. That means that the Public Accounts Committee can interview the regulator, but not Consignia, because that interview is scheduled for after the consultation closure deadline. Hon. Members and the Government should demand an extension to the consultation, given the extent of public interest.
Members should also demand that the liberalisation reforms be delayed and restructured so that we can go hand in hand with our EU counterparts. Nine out of 10 people in Britain think that they receive from the Post Office a good service that provides value for money, so why destroy it? I call on the Government to act. They have been standing by, as the single shareholder, waiting for the regulator to produce its proposals. We have had the proposals, and they are unacceptable.
10.28 am
Dr. Vincent Cable: I congratulate the hon. Member for Chorley (Mr. Hoyle) on introducing an excellent debate. He made his points sharply and captured a consensus that I largely endorse.
The regulator has come in for a certain amount of caning, but one must say that the consultation exercise has had two beneficial effects. It has opened up a public

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debate on the desirability of competition in the Post Office—how much there should be and how quickly it should happen—and stirred up a debate on the nature of the universal service obligation. What does it mean? Is there a social obligation? The radical and rather contrarian views of the regulator have, at the very least, helped us to focus on those questions.
As to whether there should be competition in the Post Office, most of us would argue that, in most markets, competition is desirable. It improves performance and makes people more conscious of costs. There is certainly plenty of inefficiency in the Post Office. I was recently taken round a highly mechanised sorting office in which a large group of postal workers were sorting envelopes. When I asked what they were doing, I was told that, when the machinery was ordered, someone forgot to specify the need to sort A4 envelopes, so they have to be taken out by hand and sorted separately.
The system is replete with such incompetence. A degree of competition to force Post Office management to pay attention to issues of efficiency is surely right, but the problem is that this is a peculiar industry in that it operates on a network, like the railways. If one reduces volumes in a network, one drives up unit costs. One cannot duplicate a network, which is a problem that was unforeseen when the railways were privatised. The more cream-skimming or cherry-picking that is allowed, the greater the danger that competition will push costs up rather than cut them. Price capping, such as applies in the postal service, means that the Post Office, rather than earning profits, suffers increasingly large losses.
How fast the growth of competition should proceed is an issue for debate. I agree with the hon. Member for Chorley that the balance struck by the European Union is probably about right, but the British regulator seems to have guessed the competition sustainable in the industry. Consignia argues—rightly or not I do not know, but the matter needs clarification—that the limit of 4,000 bulk items proposed by the regulator would account for half the Post Office's business. The regulator, on the other hand, seems to believe that it would account for only 25 to 30 per cent. That is a massive difference that would make an enormous difference to the economics of the Post Office. Will the Minister clarify his understanding of the new competitive threshold?
If the regulator pushes ahead with maximum competition, some consequences are inevitable, as we are already seeing. First, the Post Office will not be able to proceed with investment, because it will not have the cash to fund it. I can cite a good example from Twickenham, where a post office with a TW postcode is the only one in London that delivers within the first-class mail target of 92 per cent. It is a very efficient sorting office, but the machinery is antiquated and must be replaced within two years.
As a result of that, the Post Office sought planning permission a few years ago for a new development. The matter is controversial and I shall not go into the details. The new sorting office has been built and is sitting there, but the Post Office is not moving in. When I asked why, I was told that the Consignia board has frozen the investment because it does not have the cash. The postal service has suffered 20 years of the Treasury taking out dividends, which is now being compounded by a profit squeeze.
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The cut in services is another damaging consequence of the way in which the competitive regime is evolving. We may consider the more dramatic possibilities, such as the withdrawal of elements of home-to-home delivery. The single delivery pilot scheme at first sight seems innocuous, but the feedback that we are receiving from a large number of self-employed people working at home is that enormous damage could be done. Segregating the bulk business of large-scale companies and giving them priority service disadvantages not only households, but small companies. There will be a lot of fallout from that decision.
We need to take a balanced view about the competition that the Post Office can reasonably sustain. That is the first issue. My second point relates to the meaning of the universal service obligation. I am increasingly confused by the arguments made by people in the industry. Many hon. Members have said that our understanding of that obligation is that it is a social obligation to protect rural areas, such as the far-flung parts of Scotland, which are costlier to service than urban areas. That is the right thing to do, but the message I have had from the regulator and his staff is that they reject that argument completely. They say that it is just as easy to deliver in Orkney and Shetland as in central London and that there is no problem associated with rural areas.
I have not been able to analyse the data, but I would like the Government to explain their understanding of the problem. If they share Postcomm's analysis, the basis on which the universal service obligation has been predicated for many years falls to the floor.
Mr. Carmichael: Some of my hon. Friends and I recently met Martin Stanley, chief executive of Postcomm, who told us that that part of Consignia's loss amounts to a mere £80 million a year. His argument was that the universal service obligation would be safe in a deregulated market because banks, building societies and credit card companies would want the same standard of delivery. He said that those big mail users would be the saviours of the universal service obligation in communities such as mine. Does my hon. Friend agree that that represents breathtaking complacency from Postcomm, which is surely born out of sheer ignorance?
Dr. Cable: It is certainly highly optimistic. I seriously wonder about the sustainability of rural areas if it rests on such acts of faith.
Mr. McLoughlin: I am sure that the hon. Gentleman will want to correct what he said a moment ago, as he was either wrong or does not understand. He said that universal service protects rural deliveries in Scotland, but it does not apply only to Scotland. Huge rural and remote areas of the United Kingdom outside Scotland rely on universal service.
Dr. Cable: The hon. Gentleman misunderstood. I referred to Scotland, which provides perhaps the most extreme example of geographical spread.
David Hamilton: I represent not a far-flung place in Scotland, but a semi-rural area with small villages. Following bus deregulation, our local authority

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spends £1 million a year on subsidised transport. The proposals would have an effect not only on far-flung areas, but wherever there are villages in Great Britain.
Dr. Cable: I entirely agree. The problem is subtle, as the hon. Gentleman rightly emphasises. As a result of taking those interventions, I have used my 10 minutes, so I shall wrap up with two quick points.

The regulator brought to the surface the question of how the universal service obligation would be financed. The assumption all along has been that Consignia covers the cross-subsidisation, but as it makes losses it has found that impossible. I have asked why the new competitors cannot pay a levy to the Government that they would use to fund the universal service obligation. Mr. Corbett asked the same question on the "Today" programme on the morning that he launched his consultation, but he has never asked it publicly since. I have been told by the industry that someone from the Department of Trade and Industry rang him up to tell him that he was treading on thin ice and that it would be a good idea to say no more about it. The argument is that the Government forgot to create legislative powers to impose such a levy.
I would like clarification from the Minister. Were it possible, it would be sensible for the new cream-skimming competitors to pay a levy to contribute to the maintenance of the universal service obligation. They pay VAT, of course, but VAT goes to the Treasury, not the industry. Have the Government considered that option? What are the legislative possibilities for introducing it?
Another speaker touched on my final point: we talk about the universal service obligation, but the real need is not in the mainstream Consignia or Post Office business, but in that of Post Office Counters. That is where the threat to rural areas and small communities lies. The debate is separate, as that is a separate part of the Post Office, but it is worth flagging up the fact that the doubts remain as big as ever, despite all our discussions on the subject.
We still face a looming disaster. In a year, the counters business will have lost more than £400 million with no obvious sign of replacement income. Unless the Government clarify quickly how many people will be given the new post office card account to keep them in the network, there is a danger that that part of the Post Office will collapse, quite apart from the Royal Mail business.
10.39 am
Mr. Nigel Waterson: I congratulate the hon. Member for Chorley (Mr. Hoyle) on securing the debate, which has been interesting. Many concerns have been expressed about the state of our postal services by hon. Members from a range of parties and parts of the country. At times, however, I thought that I had blundered into a meeting of the parliamentary Labour party. There are clearly marked differences of view among Labour Members on the future of our Post Office and Consignia.
The hon. Gentleman and other hon. Members, including the Liberal Democrats, have spoken on the
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general theme that having competition is fine, but not too much and not yet. We must consider the background to the debate on the Postcomm proposals. The European Union has already agreed to phase in much greater competition in postal services from next year, so the only real debate is on how quickly or slowly that is done. The hon. Gentleman made a case for extending the consultation period, but even if it were extended by a month, six months or 10 years, I doubt that he or his hon. Friends, who make the same arguments, would change their views.
Geraint Davies: Is the hon. Gentleman aware that Postcomm's economic analysis has been published only in the past few days? It is unrealistic and unfair to expect the Government or Consignia to have made a rational appraisal of it.
Mr. Waterson: The problem is that the postal service and Consignia do not have any time left to get their act together. The arguments of the hon. Member for Chorley would be much more persuasive if our postal services were not in such an appalling mess. The theme of improved service to consumers peppers the Postcomm proposals and I remind him that Consignia is still miserably failing to hit its modest delivery targets—except in Twickenham, apparently.
Consignia has the worst industrial relations of any organisation in the economy. It loses £1.5 million a day and 1 million items of mail a week—it is simply in a mess. Hon. Members do not have to listen to me; they could listen to the regular interviews with Allan Leighton, the chairman of Consignia, on the "Today" programme.
Geraldine Smith: I do not accept the hon. Gentleman's suggestion that the Post Office is in a mess; it provides a good service to most areas of the country. I have had only one complaint about the Post Office from my constituents since I became a Member of Parliament. The Post Office provides the cheapest service in Europe. It is losing £1.5 million a day because the regulator will not allow it to put up the price of stamps. Its hands are tied behind its back.
Mr. Waterson: That says it all. During the debate, many crocodile tears have been shed about how awful it would be if the proposals were introduced, because they will put up the price of stamps. Two bodies are rather keen to put up the price of stamps: the trade union—which, incidentally, sponsors the hon. Lady—and Consignia's management.
Geraldine Smith: The Communication Workers Union does not sponsor me. There is no direct sponsorship of Labour Members of Parliament, but I do have an interest; I was a postal worker for 18 years. I think that I understand the industry.
Mr. Waterson: I am prepared to give way to the hon. Lady again if she is willing to contest the list that I have,

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which counts her among a number of hon. Members who are constituency-supported CWU Members of Parliament.
Geraldine Smith: The hon. Gentleman made the point that I was sponsored by the CWU. I am not; I have no interest to declare, and never have done. I would be grateful if he withdrew his remarks.
Mr. Peter Atkinson: Order. May we return, broadly, to our business?
Mr. Hoyle: On a point of order, Mr. Atkinson. A serious allegation has been made against an hon. Member. It should be withdrawn, because it cannot be substantiated. That would be the right way to make progress. The issue should not be left in this manner.
Mr. Waterson: The issue is one of Members' interests, and the hon. Lady has made her position perfectly clear. What the hon. Member for Eastbourne (Mr. Waterson) said is not unparliamentary.
Mr. Hoyle: I think he should do the decent thing.
Mr. Waterson: I am happy to withdraw the suggestion that the hon. Lady is sponsored by the CWU, but I notice that she did not contest my assertion that her constituency party is supported by it.
Postcomm's proposals are designed to help the consumer, and it believes that
"customers' interests will generally be best served in a competitive market…Competition promises to give most customers improvements in service quality.
Consignia's current monopoly in the letters market is not working in the best interests of postal users or Consignia".
It adds that
"Consignia has consistently failed to meet its own delivery targets."
It is worth reminding hon. Members that, for each year of the previous Conservative Government, the Post Office as it then was—and, I hope, will be again—made profits. Problems are arising because it is making substantial losses.
Mr. Colin Challen: Does the hon. Gentleman accept that the Post Office is making losses because it faces a huge investment backlog that was created by 90 per cent. of its profits under the Conservative Government going to the Treasury?
Mr. Waterson: On those matters, I am happier to listen to the views of the chairman of Consignia. He admits that costs are out of control, which is why Consignia has a programme to save £1.2 billion of costs and to shed some 30,000 jobs. Attacks on the regulator have peppered the debate, but this Government set up the regulator two years ago and all Labour Members, including the hon. Member for Chorley, voted to set up Postcomm.
Mr. Carmichael: I have listened to the hon. Gentleman for seven minutes, and I am still no wiser. Is the Conservative party in favour of implementing the Postcomm deregulation proposals?
Mr. Waterson: May I come to the main part of my argument? The regulator was set up by this
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Government, not by the Conservative party. The consultation process ends this Friday, I think, at which time Ministers must make a decision about Postcomm's proposals. I agree with the point that was made about the dividend. When will Ministers recognise the fact that they cannot legitimately expect to take a dividend from Consignia while it is making such substantial losses?
The universal service obligation is not being met and in parts of the country people are not receiving daily deliveries. In many other areas, the obligations on next-day delivery of first-class mail are not being met. Sooner or later, irrespective of the competition proposals, the regulator may have to take action against Consignia because of its failure to meet its current obligations. Again, Postcomm, the regulator, makes it clear in its proposals that the universal service obligation must be protected. That is a central, statutory obligation on the regulator. I do not think that the Government would allow anything that would scrap the universal service obligation. Indeed, if they tried to do so, we would oppose them.
We have heard about the continuing closure of sub-post offices although, as the hon. Member for Twickenham (Dr. Cable) said, that is a separate debate. Last year, a record 547 post offices closed throughout the country. We are experiencing the aftermath of legislation passed by the Government that allegedly gives Consignia commercial freedom, but in reality allows Ministers to interfere in every level of Consignia's management. Only last Friday, The Times reported that Ministers were said to be deliberately interfering with Consignia's wish to get on with announcing proposals to bring itself back to profit. I turn now to the role of the union.
Mr. Carmichael: Will the hon. Gentleman give way?
Mr. Waterson: I shall not. I am running out of time.
The union is rather like the Bourbons: it has learnt nothing and forgotten nothing. In an interview in The Times, Mr. Billy Hayes was quoted as saying that the union may consider withdrawal from the Labour party at its annual conference. We are witnessing a debate on internal strife in the Labour movement rather than the interests of consumers, but the real issues are improving postal services for consumers, improving the reliability of postal services throughout the country, protecting Consignia's dedicated staff who deliver the mail to our homes and securing a future for our Post Office in the 21st century.
Postcomm's proposals require serious consideration, and we look forward to the Minister's decision on them. Whatever happens must happen quickly, or there will be no Consignia or Post Office for us to debate.
10.49 am
The Minister for E-Commerce and Competitiveness (Mr. Douglas Alexander): Like so many others, I congratulate my hon. Friend the Member for Chorley (Mr. Hoyle) on securing the debate. I pay tribute to his long-standing interest in postal matters.
My hon. Friend and other hon. Members raised a huge number of important points, and I shall endeavour to cover them during the last 10 minutes of the debate.

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Given the turnout, it almost goes without saying that there is real strength of feeling among hon. Members of all parties about the proposals. I shall address commercial freedom and then move on to the dividend, the name and the substantive question of Postcomm's proposals.
Mr. Carmichael: Does the Minister accept that today's turnout and the number of hon. Members who attended but could not be called to speak show that the subject should not be dealt with in Westminster Hall? Will he ask the Leader of the House to find time for a proper debate on the Floor of the House?
Mr. Alexander: I welcome the opportunity to have the debate. All hon. Members had the opportunity to attend and its virtue was established by the contributions that were made.
Many of the observations reflected the fact that in March 2001, for the first time, Consignia became a plc operating in a regulated postal market with a newly defined relationship with the Government, as sole shareholder. That decision was taken against the background of the Post Office in the latter years of the Conservative Government. I remind Opposition Members that it was deprived of investment and direction during many of those years.
As the hon. Member for Twickenham (Dr. Cable) pointed out, the Post Office slipped behind its competitors and also allowed its relationship with its work force to deteriorate to the extent that over half the United Kingdom's industrial action occurred in the company. The market is growing increasingly competitive, with competition from new forms of communications ranging from courier and express services to the progressive opening of the letters market. Consignia's problems are, therefore, deep seated and long standing, and its current poor performance results from its failure to resolve such problems over many years.
The explicit aim of Government policy, which was embodied in the Postal Services Act 2000, is to give the Post Office greater commercial freedom. Not only Post Office management, but the unions called for such freedom and believed it vital if the organisation was to address the needs of a changing marketplace and invest in new services. Other elements of that freedom included a new dividend regime that gave Consignia the right to retain a greater share of profits that could be reinvested in the core business and the ability to borrow to finance strategic investments.
At least two hon. Members mentioned the dividend payment. I confirm that, at present, the Government have not decided whether to accept a dividend from Consignia for 2001. A decision will be taken in the context of the forthcoming strategic plan and the review of capital structure that is due in the weeks to come. Additionally, the dividend regime is based on Consignia's own strategic plan and was designed, subject to Consignia meeting its profit target, to be half the rate at which profits were moved from the business under the Conservatives.
The new commercial arrangements of the business and the new arms-length relationship with the Government are designed to give Consignia the
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commercial freedom to develop new products and services, to invest, to price commercially for business users and to borrow for growth investments. That freedom was, and is, necessary to enable the business to respond to competition and to meet changing consumer demands in a better way.
My hon. Friend the Member for Chorley raised the name and offered a view that has widespread appeal—my discussions with my constituents show that. However, the decision to use "Consignia" was a commercial decision taken when the company was established as a plc. As such, it continues to use its Post Office and Royal Mail brands throughout the country. However, my hon. Friend may be comforted by the fact that Allan Leighton, the interim chairman, has made his explicit view on the name clear. He said that, although it is not his first priority because of the company's circumstance, he is reviewing all aspects of the business.
Chris Ruane: Is the Minister aware that the Government are considering a supermarket regulator? One name that has been bandied about is Offtrolley. If Postcomm were to consider a change, does he think that that would be more suitable and appropriate?
Mr. Alexander: As several hon. Members pointed out, the consultation ends on Friday, so I suggest that my hon. Friend endeavours to bring the matter to the attention of Postcomm's commissioners before then.
Mr. McLoughlin: Can the Minister help us out? I believe that he referred to Allan Leighton as the temporary chairman. When do the Government expect to announce a full-time chairman?
Mr. Alexander: I used the term interim chairman. A process to appoint the permanent chairman of Consignia is under way, but we are constrained by the timetable operating on that, given that it is a public appointment and that we must follow the Nolan recommendations. We are making as much progress as possible, consistent with our obligations under the Nolan processes.
A further feature of the structures established in the 2000 Act—the basis of today's debate—is the regulatory reform necessary to promote and protect the consumer's interests. The Act established not only an independent regulator, Postcomm, but Postwatch, which, as my hon. Friend the Member for Selby (Mr. Grogan) said, is specifically charged with responsibility for dealing with consumer needs. Given the tenor of some contributions, I must emphasise that the approach to establishing an independent regulator was widely sought, not only in the House, but beyond.
In a document circulated to all hon. Members in September 1998, the CWU, the union representing many postal workers, urged the Government to establish exactly such an independent body. Recommendation 9 from the CWU states:
"A Regulatory agency to be known as Ofpost—comprising a small panel supported by specialist staff—should be created by statute and appointed by Government and act as independently as the public sector status of the Post Office legally permits."
Consumer interest remains of principal concern to the Government and is the central feature of postal services reform introduced by the Act. The maintenance of that

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universal service, about which many hon. Members spoke, is of the highest priority. Our commitment is well demonstrated by the 2000 Act, which, for the first time, enshrined the universal service obligation in United Kingdom law, as several hon. Members made clear. In response to the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), I reiterate that the legal obligation to maintain a universal service is the primary duty of the regulator.
I assure my hon. Friend the Member for Chorley and the hon. Member for West Aberdeenshire and Kincardine that the daily postal delivery service to every address, irrespective of location in the United Kingdom and at a uniform tariff, remains at the centre of our approach to the postal service.
Mr. David Kidney: Is there a lacuna in the legislation that prevents the regulator from charging a levy on incomers to subsidise the universal service?
Mr. Alexander: The terms of the 2000 Act are well known. Consideration was given by my predecessors at the Department of Trade and Industry to determine an appropriate financing arrangement to secure the universal service obligation. As many hon. Members have made clear, there is scope for the regulator to raise prices. Under the previous proposal introduced by Consignia, a decision was taken by Consignia to withdraw that application. That should not prejudge any future application by Consignia in relation to pricing, however. Postcomm is an independent body regulating the United Kingdom postal market.
Sir Robert Smith: Is the Minister saying that, if Postcomm misjudges the market and Consignia cannot deliver the universal service obligation under the regime proposed, the only option will be sticking up the price
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and doing exactly what everyone fears? Prices will go through the roof to maintain the universal service obligation.
Mr. Alexander: No. I made it clear that there is scope in the 2000 Act for applications to be made to increase the price charged by Consignia for first and second-class stamps. Any determination would be made on the basis of merit and a decision would be forthcoming should any application be made.
I shall deal with the specific point regarding the timing of the consultation, given the strength of feeling communicated in today's debate and in an early-day motion tabled by my hon. Friend the Member for Croydon, Central (Geraint Davies). The proposal document on which consultation is taking place follows a document issued by Postcomm in June 2001, which set out options for liberalising the market. That document established a timetable, including a 12-week consultation on those initial proposals to start in June 2001, and that such a proposal document would be set out at that stage.
In response to Opposition Members' observations, I emphasise that the regulatory body is independent and will be guided by representations made during the consultation. The Government must be mindful of the regulator's position, and of the regulator's primary duty to uphold the universal service obligation. I understand that, as of the start of the debate, neither Consignia nor the CWU had formally responded to Postcomm's proposals.
I turn to the point raised by the hon. Member for Twickenham. With regard to the proposals, we would urge Consignia and Postcomm to see whether reconciliation can be achieved.
Mr. Peter Atkinson: Order. We must move on to the next business. Before I call Mr. Oaten, I ask hon. Members who are leaving to do so quickly and quietly.

NHS Funding (South-East)
11 am
Mr. Mark Oaten: I welcome this opportunity to discuss funding for health services in the south-east. The debate is not a bid for more money for the health service; although I passionately believe that more money should come into the health service, the debate has narrow confines and I do not want to get into a party political argument about the extra resources that the national health service needs to enable it to deliver high-quality services. The debate is intended to examine how to allocate the existing money that the Government have to spend on health services—and, specifically, to raise my concerns about funding allocation in the south-east.
The debate is also not intended to present an argument against the well-travelled principle that we need to try to target the parts of the country that have greater needs. I am not saying simplistically that the north is getting too much and the south should get more because I recognise that whatever formula the Government have in place should include a needs assessment. When they came to power in 1997, the Government were right to decide that certain areas in the north of England had great health care needs, and that the formula should reflect that. However, I am concerned that the balance has shifted since then, and that the formula no longer offers a satisfactory way of assessing the health needs of the south-east.
At present, we have a formula that ranges from 83 to 134 per cent., depending on where in the country one is located. North and Mid-Hampshire health authority, which serves my constituency, is at the bottom of the range—it is the lowest funded health authority in the country—and that is why I, and several of my hon. Friends, are here today.

However, the changes in the way that the formula is assessed, and in the way that money will flow down to the primary care trusts and the various new structures, offer an opportunity to review the formula, and that is why the debate is timely. I also stress that there is cross-party support for some of the things for which I am arguing. With regard to the early-day motion, we struggled a bit for that support, but I managed to find the hon. Member for Portsmouth, North (Syd Rapson), along with many Conservative Members who represent constituencies in the south-east and other Liberal Democrat Members who feel strongly about the issue.
Where is the evidence? What can I do to persuade the Minister that there is a specific problem in the south-east that needs to be addressed? Let us start with the argument that hospitals need to become more efficient. The south-east has some of the most efficient and high performing hospitals in the country. With regard to all the various Government standards and targets, those hospitals have been awarded beacon status, and they have been able to get the three-star status.
There are many high performing hospitals in the area. My local hospital, the Winchester and Eastleigh Healthcare NHS trust, has three-star status. It has achieved all the Government's significant targets. It is a beacon site for personnel, information technology and shared services. Auditors have awarded it excellent
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financial control, and it has above average reference costs. However, although it is, by all accounts, one of the highest performing hospitals in the area, it faces financial difficulties. Therefore, the problem that we face is not about hospitals failing to perform, as they are meeting Government targets.
My next point addresses their financial performance. Can they meet their targets within budget? No. There have been significant financial pressures on health services in the south-east. My hospital has achieved all the objectives to which I referred, and it has been financially prudent, but in 1999 it overspent by £1.4 million, and in 2001—the current financial year—it is £1.2 million overspent. For the next financial year, the projected overspend is £500,000, despite savings of £1.45 million. Many high performing hospitals in the south-east face serious budget difficulties.
Demographic arguments are involved that the formulae have not picked up to the extent that they should have. One relates to the elderly population and is evident in the problem of bed blocking and its associated difficulties.
I am aware that the Government have provided some new money. The Hampshire area received one of the highest allocations to tackle intermediate care and bed blocking. There is no doubt that the crisis is enormous. There is what has been described as a Berlin wall culture between social services and health services, driven by a desperate need to tackle the problem of taking people out of hospital beds and getting them back into the community. The difficulty is that some new money from the Government is capital money that relates to building new facilities, but the revenue required to support those new facilities will be extremely hard to find under the current formula.
The area has an additional problem. Bed blocking is often the result of people trying to access nursing homes and finding that such residential care no longer exists. For some people running such homes, it makes financial sense to sell the home off. Because of current property prices, they can earn much more if the plot of land is converted into houses or flats. I should like the Minister to address the problem of the demographic change involving the elderly population and the acute difficulties of bed blocking.
Mr. Archie Norman: Is the hon. Gentleman aware that in west Kent the revenue that we receive per elderly person is one third of that received in parts of east London for care homes? As a result, Kent and Sussex hospital has to open up extra wards for patients who should otherwise be released into care homes. In the past year, the number of patients who had to be brought back for extra treatment following operations rose by 18 per cent., which is among the highest figures in the country. As the hon. Gentleman says, the NHS hospital must pay the price and use its resources and revenues to make up for the fact that we have lost so many care homes in west Kent.
Mr. Oaten: The hon. Gentleman makes an excellent point. The conclusion that I would draw is that the world has moved on. When the formulae were set and the system was devised, we did not have the difficulty of care homes shutting to the extent that they are now. We now have a phenomenal property boom, and land prices in the south-east put extraordinary pressure on the area.

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I shall give further examples of why we are under such pressure. The recruitment crisis is particularly acute in the south-east and relates to the difficulties affecting care homes and the cost of living in the area. I am sure that hon. Members present in the Chamber can cite examples of hospitals that have had to recruit from abroad. Although the formula includes a market forces element, I do not believe that that element is keeping pace with the reality of the day-to-day pressures that exist, especially in relation to recruitment. Things are extremely difficult in my constituency because of property prices. With a flat costing £120,000, it does not take a genius to work out that a nurse's salary cannot be multiplied enough to secure a mortgage on a property in the area.
One example of the impact that that has on patients worries me greatly—waiting times for radiotherapy treatment, particularly radiotherapy for head and neck cancers and subsequent treatment. In my area at the moment, not a single patient has radiotherapy treatment within the recommended good practice guideline or what is described as the maximum acceptable waiting period. There are similar stories for other procedures in radiotherapy, and I am extremely concerned about what is happening. The linear units that provide radiotherapy in Southampton cannot cope with the pressure, so Southampton patients have to go to Midhurst, but the machine there has broken down. Many people in the Hampshire area are simply not receiving radiotherapy treatments within the recommended time scales and that scares me. If I were ill, I would be extremely concerned, as many of my constituents are. That is another example of the pressures that we face.
Let me give three more examples. There is also pressure on GP practices. In the last month, three GP practices in my constituency have closed their books. Two reopened their books last week, but they say that they cannot physically accept the number of applications from patients that they are receiving.
One practice in Wickham is located next to the new village of Knowle. The pressure on the south-east to take more homes impacts on the ability of GPs to take new patients. Surely there is a crisis if GPs in the area say that they cannot physically take any more patients. Many GPs link that situation to new developments. If the Government's target of 900,000 homes for the south-east is to be met, surely that influx of people must be reflected in the formula that the Government devise for the future. GPs tell me that if the situation continues, they will desperately need more resources to be able to keep their books open.
Mr. David Rendel: I have a personal interest in this matter in that my wife is a GP in the south-east. Is my hon. Friend aware that there is a problem not only with GPs' having to close their books, but with their ability to recruit new GPs to their surgeries? That ties in with the issue of property prices, because of course surgery values have increased. If a GP has to buy into a practice when they join it, they have to pay into the capital value of the surgery to buy out whoever is leaving, but a new GP often simply cannot afford to do that. One or two practices in my constituency have recently been trying to recruit, but
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have had not one applicant. They are attractive surgeries, and one might think that, on the whole, surgeries in the south-east were quite prosperous.
Mr. Oaten: My hon. Friend makes an excellent point, which is linked to market forces and the cost of living. The problem has various impacts. The example that he gives of GPs' inability to buy into practices is just another one.
I hope that I have shown that, although we have efficient hospitals, budgets are under stress. A demographic change is causing bed blocking, and there is a difficulty with nursing homes being sold to purchase property in the area. We would all regard the waiting times for radiotherapy as unacceptable. There is a particular problem with GPs' inability to take more patients, and a recruitment crisis. At the same time, we face the prospect of more housing in the south-east.
Those are the difficulties, but what is the solution? I shall suggest some possible ways forward. The Government have changed the way in which funding of the health service will operate in the local region, and the Advisory Committee on Resource Allocation is considering how the formula can be changed. Will the Minister confirm that there is an opportunity to debate how the formula will be set in future?
Another opportunity for change concerns the census data. Many of us in the south-east feel that things have moved on a lot since the last census. I hope that the Minister will confirm that any new formula or system being devised by the Department of Health will be based not on the 1990 data, but on the latest census data available, which I think is the 2000 data. That would help to make the case for some of the demographic changes that have taken place.
Will the Minister comment on the suggestion that fixed costs and administration charges be removed from the formula? Let me explain what I mean. Under the NHS plan, all health areas are required to consider GP appraisals and to have in place good human resources practices. In the Hampshire area, there may be about 100 GPs; in Doncaster or elsewhere in the north, there may be 60. The health authority or primary care trust has a duty to carry out those appraisals whatever, but my authority has only 83 per cent. of the funding to do that, based on the formula.
I am concerned that many of the fixed costs, which have nothing to do with need and which every authority has to deal with, are still based on the formula. Could we not take some of those fixed costs from the formula to assess the need element? At the moment, all the fixed administration costs are based on the formula so that a reduced amount based on need is being given for expenses that are not need-related. I would also like the Minister to look again at the market forces element. It needs to be adjusted; it is too narrow and does not reflect the current property difficulties. A possible solution may be to narrow the current range of 83 per cent. to 134 per cent. Unfairness will exist at both ends of the range and it would be fairer to narrow the range of the formula.
My final plea to the Minister is to implement some of the proposed changes, many of which I welcome. The primary care trust, as I know from my discussions with it, also welcomes many of the changes, while recognising the many transitional costs involved in some of the

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structural changes that will take place in the health service over the next two years. Will the formula recognise those transitional costs and the fact that some of them are fixed and need additional provision?
I hope that I have, in the 15 minutes for which I have spoken, demonstrated the demand and the need that exist, and suggested a way forward. The matter is critical. The Government have continually to find pots of money to fire-fight and throw at problems in the south-east. Why not get it right in the first place so that the south-east has a decent level of funding, my constituents can feel secure rather than constantly having to panic about health needs, and health authorities in the area are not constantly having to come to the Government and demonstrate a case—which the Government nearly always accept and throw money at? We should put our effort into the formula. We have a unique opportunity and I hope that the Minister will have some suggestions about the way forward.
11.16 am
Dr. Phyllis Starkey: I congratulate the hon. Member for Winchester (Mr. Oaten) on securing the debate. I want to support, and amplify, some of his comments.
First, I support the hon. Gentleman's argument that we should use the most accurate census figures. As the Minister will know, Milton Keynes is the fastest growing city in the United Kingdom, so I have a particular interest, with all public services, in ensuring that the most up-to-date population figures are used.
Secondly, I shall comment on the hon. Gentleman's remark about demography. It is often argued that the ageing population in the UK adds costs to the health service, most obviously by increasing the number of delayed discharges. However, we also need to consider the health costs of other population groups. Milton Keynes has a particularly young population. We have a high rate of teenage pregnancy and a need for much improved services for sexual health generally—not services that are much used by the most elderly. It is not only the elderly who place additional burdens on the health service, and the formula should take account of that.
Before I comment on the formula, I remind hon. Members of the enormous change for the better in NHS funding in the south-east since the election of a Labour Government in 1997, which I shall illustrate with examples from my constituency. We should not always concentrate on the ways in which the health service does not deliver; we should remind ourselves and our constituents of the improvements that have occurred.
As I said, Milton Keynes is the fastest growing city in the UK. For the past two decades we have had population growth of between 2 and 5 per cent. per annum. Despite that growth, in the decade to 1997 no extra beds were provided at Milton Keynes general hospital. Huge pressure built up on the hospital and its beds over those years, resulting in the usual problems of long waiting lists, high cancellation rates and unacceptably high levels of cross-infection when medical cases were mixed up with other cases.
Since the 1997 election, new beds have been provided at Milton Keynes general hospital and the community hospital, additional consultants have been recruited in
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particular specialties and additional nurses have been employed. Unfortunately., the nurses have had to come from abroad because there are not enough trained nurses in this country; it takes time to train new nurses. Extra facilities have been provided for ophthalmology and orthopaedics to shorten waiting times, especially for cataract operations and hip replacements. The situation is still not as good as I would like it to be, but we will have a 28-bed unit in the summer, and a diagnostic and treatment centre is planned for 2005.
Waiting times are shorter—for example, the average time that a woman with suspected breast cancer in my constituency waits to see a consultant has more than halved in the past year—but they are still not good enough and more money is needed. We are going in the right direction, however, and people working in the health service in my constituency say that at least they can see light at the end of the tunnel, even if they are not sure how long the tunnel is.
I stress the fact that when we talk about the health service, we need to think beyond hospitals, as well. In the past the lack of resources for the hospital was mirrored in other parts of the NHS. In 1997, for example, Milton Keynes had fewer community psychiatric nurses per head of population than the rest of Buckinghamshire, despite having the highest rate of mental illness in the county. The child and adolescent psychiatry services were so stretched that young people with psychiatric problems had often seriously deteriorated before they received medical help. The provision for young adults with learning disabilities was so poor that the parents of teenagers with those difficulties besieged me with anxieties about what would happen to their children when they became adults, as there was no hope of supported accommodation for them in the community.
The extra resources provided by the Government have started to make a difference—Buckinghamshire had an extra 10.2 per cent. this year—but it cannot make good in five years the consistent underfunding of the previous 18 years. As the Minister knows, my hon. Friend the Member for Milton Keynes, North-East (Brian White) and I complained bitterly about the unfair distribution of resources in Buckinghamshire, which discriminated against Milton Keynes compared with south and mid-Buckinghamshire. I am pleased that gradually that situation has been reversed and extra Government funding has allowed the health authority to provide for Milton Keynes without having to take money away from south or mid-Buckinghamshire.
Against the background of a significant increase in capital and revenue funding, I, too, am concerned about the funding formula, to which the hon. Member for Winchester referred. It is reasonable that the funding formula should reflect need and I am mindful that the south-east is the most affluent region in the country.
The recent report of the director of public health for Buckinghamshire shows that the standardised death rate for the county is 670 per 100,000 compared with the UK average of 729. I commend the director for not resting on his laurels. To provide himself with a benchmark against which Buckinghamshire could measure improvement, he sought comparisons across the rest of Europe and tried to find other regions of similar affluence as a spur to reduce the death rate in the area further. On the basis of need, it is not unreasonable

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that Buckinghamshire should receive less funding than other parts of the country where the need is much greater.
The real problem for the NHS in parts of the south-east, especially Buckinghamshire, is the high cost of living and the difficulty of recruiting and retaining staff. The extra allowances for some nurses and other staff were helpful, but there is a problem from the bottom to the top: for example, there is great difficulty in recruiting carers and care assistants in Milton Keynes. The council and the primary care trust launched an excellent initiative to reduce delayed discharges, using extra funding from the Department of Health to set up a home care team to rehabilitate people at home after hospital treatment. That project was funded, but there was difficulty in recruiting the necessary home care assistants.
The local economy is extremely buoyant, and there is an active retail sector; the shopping centre has expanded by 40 per cent. in the past year, which has had a huge knock-on effect on employment. Care worker pay rates of £5.70 an hour are uncompetitive locally. Residential care homes in the private sector cannot recruit staff either. Retention and recruitment is a real problem. The formula needs to take account of the comparative wage levels in the local economy because the NHS is competing with the private sector for staff at all levels.
The second problem is the lack of affordable housing. A joint initiative between the hospital trust and a housing trust to provide affordable housing for rent and shared ownership near the hospital has enabled the hospital trust to recruit people for occupational therapy or physiotherapy posts from elsewhere in the United Kingdom. Those people could take the jobs because they knew that they could find affordable housing.
We cannot keep producing ghetto housing for public sector workers. As well as examining whether the funding formula can recognise the extra housing costs, will the Minister talk to her colleagues in the Department for Transport, Local Government and the Regions about the need for more affordable housing, and for more housing generally in the south-east? Unless more land is released for housing, the gap between the affordable housing sector and the private market sector will grow to such an extent that affordable housing will not offer a way for people to step into the private market, but will be a ghetto in which they are maintained for the whole of their working lives.
11.26 am
Mr. Mark Hoban: First, I congratulate my neighbour, the hon. Member for Winchester (Mr. Oaten) on raising the topic in debate this morning. Fareham falls under the Portsmouth health area. I notice that the hon. Member for Portsmouth, North (Syd Rapson) also wants to speak. I suspect that many of our concerns are the same. Our local hospital, the Queen Alexandra hospital in Cosham, is in his constituency. I should like to talk about some of the funding issues that we encounter in my part of Hampshire and the knock-on effects on the care that my constituents have received.
The Portsmouth Hospitals NHS trust announced last October or November that it had a £5 million deficit on expenditure for the financial year. It was able to broker
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£3 million of that deficit but had to find cost savings to recover the other £2 million. At the time the management identified that it would have to lose 150 jobs through natural wastage, some of which would be in front-line medical services. That is of great concern to local people at a time when health needs are increasing and, judging by some of my correspondence from local people, the level of health care in Portsmouth and Fareham appears to be declining.
In its financial report towards the end of last year the Fareham and Gosport primary care group highlighted the problems that it anticipated. It projected an overspend of £1.4 million and identified ways in which it could reduce that to £620,000, partly through allocation of reserves and partly through savings. Interestingly, because the local hospital had outperformed the national targets for waiting times, it thought that it could save £250,000 by allowing waiting times to slip from 15 to 26 weeks. I do not think that the Government gave it that money to cover deficits elsewhere. It is interesting that hospitals can reallocate money given to them by the Government for specific initiatives to cover shortfalls elsewhere. Even having identified various savings, it is still left with an overspend of £620,000 and, again, it will try to broker the limit. That means that the deficit will roll forward to next year, when perhaps there will he an overspend, too, so the process of deficits will continue to roll on from year to year.
Much has been made of the way in which the Government have increased spending in real terms, but it is interesting to examine how some of that money has been spent. The hon. Member for Bath (Mr. Foster) asked a parliamentary question on 5 March about administrative expenses as a proportion of health authority spending. The answer was revealing: the health authority covering the constituency of the hon. Member for Winchester spent £6.8 million on administration in the financial year 2000–01, which was 1.6 per cent. of its total expenditure. In the Portsmouth and South East Hampshire local authority area, the administration costs for the same financial year were £10.4 million, 2.6 per cent. of that health authority's expenditure.
It could be argued that there had been economies of scale, which accounted for some of the differences between the two health authorities, but the spending on administration was much the same. The difference between them was only £4 million. We must consider the best practice of health authorities in their expenditure on administration. From 1 April, the health authorities will be swept away by strategic health authorities for Hampshire and primary care trusts in Portsmouth to cover Fareham and Gosport. I want to ensure that, in that reorganisation, the money spent on administration decreases, thus enabling more money to be spent on health care. The £4 million difference in administration costs between the two health authorities would have covered most of the deficit on spending for the Portsmouth Hospitals NHS trust of £5 million, so the health authorities and PCTs must consider administration finances as the new structure is introduced.
Hon. Members will have received, as I did, a list of complaints and problems from constituents about the services that they do not receive. Recently, Fareham

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experienced the withdrawal of podiatry services to a wide range of elderly people, who will need to find private chiropodists. That will badly affect those in their late 80s, who are not sure to whom they can turn to receive that care. There is only one NHS dentist in Fareham, whose lists are now closed to NHS patients. A dental access centre has opened in the town, which has been welcomed by many people who have no NHS dentist. However, the centre does not have a patient list, and people can only make appointments on the basis of needing treatment. I am looking forward to visiting it a week on Friday to see what demand there is in Fareham for that service. I suspect that I shall find that demand exceeds supply.
Recently, the Blackbrook maternity home in my constituency was closed. It was a local facility and greatly relied on by mothers in Fareham for post-natal and antenatal care, as well as for delivering their babies. It is meant to be a temporary closure; it is the second temporary closure in two years and it is causing real worry. The problem was caused in part because maternity care in Portsmouth has been under pressure. When arriving at Portsmouth hospitals to have their babies delivered, women have been turned away and told to go to Chichester or Southampton. That is not an acceptable level of service.
Despite the Government's message about real increases in health spending, the experience of my constituents is that they have not seen that flowing through. That is a fundamental issue, because they are trying to match up their tax increases and the level of spending on the health service with what, to their minds, is the health service's failure to deliver the care that they expect to receive. That goes for all age ranges. I have talked about the closure of the maternity home in Fareham. The hon. Member for Winchester highlighted the issue of nursing homes. That is a real problem in south-east Hampshire.
One of the problems facing the owners of care homes is the impact of the change in standards for nursing and residential homes. In February 2001, I met a group of nursing home owners who said that they were under financial pressure. They viewed the high land values and the offers from property developers as a way out of their personal crises. They were not able to generate the revenue needed to pay for improvements to their homes that had to be made in order for them to stay in business and make a reasonably profitable livelihood.
Most of the dozen care home owners who attended were at the small end of the market, with homes providing up to 20 beds and offering more personal attention and care. Half of them thought that they would sell up in the next five years. More importantly, they believed that their businesses would not be bought as going concerns to provide care for the elderly, but would be sold to property developers, as that is simply the only economic answer for them and for those who want to enter the health care market.
I congratulate Hampshire county council on the work that it has done to try to secure nursing home beds in the county. In the past financial year, it increased nursing home fees by three times the rate of inflation. That was funded not by Government grants but by council tax payers' resources to try to maintain the supply of
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nursing home beds in the county. The council has done the elderly of Hampshire a great service and should be commended. However, I share its concern that it cannot continue to do that ad infinitum. The Government need to consider the revenue funding for nursing and residential homes to ensure that there is adequate availability of beds in future. As the health service changes, we will need to rely much more on nursing homes.
When I went to the Queen Alexandra hospital last summer to discuss the new hospital plans, it was considering a decrease in the number of acute beds in line with the model proposed by the national beds inquiry. However, that was predicated on the existence of intermediate care beds, either in hospitals or residential and nursing homes. If there are no such homes, we will end up with a much greater problem with bed blocking, as there will be fewer acute beds and more patients experiencing delayed discharges.
There is a fundamental funding problem in Hampshire. We can talk all we want about changing the formulae, but we must also consider how health care is delivered. The Government speak of the link between reform to the NHS and increased funding, but people on the sharp end of the health service in my constituency have noticed that although taxes have risen and health care spending has gone up, reforms to improve the health care that they get have not been introduced. The Government should consider carefully the reforms that they are pushing through to ensure that we free up more money for health care and spend far less on administration.
Several hon. Members rose—
Mr. Peter Atkinson (in the Chair): Order. Before I call the hon. Member for Portsmouth, North (Syd Rapson), I must tell hon. Members that I propose to start the winding-up speeches at 12 o'clock, so if the three hon. Members who are seeking to catch my eye keep their speeches to about seven or eight minutes, they can all be called.
11.38 am
Syd Rapson: First, I congratulate the hon. Member for Winchester (Mr. Oaten) on securing the debate, which is about the south-east region, as opposed to the parochial areas that we represent. Like the hon. Member for Fareham (Mr. Hoban), I shall concentrate on what we know and have to deal with. I have an inherent distrust of formulae; having been in local government and having created annual budgets, the potential for manipulation is quite well known to me. We must consider carefully how the formula is structured, and I welcome the words of the hon. Member for Fareham on the subject.
There is tremendous potential for economic expansion in the south-east. It will be the area that everybody looks at. That expansion produces benefits and disbenefits, such as pressures on housing, which can lead to difficulties in getting new general practice surgeries, for example. With regard to that, the cost of property in and around my constituency is so high that accommodation is hard to find. Therefore, economic expansion can also work against us.

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We are proud that there have been several major Government announcements about Portsmouth: shipbuilding is returning, space exploration companies are winning major contracts and the Navy is re-gravitating to Portsmouth. Those are good things, and I am making the most of them in political terms, but they produce the same knock-on effect, because house prices rise dramatically due to the pressure caused by people moving in—and all the other problems that have been mentioned also get worse.
I have the greatest admiration for our local health groups. The health authority—as it was—did a tremendous job, and established good relationships. The new primary care trust and the trust are doing a marvellous job, in light of all of the pressures. They are loyal, and they are working within the realms of their ability, but they have worries about constraints on the budget, which restricts what they can do, and they express their concerns to the hon. Member for Portsmouth, South (Mr. Hancock), the hon. Member for Fareham and me, who have regular meetings.
I wish to focus on the small point that the formula must be reconsidered, and the demographics must be looked at. The expansion of the economy, and the benefits that will flow from that, will make things worse. We must to try to re-balance that. If the Minister were to address that point, I would be grateful.
11.41 am
Mr. Archie Norman: I congratulate the hon. Member for Winchester (Mr. Oaten) on introducing the debate. It is of great relevance to constituents of hon. Members throughout the south-east of England.
With regard to the issue under debate, the case has been ably made, so I will focus my remarks on the key points. The first and most obvious point is that the crisis in heath care in the south-east was predictable. All the factors that we have talked about are capable of being forecast and understood. During the past three or four years, hon. Members warned the Department and its Ministers that this crisis was likely to arise—particularly with regard to bed blocking. Therefore, the Minister must answer a key question. Does the Department have any radar at all? If it has any capacity to forecast the extent of the problems as they arise, what does she envisage is likely to happen in the coming years? Currently, it is difficult to see why the situation with regard to bed blocking, for instance, might improve in the next two to three years; all the signs are that it will get worse.
Every hon. Member who has spoken has raised bed blocking, and in Kent the problem is on the verge of crisis. There are clear diseconomies: the Department is underfunding care homes and as a result, the NHS is having to take the strain. That has serious knock-on implications for the standards of clinical care in areas such as readmissions and the inability to give people the right level of intermediate care after they have had serious operations.
The problems are being driven by the implementation of new regulations. We have all heard that at first hand, from our visits to care homes, as my hon. Friend the Member for Fareham (Mr. Hoban) has said. We know that the problems are a result of the introduction of
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measures such as the minimum wage, and of the squeeze between the rising cost base and the opportunity cost of better property prices.
I and most other hon. Members know that, currently, there are care homes that are contemplating going out of business, and some of them are likely to do so in the coming months. Therefore, the problem will get worse, rather than better. In the whole of west Kent, I do not know of a single example of an entrepreneur or businessman who is planning to set up a new care home, so it is extremely difficult to see why this situation will not get worse. The problem goes straight back to the question of subsidies. That was predictable. The Minister might like to comment on that. As she will know, in Kent the Government elderly residential standard spending assessment—the formula per resident over 65—is £351. In Islington it is £917. That produces the appalling inequity in the system whereby London boroughs can purchase the best care homes in west Kent. As a result, patients released in west Kent into care homes must take the second choice of care homes and are often moved a long way from where they live or from their relatives. It is not merely that we do not have enough care homes. We have the second-best care homes. That is creating tremendous resentment among patients and immense frustration among NHS professionals.
The figures show the knock-on effect on the NHS. Last year, there was an 18.9 per cent. increase in delayed discharges in the south-east, which is appalling. It means that the percentage of delayed discharges in relation to the total number of patients is now 9.5 per cent., the highest in the country. What clearer statistical illustration can there be of the extent of the problem and the knock-on implications for the NHS?
The same applies to readmissions. As I said earlier, last year, west Kent had the second largest rise in readmissions in the country, because patients have to be sent home too early without adequate care. The result is predictable. They come back into hospital for further treatment later. There is real suffering among patients and real costs. The problem must be addressed. It is a crisis. It is not something that can be glazed over. It is obvious that the system of funding for care homes needs to be reviewed and that the interface between the two departments needs to be addressed. The crisis needs to be tackled now.
I do not have the figures, but on balance it is probably true that in the past few years the weight of capital expenditure in the NHS has gone into the north and the midlands. If that is true, that has happened for entirely understandable reasons. We understand that there are well deserving cases for new hospitals elsewhere in the country. However, the result is that we have a growing problem in the south-east.
We now have in principle a green light to proceed with a new hospital in Tunbridge Wells for the Maidstone and Tunbridge Wells NHS trust and more investment in Maidstone. That is entirely welcome. It is a big leap forward. However, it is happening treacly slowly. I ask the Minister to consider how fast capital expenditure is being brought to bear. We first submitted a proposal for a new hospital in Tunbridge Wells in 1997. We now have the green light to proceed, but it is five years later. Even on the best possible time scale, that hospital is unlikely to open for another five years, so we are looking at a

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10-year lead time to tackle the problem. Can the process of investment in new hospitals and facilities in the south-east be accelerated so that we can have new capital facilities and so that doctors, nurses and staff can start working in conditions fit for the 21st century instead of for the 19th century?
11.48 am
Sandra Gidley: I congratulate my hon. Friend the Member for Winchester (Mr. Oaten) on having secured the debate. Most of my focus will be local. I also congratulate him on being timely. The issue was taken up by last week's Health Service Journal, which states:
"The projected deficit, submitted to regional offices at the end of last week as part of the annual service and financial framework round, has arisen because the demands on the service are running far ahead of the large increases in funding."
Health Service Journal goes on to discuss the south-east, where the problem is most acute. Chris Hurst from the Oxford Radcliffe Hospitals NHS trust said that mental health and information management and technology were likely to suffer as attempts were made to balance budgets, as they were generally seen as soft targets. He did not know how the gap between demands and funds would be bridged. Closer to home, Ian Marriott of Southampton and South West Hampshire health authority said:
"For the whole of Hampshire and the Isle of Wight, there is a potential deficit of £76m…that comprises a split between the NHS trusts of £17m and primary care trusts of £59m. On top of the £76m"
it is being asked to find
"about £30m of cost savings. The confidence on this is variable. My submission says the level of savings is daunting. We are not going to magic these figures away. In any budget there is a margin of error, but not £100m."
That comes from a journal that understands such things.
On the issue of local prescribing, I received submissions from local primary care trusts. Advice from the south-east regional office during 2001–02 was that an increase of 5 per cent. would be appropriate. Local people warned that it was more likely to be 8 per cent., and, in effect, the outturn was approaching a 10 per cent. year-on-year increase. There is no sign that those increases in drug spending will be taken into account.
The pressure, however, has been almost entirely caused by certain Government initiatives. The single therapeutic area currently responsible for the greatest increase in expenditure is lipid lowering drugs or statins. The Government rightly boasts of their success in increasing the prescription of such drugs. However, they must appreciate that that comes at a price.
Another pressure is the mandatory implementation of National Institute for Clinical Excellence guidelines. I have no problem with that, because they are funded. However, there is still a robust denial that that will have an impact on spending on other drugs. Perhaps it will lead only to a greater year-on-year deficit.
I echo the sentiments already stated that it is right and proper that areas in greatest need receive most money, but as my hon. Friend the Member for Winchester
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pointed out, it cannot be entirely fair that the range of funding is so wide—83 per cent. to 134 per cent. An adjustment of only 5 per cent. at each end of the scale would go a long way towards helping the Winchester and Eastleigh Healthcare NHS trust, for example, without imposing any significant challenge for the highest funded, which would still receive 50 per cent. more per capita. That problem must be addressed.
Mr. James Arbuthnot: The hon. Lady makes important points in an important debate. Does she agree that, although it is clear that people in the area in which we live—Hampshire—are healthier and have better longevity, a certain level of health care, including the time in which one can expect to be treated and a manner of treatment which one ought to be able to expect, should be taken into account in a civilised society when developing a health funding formula?
Sandra Gidley: I entirely agree. It is telling that the majority of hon. Members taking part in the debate are from Hampshire. That must say something.
The Winchester and Eastleigh Healthcare NHS trust has three-star status, so it could be argued that it does not need the money. Putting aside for one moment the argument that the star ratings are based on selective and arbitrary measures, the system is badly overloaded. Most people wait 18 months for a hip replacement, which is also the case in Southampton and South West Hampshire health care trust. Consequently, in order to meet targets, the Winchester and Eastleigh trust spent approximately £1 million accessing private health care. "Aha," I hear hon. Members say, "The Government provide money for that very purpose." They do, but not enough. They provide funding only to the tune of £500,000.
The waiting list for orthopaedics is unfortunately—or fortunately, in a way—a result of the population living longer. We have a long life expectancy in the south of England, and have reached the stage of replacing hip replacements because people are living so long. People should not be penalised for living longer. However long they live, they deserve access to prompt and high-standard health care. That is rapidly becoming more difficult to provide.
Analysis of recent NHS performance indicators shows that the performance of Winchester and Eastleigh trust is below average for both delayed discharges and improvement of 13-week out-patient waits. That shows that the south-east's health care system is creaking under the strain. It is more worrying that although my local trust has retained better than average outcomes for most types of cancer, its performance is slipping from year to year. That aspect cannot be totally unrelated to the difficulty of access to radiography treatment, which my hon. Friend the Member for Winchester highlighted.
I want to mention primary care trusts because, theoretically, they will be in control of a huge proportion of health spending. I have a real fear that much of that money will come with strings attached, and there will be little freedom to spend it. PCTs are set and ready to go. I gather that few of them have appropriate financial expertise available to help them. They have

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been forced to accommodate a share of the current health authority deficits. Does the Minister agree that that is no way to launch a new organisation? Will she undertake to find funding so that new PCTs start with a clean balance sheet and do not struggle to address problems that are no fault of their own?
The Government have a golden opportunity to redress existing inequalities and to come up with a fairer funding formula that takes into account not only the specific problems of the north, but specific problems of the south and, especially, the deprived rural areas in the south that receive little attention.
11.56 am
Dr. Evan Harris: I am delighted to add my tribute to those paid to my hon. Friend the Member for Winchester (Mr. Oaten). He set out a cogent case for the need for more funding for the health service in the south-east. He drew our attention to demography, the problems of the shortfall of social services funding and the problem that much funding that enters the health service is non-recurrent, which makes planning difficult and stores up pressures for the future. He mentioned, as did other hon. Members, the problems of recruitment and retention in the south-east, and discussed waiting times for cancer treatment. He also made an important point about whether fixed costs—administration costs—which should be the same for every head of population, should be subject to the formula.
I want to address many issues that my hon. Friend raised, but he was a little too charitable, in his diplomatic manner, toward the Government when discussing overall funding levels. It must be recognised that almost every—if not every—health authority and trust throughout the country is facing huge pressures. It is difficult to know the areas from which we can take funding in order to improve funding for the areas that south-east Members, including myself, represent.
The health service has been chronically underfunded for not only 18 years, as the hon. Member for Milton Keynes, South-West (Dr. Starkey) said, but for 20 or 21 years. The step change in funding that people thought that they were voting for in 1997 did not occur until 1999–2000. Figures show that the settlements in 1997–98 and 1998–99 were among the most miserly real-term increases of the past few decades. That cannot be disguised and history cannot be rewritten by people who continually talk about 18 years of underfunding, but know that that occurred for 20 years.
It is clear that we were right when we said—both times—that taxation should rise fairly to fund a bigger cake. We could then discuss how the cake should be divided, but a bigger cake is needed. When the Government are faced with that point, they cannot get away with arguing that they have given the health service more funding than our party called for. If one looks at the arithmetic, that is nonsense. We committed ourselves to the Government's spending plans plus extra funding from specific taxation increases. To argue that that is less than the Government would spend implies that, if we were in office, we would simply get a pile of cash and burn it, rather than add to the spending through specific, fair and targeted increases in revenue raising. More funding is required in the overall system.
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Then there is the question of how one divides the cake. I think that the Government accept that a formula-based allocation of all the funding does not seem reasonable. I am referring to the fixed administrative costs, which are not related to some of the demography on which the formula depends. The Government top slice funding from the cake and allocate it in their own way, rather than according to a formula. That represents an inherent recognition that the formula-based allocation is not always the best way to allocate funding.
I am a little more cautious than other hon. Members about calling for the difference in funding levels between needy and less needy areas to be narrowed. One could not necessarily justify that before seeing a narrowing of health inequalities. One sad aspect of the Government's record is that we have not seen the narrowing of health inequalities that we all want as quickly as we might have. However, if the Government can deliver on that, the difference in funding levels could be narrowed.
Of course, the Government recognise that the formula sets only the target funding. The allocations then move towards that target as quickly as growth allows. In years of low growth, there is little movement towards the target because the allocations are so flat. I am interested to know whether the Government believe that they are doing enough to move authorities that are underfunded according to the formula more quickly towards their target. These health authorities and primary care trusts will exist throughout the country, and a number in the south-east feel that, if the formula exists, they should at least be moving towards the target more quickly.
The hon. Member for Milton Keynes, South-West made a number of good points. I know Milton Keynes general hospital well and am also aware of the pressure that it is under with the area's expanding population. Like my hon. Friend the Member for Winchester, the hon. Lady talked about the need to use the new census figures as soon as they are available. Similarly, she made important points about creating a housing ladder, not just of affordable housing but from which people can move up.
There is a problem with saying that one area is underfunded because another is overfunded. I remember hon. Members from the Northampton area complaining in 1997–98 that Northamptonshire health authority was allocating all the growth money that they had expected to the Kettering area. Rather than blaming the Government, however, hon. Members from the Kettering area claimed, in an almost simultaneous press release, that Kettering was not getting the extra money because it was all going to the Northampton area. That "robbing Peter to pay Paul" mentality simply will not do.
I believe that similar things have happened in Buckinghamshire, where other hospitals, including those in Aylesbury and Wycombe, are also under pressure. I accept that demographic growth there has not been as great as that of Milton Keynes.
Dr. Starkey: I can assure the hon. Gentleman that the extra money for Milton Keynes has come only from growth money. We have been complaining because we did not see why our historic underfunding should

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continue, but the fact is that the money came only from growth money and was not taken from other parts of Buckinghamshire.
Dr. Harris: I accept that, but two points need to be made. First, money can be taken from growth money only when there is growth money, and the hon. Lady will accept that, in the first two years of the Labour Administration, there was precious little growth money. Secondly, if money is taken from growth for one area, less is available from growth for another. That is a fact of life, and all areas are suffering extreme pressures. If those hon. Members who represent other parts of Buckinghamshire were here, they would not tell a happy story about full funding.
The hon. Member for Fareham (Mr. Hoban) rightly questioned whether it is sensible to lose front-line staff when there are so many pressures on the health service. How can the Government justify hospitals having to make huge cuts—they are not efficiency gains, cost savings or cost improvements—when they are under such pressure?
The hon. Member for Tunbridge Wells (Mr. Norman) made an important point. Even where places in care homes are available, often better-funded social services authorities can pay a higher price and outbid those in the local area. That is a particular problem on the south coast, where London social services authorities buy beds because it is perceived to be a nice place for people to spend time in rehabilitation, long-term care or residential homes.
It is bizarre that the Government should allow any delayed discharges, which are an abuse of people stuck in hospital beds and a huge waste of resources. That is the nub of the problem; it is not simply a matter of more money. The money could be better spent if funding were given to social services to obliterate delayed discharges, which tie up large amounts of NHS capacity. Money is paid over the odds, particularly on the south coast, for people who could be treated locally to go to France for treatment.
My hon. Friend the Member for Romsey (Sandra Gidley) mentioned the problems of areas that are not Government targets losing out. She quoted the director of finance at the Oxford Radcliffe hospital on the subject of mental health and information and communications technology who said, rightly, that they are soft targets. There are no targets in the Government's performance-indicator game in such areas; they are de-funded to meet other targets. My hon. Friend spoke of her direct experience of the huge pressures caused by demography and the pressures on drug budgets of prescribing new and effective drugs.
There is general underfunding, and more resources are needed. Clinical priorities are distorted because of the Government's insistence that certain targets are met, which means that anything that is not targeted is de-funded and, as The Sunday Telegraph reported, surgeons are asked to do less clinically urgent operations before those that are more urgent. Mr. Rawlins of Bedford hospital said that that distortion of clinical priorities "may be unethical". It is unethical; I have asked the British Medical Association to consider
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whether it is ethical for doctors to go along with a central diktat to treat less clinically urgent cases for political reasons, rather than on the basis of patient need.
Money could be better spent if it were directed in large amounts to the needs of social services authorities to enable them to afford to place people in care homes. In my constituency, it is not so much a Berlin wall, as the Government said, as a Berlin trench. Both sides are digging for funds; they are both significantly over budget; they get on well together and there is excellent joint working, but if they do not have the funds, there is little they can do.
The Government must recognise that there is a false economy in failing to deal with recruitment and retention problems, especially in the south-east, as hospitals are forced to pay over the odds for agency nurses. Paying nurses a decent amount, or providing increased amounts—more than what is promised—for housing costs and living allowances would be a more cost-effective way of generating a home-grown work force that could afford to stay in the service and was prepared to do so. Those are significant problems, which the Government must face now.
12.9 pm
Tim Loughton: I welcome you to the Chair, Mr. Benton. I, too, congratulate the hon. Member for Winchester (Mr. Oaten) on securing this interesting and well-informed debate and on his early-day motion drawing attention to the problems of funding health care in the south-east.
I stray into the debate, which has referred mainly to Hampshire health care, with trepidation. However, the points that have been raised will be familiar to all hon. Members in the Chamber. They certainly apply to my constituency of East Worthing and Shoreham. The speeches this morning also show how large and diverse the south-east is. It includes Milton Keynes, Winchester, Fareham, Portsmouth, Tunbridge Wells and my constituency on the Sussex coast. The hon. Member for Milton Keynes, South-West (Dr. Starkey) mentioned the public health director in Buckinghamshire: I should be interested to know what part of continental Europe he contrasts with Milton Keynes when he goes further afield in his comparisons of the success in her county.
The debate has also shown that it is not just a question of funding, important though that is, but that much more complex issues are at work such as the cost of living and recruitment problems. Life is not a bowl of cherries in the south-east as is so often thought. We have great contrasts. Arundel is the healthiest place to live in the United Kingdom and is one of the more affluent parts of the country, but just along the coast, Hastings, with all its health care and social problems, is one of the most deprived areas in the south-east. One of the wards in Worthing is in the top 10 per cent. of deprived wards in the country.
The south-east is the largest region in the country, accounting for 13.5 per cent. of the population. As the hon. Member for Winchester mentioned, it is set to grow disproportionately with the building of at least 900,000 new houses over the next 15 years. It is the fastest

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growing economic region and the Government intend it to be one of the top 10 economic regions of Europe; but that will not happen with our current infrastructure problems, not least the shortfalls in health care provision and the associated cost of living limitations.
We have a very elderly population and, coming from Worthing, I know more about that than most. Sussex alone has eight constituencies among the top two dozen with the largest number of older people. In West Worthing 42.6 per cent. of constituents are of pensionable age and in my constituency the figure is 32 per cent. Older people bring more health funding requirements with them. It is not just a question of the orthopaedic costs, although I speak as someone whose father has had a hip replacement of a hip replacement and he is only 67. As the hon. Member for Milton Keynes, South-West mentioned, we also have a young population in the region. The younger and older age groups impose the biggest strains on the health service and the funding requirements that go with it. We are seeing the consequences at both ends.
There are enormous discrepancies in the amount of per capita funding that we receive, as my hon. Friend the Member for Tunbridge Wells (Mr. Norman) mentioned. In the forecasts for 2002–03, the per capita funding through health authorities is £1,204 for Camden and Islington, £1,041 for east London, £1,002 for Manchester and £940 for Sunderland. Yet it is £741 for west Kent, £745 for west Surrey and £790 for west Sussex. Those are enormous discrepancies, which cause great problems in our constituencies. There are also great discrepancies within social services funding. Much of it goes towards the elderly. My authority spends an enormous amount above its standard spending assessment. Authorities throughout the country spend £1 billion above what the Government fund them for and think they should spend. It largely goes on extra care for the elderly. The demographics of the situation mean that that problem is getting worse.
As hon. Members have said, the imbalance of the system where the NHS takes the strain for the underfunding of social services, leading to the delayed discharges and bed blocking is worse in the south-east than in any other area. It is more than double what it is in the north-west. Premature discharges from hospitals because of the shortage of beds result in people coming back into hospital as emergency admissions only a few days or weeks later. Again in the south-east we suffer from that more than any other region as figures released just the other week show. Hospital emergency readmissions are climbing all the time.
The position will get worse in the south-east. There is, as my hon. Friend the Member for Tunbridge Wells said, a crisis in care and the health service, particularly in our region. Because of the extra capitation for funding social service places in London, for example, London boroughs place their elderly people into nursing and residential homes in Kent and Sussex. Our local authorities cannot afford to place our own people in local residential homes.
Like my hon. Friend the Member for Fareham (Mr. Hoban), I congratulate Hampshire county council, which has bucked the trend by increasing the number of available residential places—but at great cost to local council tax payers. Other figures, such as those on hospital waiting times and waiting lists, show that, not
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surprisingly, the south-east again bears the brunt of the problems. The percentages of people waiting for more than 12 months are 10.9 per cent. in west Surrey, 8.7 per cent. in east Surrey and 9.3 per cent. in west Sussex. Disproportionately, three hospitals in the south-east are among the bottom five in the national tables on in-patient waiting times: the Royal Surrey county hospital in Guildford, the Princess Royal hospital in Haywards Heath and the East Surrey and Crawley hospital in Redhill. Which hospitals and health care trusts are among those with the longest trolley waits? They are all within the south-east: Brighton, Surrey and Sussex, Dartford and Gravesham, Maidstone and Tunbridge Wells, and the Royal West Sussex hospital all have well above average trolley wait times. I fear that the situation is getting worse.
We have all heard about pressures on GPs. Worthing has had some of the biggest pressures in the country. Almost a year ago we had a debate in Westminster Hall on the subject and in the summer the Minister kindly came down to Worthing to see the problem at first hand. I fear that nothing has been done and the problem is getting worse. Just about every GP surgery within Worthing has closed its lists. New GPs and practice nurses cannot be recruited to help with that worsening work load.
GP vacancies across the region have leapt up disproportionately in the past year. In east Kent, GP vacancies have gone up from 13 to 29 per cent. In Oxfordshire, the area of the hon. Member for Oxford, West and Abingdon (Dr. Harris), they have gone up from 24 to 62 per cent. In west Kent it has doubled, from 31 to 60 per cent. That is a common problem across our region.
Nursing vacancies have similarly increased, as the hon. Member for Portsmouth, North (Syd Rapson) said. He also mentioned the problem of GP surgeries. The surge in property prices has meant that people are being priced not only out of buying residential homes but out of buying and extending new surgeries. The cost of living in the south-east also means that we have some of the highest figures for nursing vacancies and ancillary staff in the country. As the Audit Commission found, the additional cost of employing agency staff is excessive. Agency staff now cover one in 10 daily shifts in the NHS. The cost to the NHS of employing temporary nurses rose by a record 20 per cent. in 1999–2000 because agency staff typically earn nearly 20 per cent. more than NHS nurses. That is not an ideal situation.
There are also vacancies in social services. If one does not get the social services right, people are neglected, particularly elderly people and they end up as emergency admissions, placing additional pressure on hospitals. Kent, in particular, which is the largest authority in the country, currently has social worker vacancy rates of around 20 per cent. I could touch on many other areas. The hon. Member for Milton Keynes, South-West mentioned the enormous gaps in mental health care, particularly for adolescent mental health services, which is a particular problem in the south-east. My hon. Friend the Member for Fareham referred to the enormous variation in management costs across the country, particularly in our region. It is not surprising that just a few weeks ago the Department of Health had to admit that we have a record number of managers, a

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record number of low bed numbers and a ratio of 1.15 administration and estate management staff for every one bed in the country. That situation is getting worse and the discrepancies between the regions are enormous.
It is therefore no surprise that in January a leaked memo from Ruth Carnell, the chief executive of the NHS in the south-east, showed an overspend of at least £60 million in health care in the south-east. That money will have to come from somewhere. We have a real problem in the south-east and we need a fair assessment of the demographic and population density pressures on our services. Above all, we need a joined-up approach, not the existing fire-fighting approach mentioned by the hon. Member for Winchester.
12.19 pm
The Parliamentary Under-Secretary of State for Health (Ms Hazel Blears): In the short time available to me, I shall endeavour to deal with the majority of points raised by hon. Members. If I do not have time to deal with specific points, details or technicalities, I undertake to write to hon. Members.
I congratulate the hon. Member for Winchester (Mr. Oaten) not only on securing this debate, but on the way in which he presented his case. It was a pity that the hon. Member for Oxford, West and Abingdon (Dr. Harris) should have accused him of being over-charitable. A debate is obviously taking place between the two hon. Gentlemen on where they eventually want to position themselves, and we will all be delighted to see the result.
The hon. Member for Winchester made some important points. Indeed, hon. Members representing seats throughout the region raised issues that we all see on our visits and experience in the community. He made some suggestions about the formula, and I shall respond to them in detail.
I pay tribute to the Winchester and Eastleigh trust. It is doing an excellent job; I have seen the presentation made by Mr. David Livermore, the chief executive, on the funding pressures faced by the trust. It is a beacon site, and I am delighted that it is delivering all its targets. I acknowledge Mr. Livermore's drive to try to deliver on budget, and his difficulties in achieving it.
The hon. Member for Winchester asked for the new census data to be used as quickly as possible, as it would ensure a more accurate formula. I am told that we will be using the new census data, but that the administrative processes involved will mean that it is likely to take another two years for it to be fed fully into the formula. However, if I can shorten that time, I shall do so. It is important to all hon. Members that that up-to-date information should be available. Most of us know how fast our communities can change during a 10-year period. It is therefore important to make sure that the information is up to date.
The hon. Gentleman asked whether we could take the fixed administrative costs out of the formula, so that it was targeted at health needs rather than administrative functions. It would probably be a difficult task—these things always are, and formulae are complex—but I could ask the review body to consider that aspect. I
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would welcome suggestions from the hon. Gentleman and other hon. Members on what fixed costs might be taken into account.
The hon. Gentleman asked about market forces and the pay element of the formula. I am told that the university of Warwick was asked to review the number of pay zones incorporated in the formula this year, and I am told that the number of zones has increased. The market forces factor has been updated as a result, so that it is a little more sensitive to the wage rates that are being paid.
The hon. Gentleman also asked about the transitional costs of shifting the balance of power and whether they would be met. I am informed that £55 million will be provided transitionally in 2002–03 and 2003–04 to meet those costs. Pressure on the delivery of health care would be lessened as a result of being able to meet the inevitable transitional costs. Once the shift in the balance of power is completed, administrative savings of about £100 million will accrue from the reduction in the number of health authorities, but transitional costs are inevitable.
Mr. Oaten: I am grateful to Minister for answering those points so clearly. Will she confirm that although there may be a review to consider the impact that market forces have on wages, the market forces element of the formula should consider also some of the other issues that have been mentioned this morning, such as property prices, because market forces have an impact not only on wages, but on many other aspects of health care provision?
Ms Blears: I take the point made by the hon. Gentleman. Some factors in the formula relate to housing, but they are based more on people's access to basic facilities such as central heating, indoor sanitation and other traditional factors of deprivation that have been included in Government formulae for many years. However, housing costs are not specifically included. The hon. Gentleman makes an important point.
My hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) made the interesting point that, in addition to the number of elderly people in communities, the health needs of young families are also a factor. I hope that hon. Members will be aware that there are competing internal tensions and contradictions in trying to provide fairness for different areas of the country, for different groups in the population and for those with different health needs.
Although many hon. Members have mentioned the increase in the number of elderly people who are living longer and, therefore, causing health costs to rise, life expectancy is lower in some areas of the country than in others, which require extra funding to address the social deprivation that leads to lower life expectancy. As my hon. Friend the Member for Milton Keynes, South-West and the hon. Member for Winchester recognised, including health inequality in the formula and directing funds towards areas of greatest need is entirely proper, although staff recruitment and retention, housing costs and economic pressure in the south-east must also be taken into account.
I hope that hon. Members of all parties will recognise that in devising a formula, it is important to target resources on the areas of greatest need. It is a matter not

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of counting heads, but rather of directing health service resources to the places where people are more ill more often and die earlier, as well as providing the continuing care that is important for communities.
My hon. Friend the Member for Milton Keynes, South-West acknowledged the progress that has been made on extra capacity in the past few years. To set the debate in context, there has been an increase this year in health service spending nationally of almost 10 per cent., an extra £601 million this year for the south-east, and an increase in social services spending over the past five years of about 20 per cent. compared with an increase in the last five years of the previous Administration of only 1 per cent.
There are pressures. Far too many people wait too long for treatment, far too many people wait in hospital to be discharged and I accept that there are huge pressures in the south-east, but that must be seen in the context of significant and substantial increases in national health service investment. I hope that hon. Members will build a consensus around the need for increased and sustained investment in the health service, not just in the next few years but hopefully, for a long time to come, so that we can redress decades of underfunding.
My hon. Friend the Member for Milton Keynes, South-West is right that we must do more to encourage imaginative housing schemes to give people a first step on the housing ladder. That is incredibly difficult when one considers the average house price in the south-east. NHS Estates is now involved in a large-scale programme of shared ownership and shared equity schemes, trying to utilise parcels of NHS land together with developers so that part of the development provides affordable housing units for staff. We are facing exactly the same problems with teachers, police officers and other public sector workers.
My hon. Friend the Member for Portsmouth, North (Syd Rapson) made some extremely good points on behalf of his community, which took into account the
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economic expansion in the south-east. That is a driver and the engine of our economy, so it is vital that we deal with the issues of housing and recruitment.
The remarks of the hon. Member for Fareham (Mr. Hoban) must be set in the context of the increased investment in his local area of £48 million this year. He mentioned chiropody and dentistry. I am afraid that hundreds of dentists withdrew from the national health service when their contracts were changed in the early 1990s. That decimated NHS dentistry. We are doing a great deal to bring those dentists back, but it is not easy. I am pleased that he has a dental access centre in his constituency and I hope that he will visit it. We shall do what we can to increase the number of NHS dentists.
The hon. Member for Tunbridge Wells (Mr. Norman) was especially concerned about delayed discharges. I am pleased to be able to tell him that delayed discharges in the south-east have decreased by 183 since last September as a result of the extra £100 million invested last year and the extra £200 million that will be invested in the forthcoming year. I think that, in his area, £2 million was invested this year and £4.5 million will be invested next year. I am not saying that that will solve the problem because we all know what problems exist, but there is increased investment. It is not only about providing increased investment for bricks and mortar. It is also about providing more domiciliary care support in people's homes to keep them independent. An awful lot of elderly people do not want to go into residential care; they want support at home, which is what we are trying to provide.
The hon. Member for Romsey (Sandra Gidley) commented on the funding of primary care trusts. They have been involved in the whole service and financial frameworks round. They will inherit health authorities' assets, as well as their liabilities. From now on, they will be the power and the driving force in health communities. It is right that they will make decisions about priorities in consultation with their local communities.

Housing (Hyndburn)
12.30 pm
Mr. Greg Pope: I am grateful to have secured this debate on housing in Hyndburn, which is undoubtedly the most important issue facing my constituency. I am also grateful for the opportunity to place on record my thanks to my noble Friend the Minister for Housing and Planning, Lord Falconer, for visiting my constituency at my request in October 2001. He also visited the neighbouring constituencies of Blackburn, Rossendale and Darwen, Burnley and Pendle, which have virtually the same housing problems as Hyndburn.
It is fair to say that my noble Friend was shocked by what he saw. Of course, he met councillors, Members of Parliament and local authority and private sector representatives, but, most importantly, he met people who live in my constituency. I took him to Lonsdale street in Accrington, once a sought-after place to live, but now a place where decent families try their best to bring up their children in the most appalling housing conditions. I showed my noble Friend an abandoned and derelict housing block, which has been vandalised, which is regularly set on fire and which is infested with rodents. Yet, houses in the middle of the block and facing it are occupied. In 2002, people are living there in the most appalling conditions.
The raw statistics make pretty grim reading. In the borough of Hyndburn, 9,000 houses are unfit for human habitation. Of those, 8,000 are privately owned. Some 2,700 houses have been abandoned. They have no value, and people simply walked away from them when they could not sell them.
In the statistical appendix to its 2001 housing investment programme bid, Hyndburn council estimated that the cost of making fit the unfit private homes in the constituency was about £180 million. In the last year for which I could obtain figures, the council was spending slightly more than £1 million on the problem. In best value performance indicator BVP162, the Government asked what percentage of unfit private houses the council had made fit or cleared during 2000–01—the last year for which figures are available—and the council's answer was 1 per cent.
It would be easy for me as the Labour Member of Parliament for Hyndburn to point the finger of blame at Tory-controlled Hyndburn council, particularly as we have all-out elections in early May. I shall not do that, however, for two reasons. First, the people who live in such housing deserve better from their elected representatives than cheap point-scoring. On such issues, it is better for us to forget our politics. I, the Government and Hyndburn council—whoever runs it—should work together for the good of those people.
Secondly, the problem is not really the council's fault, because it does not have the resources to put right the problems that my constituents face. The majority of homes in Hyndburn—more than four out of five—are privately owned. Of those, 30 per cent. are unfit for human habitation and another 10 to 15 per cent. are becoming unfit. As Lord Falconer would testify, the statistics do not do justice to the scale of the problem. One needs to meet the people who are trapped in those houses—people like Robert Treasure of Steiner street in
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Accrington, whom I had the privilege of meeting last year when I went to his home. The conditions in which Mr. Treasure lives are almost unimaginable. It is not an exaggeration to say that he exists in the sort of Victorian squalor that most people would have thought had been swept away generations ago.
An elderly lady from Accrington came to my advice surgery close to tears. She had moved into a property on Pearl street when she got married, after the second world war, then a nice part of Accrington, but now something approaching a war zone. Houses are abandoned and wrecked, and unscrupulous landlords buy up properties for next to nothing and put in them people with drink and drug problems. She cannot move—she is trapped; nobody would give a mortgage on a property in Pearl street. Her only chance of getting out is if the council demolishes the street—I hope that that will be done soon and think that it will be.
During the general election, I met a lady living on Garbutt street and asked her for her vote. She said that she would not vote for me or my opponent; she had been let down by everybody of every conceivable political party. She was right—if I had lived in her house I would not have voted for me. It is a badge of shame on the reputations of all who seek to represent people like that lady that she is still living in those conditions. We have seen a complete collapse in the housing market in parts of my constituency. There is a cycle of despair in which the prices of properties are so low in some areas that they are completely worthless.
In Lambeth, not far from where I have a London flat, there is a terraced house for sale with an asking price in excess of £300,000. In parts of my constituency, that property would not be worth a tenth or even a hundredth of that. People are trapped in negative equity. They are unable to sell or to move and houses are abandoned; there is a surplus of houses in the market. We have a doughnut effect: in the inner parts of towns, the market is collapsing or has collapsed, and on the edges of towns, new build is very popular. My constituency is a collection of small mill towns that are proud of their historic distinctions. Residents do not want to see a blurring between Great Harwood and Clayton, Clayton and Rishton or Oswaldtwistle and Accrington. However, there is huge pressure on new build on the green belt areas between the towns, whereas in the centres of towns the housing market has collapsed.
In parts of my constituency, renovation will not be enough. The houses are just too poor to repair. In other areas it is not worth repairing them because there is no market for that kind of housing. It is increasingly clear that we shall have to demolish a large number of houses. That should have been done in the 1960s, as it was in places such as Sheffield, Liverpool, Manchester, Newcastle and all the major cities. Demolition did not happen in east Lancashire partly because of the structure of local government. In my constituency alone, there were half a dozen tiny urban district councils, which did not have the resources to clear those properties. They have been replaced by slightly larger district councils, but they, too, are far too small—Hyndburn council does not have the resources for clearance, nor does Pendle or Rossendale. The irony is that city authorities are now getting grants from the

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Government to knock down the houses with which they replaced the terraces—in east Lancashire we have not even replaced the terraces.
Last summer saw large-scale disturbances in the neighbouring constituency of Burnley. There is no doubt in my mind—and none in the minds of anyone who has been to Burnley and knows east Lancashire—that the appalling housing conditions were a contributory factor to those disturbances. We were extraordinarily lucky that those disturbances did not spread to neighbouring boroughs, such as Hyndburn to the west and Pendle to the east. The taskforce report on the disturbances states:
"In almost every sense it is clear that, whilst Burnley is not a city, it experiences all of the chronic problems associated with inner city deprivation."
That is true for not only Burnley but Accrington, Nelson, Colne and large parts of Rossendale and Blackburn. If we do not want a repetition of those problems, we must face the fact that we need to invest in those areas.
When Lord Falconer visited east Lancashire, he invited the local authorities to submit a 10-year bid. It is clear that we could double the amount of money that Hyndburn council has next year, or triple or quadruple it, and that it would not make that much difference. A one-off payment will not resolve the problems. We must have year-on-year investment, for which we need a 10-year programme of housing renewal.
This is not simply a Hyndburn problem; it would be appalling enough if it were confined only to my constituency, but all the neighbouring towns and constituencies have the same problems. Throughout the sub-region, which includes Blackburn, Hyndburn, Burnley, Pendle and Rossendale, half the houses were built before the first world war. We have twice the national average of private homes that are empty and abandoned and a quarter of the housing stock is unfit for human habitation. It was with that background that the east Lancashire partnership, acting on behalf of all the local authorities in east Lancashire, submitted a 10-year bid, which will cost in total some £670 million.
If that bid were successful., we would be able to remove the surplus housing stock by clearing the worst of it. That would enable us to remodel the housing market, which we desperately need to do to stop the doughnut effect and make it worth while to live in the inner part of Accrington or any of the other towns in east Lancashire. It would also enable us to improve our neighbourhoods with grants and loans and some environmental work. Therefore, I cannot impress enough on the Minister how important it is that the bid be successful. My purpose in securing the debate is to urge the Minister and the Government to support the bid. We can make a huge difference to the lives of tens of thousands of people in my constituency and east Lancashire as a whole.
The lady whom I met during the general election said that politicians of all parties had failed her, and she is absolutely right. A Conservative-controlled council is failing her, but she was equally failed by Hyndburn council when it was a Labour-run authority. She was failed by a Conservative Government for 18 years and she is being failed by this Government. She was failed by my predecessor, Ken Hargreaves, who was a good
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Conservative MP, and she is being failed by me as well. We have a once in a generation opportunity to put the matter right and make a difference to that lady and others like her who are living in unfit housing in my constituency and in other constituencies. I urge the Minister to join me to make a difference.
12.48 pm
The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Ms Sally Keeble): First, I congratulate my hon. Friend the Member for Hyndburn (Mr. Pope) on securing the debate and describing eloquently what is, for him and other hon. Members, a pressing and important matter that touches the lives of many of their constituents. The Government fully share his concerns, and I am glad to have the opportunity to set out the Government's view. The hardship that my noble Friend the Minister for Housing and Planning saw in the Lancashire towns when he visited them impressed itself upon him. I have not visited Hyndburn, but I have certainly seen similar areas in the north and in parts of the midlands as well.
The issue of housing in Hyndburn is part of a broad east Lancashire housing problem. East Lancashire towns in general are characterised by high proportions of aged, privately owned terraced houses in poor condition. More than 60 per cent. of the stock was built before 1919—my hon. Friend referred to somebody who moved into such a house after the war. Presumably, over the years, the structural state of that house will not have changed much. I am sure that people will have made many improvements, but not such as to deal with some of the structural difficulties of that type of housing.
The continued existence of such housing means that there are surplus supplies of obsolete housing. My hon. Friend referred to the problems in Burnley and elsewhere—the disturbances during the summer—and it is clear that housing was an important contributory factor. Housing issues, including housing disadvantage and decay, are overlaid by racial and ethnic divides.
As my hon. Friend rightly said, the problem of low demand is not unique to Hyndburn—it is shared with neighbouring areas in east Lancashire and other areas throughout the north and the midlands, particularly in parts of the east midlands. It is, in many respects, a reverse image of the difficulties in London and the south-east. The challenge for the Government in the low-demand areas is to deal with obsolete housing and recreate value where the housing market has completely collapsed, whereas the problem in London and the south-east is to mitigate the effect of very high values in areas of high demand such as the part of Lambeth described by my hon. Friend. The Government have to deal with both of those problems, recognising that they require different solutions but are both intensely human.
The Government are committed to tackling low demand and we have set ourselves the target of reversing declining demand by 2010. One of the main reasons why we attach so much importance to that is that low demand blights communities and people's lives. The symptoms are cruel and immediately apparent in east Lancashire and elsewhere. As my hon. Friend said, people no longer want to buy or live in the mostly terraced housing, so row upon row of houses are boarded up, vandalism is rampant and crime is increasing

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Once decline sets in, it is hard to reverse. The people who are left feel under siege in their own communities and are unable to move out. Unfortunately, we are faced with this kind of decline in too many communities throughout the country. The housing problems caused by low demand are overwhelming the capacity of all agencies to respond to this and other aspects of regeneration.
It might help my hon. Friend if I set out some points about the Government's contribution before talking about the housing market renewal fund, which is extremely important.
Nationally, as we made clear in our housing policy statement in December 2000, we are committed to addressing housing problems across private sector tenures, which are particularly prevalent in my hon. Friend's constituency, and those in the public sector, as part of our strategy for housing renewal and tackling social exclusion. Local authorities have a vital role to play in that and we have substantially increased the resources available for housing investment. Allocations to authorities for the coming year will total £2.6 billion, three times the amount provided by the last Conservative Government.
I understand why my hon. Friend made certain points about his constituents having been failed, but the Government recognise the difficulties and we have policies in place to tackle them. It should be borne in mind that the problems were a long time coming and that resolving them fully will be a difficult, long-term job. A large part of the overall spending will go towards delivering our commitment to bring all council housing up to a decent standard by 2010. However, authorities' housing programmes fund a significant amount of private sector housing renewal work—local authorities currently spend more than £250 million a year on more than 70,000 dwellings.
We are providing considerably more funding this year for the north-west—an extra £55 million through the housing investment programme—and some £9.7 million has been allocated to east Lancashire local authorities this year for improving housing through the housing investment programme. This investment programme is due to increase by nearly 20 per cent. in England during the next three years.
Some 21 authorities in the north-west region will share an extra £243 million over the next three years through the neighbourhood renewal fund, which deals with some of the wider regeneration issues in my hon. Friend's constituency and in other towns in the north-west. In east Lancashire the neighbourhood renewal fund will provide an extra £20 million for regeneration during the next three years. That extra funding will enable those authorities to make significant improvements to living conditions in their area and give homeowners the incentive to invest in their homes.
Apart from neighbourhood renewal and the increased funding from the housing investment programme, there are also proposals, which my hon. Friend rightly identifies, for a market renewal fund that will deal specifically with the need to restructure the housing markets in some areas, particularly in the north-west, and create value where presently there is none. That is
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the nub of many of the problems in my hon. Friend's constituency. Many people have come to the view that combating low demand will require intervention, particularly at the sub-regional level.
We have received comprehensive proposals for a housing market renewal fund from several different authorities and we are considering them as part of the current comprehensive spending review. The review will conclude in the summer and at this stage I cannot say any more about the prospects of finance for the proposals, although this debate will help to raise the profile of the issue and underline the importance of ensuring that difficult housing issues are properly understood by the Government.
However, whatever the outcome of the spending review, action should not be postponed, and we look to local authorities to make a start. Inevitably, there are difficult choices to be made. Restructuring the housing market can mean managing the decline of an area, removing obsolescent housing and reducing the scale of new building. That requires engaging people in a real and honest debate about the future.
It can be very uncomfortable for people to think in terms of their house or housing in their community or area being either demolished, partially demolished or substantially changed. The situation requires stakeholders to work together in a genuine partnership. Hyndburn must, of course, play its part in that. I acknowledge the work of the east Lancashire partnership, which provides a sound foundation on which to build, and it might be of help to set out some of its work to find a long-term strategy for the problems that it faces.
The east Lancashire partnership and the east Lancashire housing forum have been considering new ideas and jointly devising some ways forward. My hon. Friend has made the case well that the problem does not exist solely in one area, so the solutions will not be found inside one local authority boundary. The east Lancashire partnership strategy was launched almost two years ago. It sets out a vision for east Lancashire in 2020 and identifies the significant challenges that the sub-region faces in tackling the problems of a declining, low-wage, low-skill economy, with the attendant problems of poor health and housing, dilapidation and crime. The vision is of east Lancashire offering city living in a rural context, with services for the 500,000 inhabitants planned accordingly.
The strategy envisages a new, integrated transport system run along the lines of those in metropolitan passenger transport authority areas, an expansion of cultural and sporting activity and of higher education opportunities and higher retention rates. However, it is also clear that the number one priority will be to tackle the acute housing problems. The strategy has been produced as part of the Local Government Association's new commitment to regeneration programme, and east Lancashire is one of the 22 pathfinders nationwide.
The Government office has played a part in advising on and supporting development of the strategy, including regular review meetings with the partnership. The strategy is a voluntary document, as there is no statutory requirement to produce it. However, local

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strategies are becoming increasingly important in combating problems such as those faced by my hon. Friend's constituency.
The east Lancashire partnership housing strategy was published a year ago, following detailed research by consultants and extensive consultation. It sets out an appreciation of the demographic, physical, economic, social and environmental factors that are the main drivers of the sub-region's market across all housing sectors. Its proposed solutions are very much in line with Government policies and mirror ideas on urban regeneration and emerging initiatives, including neighbourhood renewal and the new deal for communities. Those largely depend on successful lobbying for new resources, and the strategy provides a framework that should help the partnership to make a more cogent case. I am sure that my hon. Friend and Members of Parliament for neighbouring constituencies will play an important part in that.
Partnership between authorities and other agencies in the area is key if we are to make an impact on the problems. I urge my hon. Friend to encourage people in his constituency to strengthen further the ties between different parts of east Lancashire, for the good of the whole area.
It might help my hon. Friend if I say something about his local authority's housing performance. The local authority has made considerable progress. I take his point about his constituents feeling that they have been failed by it, but it is important to give due credit for its efforts to overcome problems. Officials conduct annual assessments of all local authorities' housing performances, and Hyndburn has some strengths. It is to be commended for the inclusive nature of its housing policies. The council manages 3,800 homes, which are distributed across the borough. There have been some clear achievements, partly as a result of a policy for
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ethnic minority groups. I am sure that that policy went a considerable way to ensuring that my hon. Friend's area did not see problems of the sort that occurred elsewhere in the summer.
Mr. Pope: I deliberately did not attack Hyndburn council. Its officers do a good job, especially Ken Bury, the director of housing, so I am grateful for the Minister's points about the council's record. Its difficulty is one of resources.
Ms Keeble: When a local authority has such massive problems but is clearly taking steps to deal with them, it is important that it is given some credit. It has also done some good partnership work and has made progress on providing decent homes. There is scope for improvement on some issues, as it would be the first to recognise, but it is important that the council continues its constructive and long-term strategic approach towards tackling some problems.
I said at the outset that we were dealing with serious and long-term problems to which there are no easy or quick fixes. There is a clear role for the local authorities to work with others, including regional partners. The Government are committed to playing their part in tackling the real but often under-recognised problem. We need to ensure that people with roots in those communities and a long-term commitment to them, who have seen the area's decline over the years, do not feel let down by their council, Government or MP. They must be able to see that policies are being put in place to deal with their financial security—after all, most people who buy their homes see them as their bedrock financial security. They must also see a way forward for their community, so that it can be restored to the kind of condition that they often look back to. They can then lead much more constructive, safe and secure lives.

NHS Waiting Times
1 pm
Mr. Gregory Barker: I was grateful to be drawn in the ballot for debates, because escalating NHS waiting times are a matter of extreme concern to my constituents, and I am grateful to the Minister for taking time out of her day to reply to me.
Since I entered Parliament last June, many of my constituents have entreated me to take up their cases. Some, of course, are trivial, but many are important—often desperately so—to the person writing. All hon. Members must find that many people turn to them as a last resort. Despite a huge mailbag, however, nothing has moved me more than the plight of cancer patients in my constituency, who now face the most dreadful and stressful wait for treatment following surgery.
The issue was first brought to my attention by a remarkably brave and sensible lady, who was diagnosed with breast cancer on 21 November. To the Government's credit, she was referred promptly for surgery, but what followed was totally unacceptable. Her surgeon advised her that she would need to begin radiotherapy within four to six weeks. Six weeks elapsed, but her calls to the hospital did not result in an appointment. She went back to her surgeon, who said that he was powerless to begin radiotherapy and that the decision lay with the hospital managers. Eventually she was told that she would begin treatment on 25 March, a full 16 weeks after surgery. At a time when she should be focusing all her energy on healing, her condition is being compounded by having to deal with NHS bureaucracy. She has had to face yet more stress and anxiety, which can only have hindered her recovery. She has still to begin her radiotherapy treatment.
When the issue was first brought to my attention, I wrote immediately to the Secretary of State to seek his intervention. Such was the urgency of the case that I not only wrote, but faxed the letter to his private office. My office followed that up with a telephone call on 8 February. The issue was clearly urgent, but despite raising it on the Floor of the House and chasing an answer to a parliamentary written question, I succeeded in securing an answer from a Minister only on 4 March. I appreciate that many increasingly vocal demands are being made on the Government by people who are competing for Ministers' attention, but given the personal nature of my intervention, the Government's response time was nothing less than disgusting. I hope that the Minister will deal with that specific point.
Since I first highlighted the case, other people have contacted me. My constituent's experience was not an isolated incident. Sadly, she is just one of the many victims of a system that, under a Labour Government who are approaching their sixth year in office, faces chronic shortages of staff and equipment.
Britain has about half the number of radiotherapy machines per million people that France and Germany have and a third the number that the United States has. The problem is compounded by a national shortage of radiographers. There are about 500 vacancies across the country, including five at the Maidstone and Tunbridge Wells NHS trust in my area. This morning, following a meeting, I received a letter from the trust's chief executive, which concludes:
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"We are also suffering with the additional constraints of the lack of medical manpower, currently 40 per cent. mean national vacancy and 33 per cent. local vacancy. The frustration"—
that of my constituent and others—
"is shared by us all, and whilst we are trying to improve matters, I am sorry that I cannot be of much help in reducing your constituent's wait for her Radiotherapy treatment at present."
We are told that, historically, we have failed to train enough specialists and that it takes time for them to come through the system. However, a third of the people who train as radiographers never enter the profession because of pay and conditions in the NHS. Of the 34 new radiotherapy machines acquired by the NHS in the last two years, most have been used to replace existing equipment, rather than to provide a material increase in capacity.
The experience of my constituent is typical of that of thousands of cancer patients throughout the country who find themselves quickly referred into the system. However, once they have ticked the box to hit the headline target of prompt referral, they are starved of the necessary care and treatment to be certain of full recovery—driven, effectively, into a deadly bottleneck. I know that Ministers work long and hard to try to deliver a better health care system, but the new Labour preoccupation with just a few selective headline targets is conning the British public into a false sense of security. A quick first-rate referral is vital, but it is by no means the whole picture.
It is no wonder that Britain still boasts among the worst cancer survival rates of any country in Europe. At the cancer care summit in November 1999, Britain was famously described as having a third world level of cancer care. Other countries in Europe spend far more per head of population on cancer drugs than the UK does. According to a report in the British Medical Journal, chemotherapy spending in the UK works out at only 95p per head, compared with £3.31 in Italy and £6.24 in Germany, and the Royal College of Radiologists reports that the number of patients waiting for a dangerously long time for treatment has doubled in two years. The number of patients starting radiotherapy within the Government target of four weeks since their consultant recommended it has fallen from 68 per cent. in 1998 to 32 per cent. in 2001. The author of the report, Dr. Nick James of Birmingham university's institute for cancer studies, has said that patients are dying while they wait, due to widespread failure to meet waiting time targets. According to the royal college's report, waiting times for radiology are rising in all parts of the UK, apart from Wales and Northern Ireland.
The average wait rose from 5.1 weeks in 1999 to six weeks last year. However, as evidenced by my constituent's experience in the Maidstone and Tunbridge Wells NHS trust, there are huge regional variations. It is particularly bad in the south-east—I believe that there was a debate earlier today about the funding and resourcing of health care there. Rather than confront the appalling situation head on, Ministers have consistently tried to hide behind other, more flattering, statistics. When questioned in the House of Commons on 6 March concerning this genuine crisis in radiology, the Prime Minister immediately fell back on referral statistics for surgery, rather than face up to the difficult issues of chronic waiting times for follow-up treatment, particularly radiology.

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Sadly, the Government's prioritisation of cancer has done little to improve the care of cancer patients. In the recent study by the Royal College of Radiologists, 21 per cent. of lung cancer patients who were curable when diagnosed were found to be incurable by the time that treatment began, and it was found that, on average, patients' tumours tripled in size while they waited for their radiotherapy to begin. The same report also chronicled doctors complaining that they had to lie to patients because, although they knew of drugs that could help sufferers, they also knew that they could not afford them.
Whereas 20 per cent. of breast cancer patients in Europe receive drugs to alleviate the side effects of chemotherapy, in Britain only 5.9 per cent. do. Cancer patients in the UK have their chemotherapy doses reduced to avoid the onset of neutropenia—which reduces protection against infection—in order to ensure that they do not need the expensive drugs required to counteract it. A study by doctors at Addenbrooke's hospital in Cambridge showed that 32 per cent. of breast cancer patients receive sub-optimal treatment as a result of the rationing.
Results collected by the recent World Health Organisation survey are expected to show that as many as 10,000 lives could be saved each year in the United Kingdom by raising cancer care to the European Union average. But cancer is not the only area that is affected by chronic waiting lists. More than five years on from that modest 1997 pledge to reduce in-patient waiting lists by 100,000, that famous Labour pledge remains broken. According to the January figures, more than 1 million patients are still waiting for treatment, despite unprecedented attempts to massage down the figures, including the creation of waiting lists to get on to waiting lists.
Pressure from Whitehall to reduce headline figures at all costs found its nemesis at the end of last year when the National Audit Office exposed a record of what it called "deliberate manipulation" of waiting lists over four years at hospitals throughout Britain. The NAO report found that one in five of 300 hospital consultants who were interviewed said that they had frequently prioritised patients not according to medical need, but to meet waiting list targets. Surrey and Sussex Healthcare NHS trust put only urgent patients on waiting lists and offered appointments at short notice or when patients were on holiday.
One of my constituents in Bexhill had a similar experience. She was left perplexed and angry after she had filled in a form for treatment at the Conquest hospital in Hastings last autumn, only to be promptly offered treatment in the one specific period that she had ruled out while she took a long awaited week's holiday abroad. St. Bartholomew's hospital was reported as having amended patients' records to make it look as though they had been treated on time. The BBC reported that more than 6,000 patients were affected. The NAO said that the condition of many
"may have deteriorated during the wait."
Figures released last week, on which I hope we can rely, showed that more than 36 per cent. of NHS trusts still had patients waiting for more than 15 months for in-patient treatment. I have spoken a great deal so far about the plight of cancer patients, but that is by no
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means the only area that is affected. In advance of the debate, the Patients Association provided me with information from its report on NHS ophthalmology waiting times. It found that, in the United Kingdom as a whole, only 1 per cent. of authorities and boards can offer patients a routine appointment with an ophthalmologist within a month.
The average waiting time throughout the United Kingdom for routine referral to an ophthalmologist is three to six months, during which time a patient's eyesight can seriously deteriorate. Furthermore, the report found many cases of the waiting time governed not by clinical need, but by trivial indicators such as postcodes. In March 2000, it was reported that the number of heart bypass operations fell for the first time in 25 years as a result of a shortage in intensive care and recovery beds. At the time, Mr. Jules Dussek, president of the Society of Cardiothoracic Surgeons, speaking on Radio 4, said:
"This kind of operation is not one you can wait for…there is a risk of dying while waiting."
He said that doctors were twiddling their thumbs while waiting for the necessary beds to be made available.
A recent survey found surgeons operating at 25 per cent. below usual rates. In 2000, the average surgeon carried out 170 coronary artery operations compared with 250 in 1995. What should the Government do to drive down the dangerous and unacceptable level of waiting lists in Britain? First, they should have the honesty to acknowledge their failure to make real headway over the past five years and cease hiding behind selective targets that do not tell the whole story. Karol Sikora, the professor of cancer medicine at Hammersmith hospital where radiotherapy waiting times currently stand alongside those in Brighton and Maidstone at three months, told The Observer on Sunday 3 March:
"Waiting times are getting worse, but because of the government spin, expectations are getting so much higher."
Secondly, the Government should give doctors and surgeons greater autonomy to tackle clinical priorities. They should stop imposing artificial targets to flatter Labour's selective election promises. Thirdly, the Government should address the chronic regional imbalance in waiting times. My constituents are routinely referred to either the Conquest hospital in Hastings, Eastbourne district general hospital, or the hospitals of the Maidstone and Tunbridge Wells NHS trust. All those hospitals face an average occupancy of about 95 per cent.—way above the Government's optimum occupancy of 82 per cent. No wonder waiting lists in the south-east, and particularly East Sussex, are spiralling.
The Government's cash for change programme offered some temporary relief from regional bed blocking, but I understand that it expires at the end of the month, and there is no sign of further funding to replace it. I should welcome a comment from the Minister on the future of cash for change. Most of all, the Government need to change the way in which the NHS works. Ministers are still running that vast organisation on lines that would be only too familiar to its founders in post-war Britain. The working habits of Britain have moved on, but not those of the Whitehall-dominated NHS.

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People are dying because they cannot get the necessary treatment in time, yet right across the health service valuable equipment procured at great expense to the taxpayer—equipment for which there is huge demand—sits idle at weekends and in the evenings. In the 21st century we can do our supermarket shopping 24 hours a day and our banking round the clock. Shops and services are increasingly available on Sundays, but our hospitals close promptly at 5 pm on a Friday. We can go to Tesco at the weekend and can change our direct debits out of hours, but we cannot get life-saving medical treatment. Too many hospitals close for all but emergency treatment at 4 pm at the end of the week.
My constituent with breast cancer had the misfortune to require treatment shortly before Christmas, just as the system was beginning the big seasonal shutdown. Although the rest of Britain is able to cope with the flexibility of the demands of the 24–7 consumer—evenings, weekends and bank holidays—the NHS seems stuck in a 1940s time warp. It is time to throw open the doors of the NHS and allow patients round-the-clock access to vital equipment and services. The Prime Minister told the country in 1997 that it had just 24 hours to save the NHS, but as Labour approaches its sixth year in office, waiting lists are worse and the number of trained medics coming into the system is failing to rise to match the needs of today's NHS.
I do not doubt the Minister's sincerity in wanting to improve the NHS, but until the Government have the guts to admit their failures and confront the scale of the problem in an honest and transparent way, patients will continue to suffer.
1.17 pm
The Parliamentary Under-Secretary of State for Health (Yvette Cooper): I congratulate the hon. Member for Bexhill and Battle (Mr. Barker) on securing a debate on NHS waiting times, which is clearly an important issue not just for his constituents but for people throughout the country. Surveys of public opinion have repeatedly shown that waiting times are a key concern of NHS users. We recognise that concern, and as part of the commitment to building a modern NHS it is important that access to services becomes faster and more convenient. Reducing waiting times is a main priority for the Government and lies at the heart of the NHS plan.
The Government have already made significant progress in reducing waiting times for secondary care, and, as part of the NHS plan, the maximum in-patient waiting times will fall on a staged basis in the next few years to reach six months by 2005. Similar reductions are planned for out-patients too. Most out-patients are already seen within six months. By the end of March that will be an absolute requirement, and by the end of 2005, the maximum waiting time for a routine out-patient appointment will be halved from more than six months to three months. Under those new guaranteed maximum waiting times, patients will continue to be treated according to individual assessment of clinical urgency.
Two things are needed to improve waiting times. Capacity must be increased, and the NHS and its processes must be reformed. To increase capacity,
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additional investment in the NHS is needed. That is why the Government have put record levels of additional investment into the NHS during the past few years, and we must continue to do that.
The East Sussex, Brighton and Hove health authority was given £596.7 million for the current financial year, which is a 5.8 per cent. increase in real terms and an 8.4 per cent. increase in cash terms. Overall, investment has doubled during the past few years, compared with the historical average increase in investment. That is because, historically, the NHS has been underfunded; it has had a legacy of long-term underfunding, and it needs additional investment, which it is now receiving.
Additional investment is not the only necessary measure. The way in which the NHS provides care must also be reformed. The hon. Gentleman raised concerns about cancer care. The key issue with regard to that is to shorten waiting times at every step along the way, and to ensure that patients have access to top-quality care. The Government have drawn up the first national cancer strategy—"The NHS Cancer Plan". It is a 10-year plan, and it is part of the NHS 10-year plan. For the first time, we have a national strategy to deal with cancer all the way through from prevention, to diagnosis, to treatment, to palliative care.
With regard to waiting times for cancer care, the key issues concern not simply the time to in-patient treatment, as they do in some other areas. For cancer sufferers, it matters how long one has to wait to see a specialist and to undergo diagnostic tests, and how long one has to wait for different stages of treatment. This information has not previously been gathered in the NHS—previous Governments have not done that—and targets on the whole cancer process have never previously been set. It is important that that has now happened, as part of the NHS cancer plan, because we need to improve the cancer care that people receive throughout the country.
That requires improving the information that we gather on cancer care. It also requires improved investment and reform. There will be extra capacity for cancer services and extra cancer specialists—by April, there will be 428 extra cancer consultants, compared with April 1999. There will also be new cancer equipment—27 new MRI scanners, 66 new CT scanners, and hundreds of extra new pieces of breast cancer equipment. We must continue to increase capacity with regard to specialists and equipment.
It is also necessary to reform the way in which people are provided with cancer care, and that is why the cancer collaboratives were established. They have been doing impressive and innovative work, by reforming the way in which care is provided and by focusing on patients and their needs. For example, the cancer collaborative in west London has cut the diagnosis time for prostate cancer from 20 weeks to 14 days, simply by changing the way that it provides the service. Wirral hospital has halved the waiting time for treatment for prostate cancer. On average, since the cancer collaboratives were introduced, there has been a drop of two and a half weeks in waiting times for treatment.
The overwhelming majority of cases that are urgently referred to specialists are seen within two weeks. I welcome the hon. Gentleman's endorsement of the increase in the speed of referral, but I wish to impress

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upon him that that was not easily achieved. Huge improvements have been made as a result of considerable work by not only specialists, but GPs and support staff throughout the country. He is right to say that it is essential that people are seen speedily. It is also essential that they are diagnosed speedily, and that we speed up time to treatment. That is why we introduced the new target for the time taken to see a specialist, and it is why we are also gradually introducing new targets, stage by stage, for every other section up to treatment.
New targets for times to diagnosis and treatment are already being introduced. From last December, there has been a maximum one-month wait between urgent referral from a general practitioner to treatment for children with cancer and patients with acute leukaemia and testicular cancer, and a target for women with breast cancer of a maximum one-month wait from time of diagnosis to beginning of treatment. We need to improve treatment times across the board, which is why we put in place new targets and extra investment. It is not possible to do that without extra investment in capacity.
The hon. Gentleman asked about radiotherapy. From the beginning of the cancer plan, we had particular concerns about radiotherapy. The number of therapy radiographers is inadequate, and we need to improve facilities. Considerable work has been going on to try to improve difficult circumstances. The number of patients referred for radiotherapy has increased rapidly during the past few years following the establishment of specialist cancer teams. Radiologists have increased by 14 per cent. since 1997, and we are increasing training places for therapy radiographers at universities. Training places increased by 62 per cent. between 1996–97 and 2001–02, and by 2003–04, the projected increase will be up 120 per cent. over 1997. The numbers are increasing, but we need to go further.
We also need to consider different skill mixes in trying to improve and speed up treatment. Different skill-mix programmes are already being piloted, including the creation of a new grade of assistant practitioner, perhaps through vocational routes. The pilots continue in 10 centres, and early indications are positive.
Huge additional investment is being made in radiotherapy facilities, with replacement and additional linear accelerators being brought into operation. However, there is much to do, and we need to go further.
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The hon. Gentleman referred to cancer treatment. For the first time we have national guidelines on treatment and drugs as a result of the work of the National Institute for Clinical Excellence. Improving cancer treatment in our 10-year plan needs extra capacity and extra reforms.
The hon. Gentleman was full of complaints and laments about the NHS and cancer care, but his diagnosis and prescription were fundamentally lacking. Throughout the country, there are NHS patients who are receiving excellent care. However, it is also true that many patients wait too long for their treatment. We do not have sufficient capacity, and we need to keep increasing it. We need to continue the reforms that are making excellent progress in some areas of the NHS, and spread them nationwide.
In his diagnosis, the hon. Gentleman quoted Karol Sikora, who has said that he wants more people to pay privately for cancer care. I believe that we should provide free care according to need, not ability to pay. If the hon. Gentleman recognises the need for extra investment in cancer services and across the board to improve capacity, he needs to say where those resources should come from. The Government have set out a major programme of investment and reform not only for cancer but across the board. I hope that he will support that and the extra investment in cancer care, and the measures being taken to continue to increase resources for the NHS. If he does not, he will need to say how improvements in cancer care should take place and where he expects the additional resources to come from. For most people who suffer from cancer, it is simply not an option to pay for their own cancer drugs or treatment. The cost of providing cancer care for an individual is extremely high, and it would be morally wrong to expect cancer patients to have to pay out of their own pockets rather than receive care on the NHS.
The hon. Gentleman is right to say that waiting times are important. They are clearly more important in cases of cancer and coronary heart disease than in other areas, and that is why we made those the clinical priorities.
The hon. Gentleman referred to the need to increase the number of coronary heart disease operations. The number of revascularisations increased substantially between 1995–96 and 1999–2000—from 34,000 to 41,000—and in the first 10 months of 2000–01, more than 45,000 procedures were performed. Revascularisation is an important, life-saving procedure, which is why we have put extra money into increasing the number of operations.

National Asylum Support Service
1.30 pm
Mrs. Helen Clark (Peterborough): For more than a year, I have been concerned about aspects of the organisation and operation of the National Asylum Support Service, especially in my constituency. I sought this debate because I am concerned that problems remain, despite many measures already taken or proposed by the Government. Only yesterday, Harmesh Lakhanpaul, director of Peterborough's racial equality council, told me that, in his opinion, many problems are worse.
The local authority in Peterborough estimates that approximately 2,000 asylum seekers live in Peterborough. NASS accepts that estimate, although that took some time to establish. I emphasise that it is only an estimate, because it is impossible for the council or NASS to determine exactly how many asylum seekers there are, who they are, where they have come from and where they live. That has nothing to do with the asylum seekers themselves but everything to do with the system that sends them to the city, and the reasons for that go to the heart of the problems that I wish to debate today.
The first problem that we encountered in Peterborough, was the misinformation or lack of information concerning how many asylum seekers were to be dispersed to the city and when. Sadly, extreme language was used, promoted and published by certain individuals with a narrow and politically motivated agenda. I am sure that colleagues on both sides of the House can imagine the scenario: words such as "floods" and "swamped" were used to describe the refugees' potential impact on local services.
My office attempted to clarify the position with a NASS official on the telephone, and I was assured that no decision had been taken concerning dispersal to Peterborough. I wrote to the local paper, the Peterborough Evening Telegraph, to set the record straight. Fortunately my letter was not printed; because the following day the council heard that the first contingent of people was due to arrive shortly. Throughout the following months, I wrote to the Home Office several times suggesting that, at the very least, stakeholders such as local Members of Parliament should be kept informed of NASS decisions. Much more is necessary, but I shall return to that later.
Another fundamental flaw in the system is that county councils such as Kent, Essex, Cambridgeshire, and Lincolnshire, and London boroughs such as Westminster, have taken advantage of the relatively low rents in Peterborough to house asylum seekers sent to their areas. Once housed in Peterborough, it becomes the responsibility of the local authority to provide health education and other social support services.
Although NASS advises that it is best practice for local authorities to inform destination authorities that they are housing asylum seekers in their area, that does not always happen and there is no legislation to enforce it. Furthermore, when asylum seekers are housed in private accommodation, the local authority has found it impossible to obtain details of their names and identities. Private landlords have not been willing to share information on asylum seekers that they accommodate, and have challenged the local authority's
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need to know. Private landlords are required to identify properties being used to house asylum seekers but local authorities have no powers to prevent their use.
Local authorities cannot influence where asylum seekers are housed or ensure that appropriate facilities are locally available. Those include public transport, which is often expensive, language classes and interpretation services. Many asylum seekers are highly skilled and trained but need locally available language tuition and language support to access other services. Peterborough has a relatively large private rented market, and there has been a knock-on effect on rents. That creates problems for those moving on once asylum claims have been determined. They have to start to look after themselves, albeit with support from benefits.
I recognise that the Labour Government have done much to improve systems for dealing with asylum seekers, which were in utter disarray when we inherited them in 1997. In fact, they practically ground to a halt with a massive backlog. In April 1997, it took 20 months on average to make a decision, yet the Tory Administration planned to cut more than 1,000 posts at the immigration and nationality department. Following the Asylum and Immigration Act 1996, councils in London and the south-east faced huge financial burdens as they struggled to support those making asylum claims from within the UK.
The new Labour Government substantially increased the human and other resources of both the immigration and nationality department and the Immigration Appellate Authority. They tackled the problem of unscrupulous, often unqualified, immigration advisers, and in 1999 they set up the centrally administered NASS to provide an integrated system of support for asylum seekers. It was to be based on enforced dispersal to the regions, and most subsistence support was to be supplied in the form of vouchers. NASS was due to take over support functions from local authorities next month, but the period has been extended to April 2004—a further two years.
Last October, the Government announced the results of two internal reviews of NASS that acknowledged the hitherto "poor service"—their words—provided to asylum seekers. The combined report of the two reviews acknowledged real problems with the system and made many specific recommendations to ensure that in future NASS would offer
"a better service to asylum seekers and other stakeholders".
Those included the replacement of the much-criticised vouchers with a more robust but less socially divisive scheme that involved the piloting of asylum reception centres from late 2002 and administrative reforms of case-management systems.
Only last month the White Paper "Secure Borders, Safe Haven: Integration with Diversity in Modern Britain" on nationality, immigration and asylum matters was published, and comments on it are due next week. I have read it carefully, and it seems to contain very little that will substantially improve the operation of NASS. I am not alone in that estimation. Expectations that vouchers will be replaced with a smartcard that delivers subsistence by automated credit transfer have been disappointed. From 8 April, vouchers exchangeable for cash at post offices will be issued, but the system will use existing NASS delivery mechanisms.

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The new asylum accommodation centres due later this year are unlikely to provide lodging and support for more than a small percentage of asylum seekers at any one time—3,000 out of a total of 100,000, according to the National Association of Citizens Advice Bureaux. That means that for some time to come most will continue to be supported under the existing NASS-administered dispersal-based scheme. For all those reasons, it is still highly relevant and necessary to debate the inadequacies in NASS, which are causing continuing problems for local authorities, host communities and, most importantly, asylum seekers. We should also suggest ways in which the system might be improved through a more fundamental re-organisation of NASS.
Last month, NACAB published a report entitled "Process Error: CAB Clients' Experience of the National Asylum Support Service". It is based on the day-to-day advice work of citizens advice bureaux. The report describes serious shortcomings in the administrative performance and accessibility of NASS. Asylum seekers and advice workers—I would add Members of Parliament, too—experienced serious delays and extreme difficulty in contacting NASS officials.
Since April 2000, when NASS began operating, citizens advice bureaux have dealt with increasing numbers of inquiries from NASS-supported asylum seekers. Many people needed help contacting NASS to obtain their full entitlement to subsistence support, others to resolve accommodation problems. Some, having been granted refugee status or other leave to remain, had been left in limbo between the NASS system and the mainstream benefits system. Cases described reveal families left for days or even weeks without the means to buy food and other necessities.
The report quotes an adviser, who said:
"We have spent hours on the phone to NASS trying to resolve what should be straightforward matters. For NASS-supported asylum seekers, most of whom have limited English and little cash for phone calls, the system is totally inaccessible."
I am sure that NACAB will submit evidence for the Government's White Paper, because citizens advice bureaux often provide services that should be provided by NASS.
What needs to be done? Peterborough city council, in its excellent briefing to me, which I have sent to the Home Secretary, advised that
"communication and consultation must be greatly improved;"—
I emphasise the words "and consultation"—
"secondly, local authorities must be obliged to declare their support for asylum seekers to other authorities when placed out of their area. All private sector landlords accepting asylum seekers must declare names and addresses on a register held by the relevant local authority; benefit agencies must appoint a liaison officer to work with local authorities and private landlords to resolve and expedite claims; additional grants for move-on accommodation and support services should be made to local authorities on the basis of resident asylum seekers. £100 is suggested. This should not be made available to local authorities placing asylum seekers out of their area".
Why should they cash in?
"Finally, there should be a national forum for the control and direction of NASS. Local authorities, health authorities and the police should be represented with the power to make recommendations on this body."
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Those ideas would make a great improvement, but, sadly, I have received absolutely no response to the suggestions from the Home Office, despite commissioning the briefing specifically for the purpose, and sending it to the Home Office on two separate occasions.
NACAB suggests a more fundamental reorganisation of NASS. The White Paper sets out plans already under way to decentralise NASS operations, thereby creating a service that is more responsive to regional issues. The Government propose that more resources should be deployed regionally and existing resources should be used more effectively. The move-on period will be extended from 14 to 2ldays for asylum seekers receiving a negative decision and from 14 to 28 days for those who are granted refugee status or exceptional leave to remain. However, as the Refugee Council and NACAB pointed out, the White Paper provides little detail about how that will be achieved.
I want to put on the record some specific proposals made by NACAB and the Refugee Council: NASS should be expanded, decentralised and regionalised in order to provide a responsive and accessible local service; NASS should establish adequate counter or drop-in services for supported asylum seekers—staff providing those services will need appropriate language skills; performance targets should be set and published for each main aspect of NASS's administration of the support system and those targets should be adequately monitored, which will require effective case management and recording systems; at local, regional and national levels NASS must be appropriately managed to ensure that all its performance targets are met; and NASS must establish effective stakeholder groups locally and nationally to enable communication with all partners including the citizens advice bureaux and local authorities.
Councillor Harmesh Lakhanpaul, of Peterborough's racial equality council, and, no doubt, the Refugee Council, would also enter a plea for more resources, another stream of funding, to support refugees—asylum seekers whose claims have been accepted—who have a right to education, health and social services but who still need additional transitional help, especially in such matters as language classes. However, strictly speaking, that is outside my brief today.
All new immigrants need help of many kinds to get to grips with a strange culture. However, almost by definition, asylum seekers have additional problems, which result from the situations in the countries that they have left behind. The Government have made good progress to ensure that they receive a better welcome today than hitherto, and they promise to do more. I hope that my hon. Friend the Minister will take on board the serious recommendations by some of the major players in the delivery of the improved policy and that she will include them in the forthcoming evaluation of responses to the White Paper.
NASS was an improvement, but it needs more fundamental reform than appears to be intended. I reiterate that the principal needs are closer collaboration and local counter services. Obviously, resources are always limited, and I am not advocating the establishment of dedicated NASS outlets throughout the country; 70 to 80 should be sufficient to cover the main dispersal areas. In other places, a regular

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NASS clinic in the local benefits office would be a possibility. Surely some of the cost would be met by greater efficiency elsewhere in the NASS system.
No one would countenance the idea of the Department for Work and Pensions closing local benefits offices and operating from a central office, or the Foreign and Commonwealth Office closing its foreign embassies and doing all its business from Whitehall. The same should apply to NASS.
To date, the experience of asylum in Peterborough has been miserable for all concerned. I hope that this Adjournment debate will mark the beginning of a fresh approach that will benefit not only my constituency, but everywhere else in the country.
1.46 pm
The Parliamentary Under-Secretary of State for the Home Department (Angela Eagle): I congratulate my hon. Friend the Member for Peterborough (Mrs. Clark) on securing this debate on an important subject, which has clearly concerned her and her constituents for a while.
First, I shall give some facts about the asylum seekers who are supported in Peterborough and the rest of the east of England region, in which Peterborough is one of the main towns. As of 31 December, the National Asylum Support Service was supporting 320 asylum seekers in accommodation that it had booked in the whole region. There were 280 asylum seekers in NASS-supported accommodation in Peterborough and 30 in Ipswich. Ten so-called disbenefited asylum seekers were also being supported in the region. We do not accept the figure of 2,000, therefore, and I am not sure where my hon. Friend got the idea that we do.
The amount of accommodation available to NASS in Peterborough would allow us to house hundreds, but certainly not thousands, of asylum seekers, so I can assure my hon. Friend that any worries that may have surfaced in the local media about the imminent arrival of thousands of new asylum seekers are misplaced.
Unfortunately, until now—this may explain some of the confusion—local authorities have had to provide information only for the number of support weeks for which they wish to claim. My hon. Friend will recall that that interim scheme was put together rapidly after a series of adverse judgments in the High Court on the Conservative Government's approach, which was to ban anyone who had not applied for asylum at a port from public support—a ban that the courts overturned. The interim scheme was organised by local authorities and had to be drawn up at very short notice. That is why we do not have the names and addresses of those in the scheme.
We are, however, undertaking an audit whereby we want local authorities to give us addresses instead of the number of support weeks for asylum seekers for which they are claiming Government grant. We hope that once the audit has finished, we will be much better able to establish precisely how many people are in particular areas because they were placed there under the interim scheme. Again, as my hon. Friend should know, the scheme is organised not by NASS, but by local authorities.
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In Peterborough in the financial year 2000–01 there were claims for 3,436 support weeks for single adults and 1,458 support weeks for families. We cannot say accurately what that means in terms of the true number of asylum seekers that Peterborough was supporting, for the reasons that I have just explained to my hon. Friend. However, we can make assumptions. If, for example, we assumed that those support weeks were allotted for people who stayed in the area for a year, that would give a figure of 66 single adults. The large numbers that have been bandied around in the local press are therefore fairly wide of the mark. Following the audit, we should be in a much better position to establish not only the NASS numbers—which we can do with great accuracy—but the numbers in interim schemes.
I hope that that will comfort local Members who have been told that there are far larger numbers of asylum seekers in their areas than our figures show. We should be able to reconcile such discrepancies. As for future demand for accommodation in Peterborough, it has been made clear to my hon. Friend in correspondence that we have no plans to send another 2,000, or any other large number of asylum seekers, to Peterborough— certainly not without its co-operation.
My hon. Friend also raised the issue of the NASS review and some of the changes to administration systems. I would be the first to acknowledge that when NASS was set up, under great pressure and with rising numbers, it did not always get dispersal right. Peterborough has had some experience of that. I will not defend everything that happened in the early days of NASS, but things are getting better and there have been major changes both in practice and in administrative systems. The issues involved in dispersal are being dealt with, and under a new system, cash chits rather than vouchers are being given to people. From 8 April they will be able to cash them in at the local post office.
We are also considering how to regionalise NASS to allow far more local problem-solving. Once reporting centres are up and running, NASS officials will regularly visit people who have been dispersed to ensure that everything is working well. When the induction centre process comes in—all the information on that is contained in the White Paper—it will enable us to spend time at the beginning of asylum seekers' claims explaining far more fully and effectively than we have been able to do in the past how the process will work, and who they should contact if things go wrong. I hope that a lot of the confusion to which my hon. Friend alluded in her speech, which occurred a year or so ago when the system was beginning, will be managed down to a much more acceptable level.
NASS aims to have good co-operation with local authorities. We work with the local authority regional consortiums, most of which provide accommodation for NASS-supported asylum seekers, and all of which aim to co-ordinate the input of local services and support for asylum seekers. A national consultative group for the consortiums meets regularly and is chaired by a senior NASS official; any concerns can be raised there for referral back to NASS headquarters. I hope that there will be feedback loops that my hon. Friend will have plenty of time to use if particular issues arise in the Peterborough area.

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The private accommodation providers for NASS are required to consult the relevant local authority when they have more than six bed spaces, and we seek to develop a way of dealing satisfactorily with consultation on smaller properties. As at the start of the NASS scheme, we will also consult regional local authority consortiums about proposals for further cluster areas. My hon. Friend's suggestion that there could be large-scale swapping of personal information on asylum seekers and on where they live would fall foul of the Data Protection Act 1998. I hope that we can find ways of consulting on practicalities for local service provision without compromising the confidentiality of those who are claiming asylum, so that we can continue to comply with our duties of confidentiality. There are ways of doing that.
My hon. Friend asked about counter services. We do not intend to set up such services as part of the regionalisation of NASS. I hope that she will recognise that some of the improvements that I mentioned earlier, such as outreach and more local problem solving, will address some of the problems that have been experienced in Peterborough. We hold effective discussions with stakeholder groups, and we are currently consulting them about the terms of reference and the composition of a national asylum supporters forum. That would be another welcome feedback loop.
My hon. Friend mentioned some issues concerning the White Paper. She said that there was disappointment that the smartcard—I think she was referring to the applicant registration card—that will be used to pay cash was not going to be in place. This morning I moved the regulations to abolish vouchers. Everyone currently on vouchers will begin to be paid in cash, initially using the same distribution system as vouchers, via post offices. That will cause the least disruption to systems that are already in place, and existing asylum seekers already know the ropes by now. That will all happen from April.
We hope that the applicant registration card, which is being issued even as we speak, will have been issued to all NASS asylum seekers by September. We certainly hope that we can begin to use some of the more secure features of that card as a form of identification and a mechanism for paying cash. Again, that will be done through post offices, perhaps even before September for those who have an existing card. I hope that my hon. Friend will welcome the rapid progress in that area. We abolished vouchers five months early to enable the transition from the current voucher system to the new
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cash-based system to run more smoothly. I can assure my hon. Friend that we will ensure that our administrative systems are robust enough to deal with it.
I do not want to spend the remaining four minutes going through the National Association of Citizens Advice Bureaux report and the criticism of past performance on a point-by-point basis, although I am happy to let my hon. Friend have some of our response to it. We recognise that there were teething problems with NASS when it was first set up and that performance has had to be raised. We are considering what more we can do about that.
For example, NASS has just published, on the immigration and nationality directorate website, contact and phone numbers for all its sections. People who wish to contact NASS can now do so more effectively. A dedicated voucher inquiry helpline has been in place since early last year. Asylum seekers who have been left without vouchers, which did happen at the beginning of the process, can now usually get emergency vouchers within 24 hours, and within a maximum of 48 hours those problems are rectified.
In the last few months NASS has reduced by 70 per cent. the backlog of problems arising after initial allocation of support. The backlog is now equivalent to two days' intake. There have been some substantial improvements in the way in which NASS works. Clearly, the key to increasing the efficacy and effectiveness of the new system will be the role of induction centres. Instead of being put into emergency accommodation, people will be put into induction centres for between one and seven days. They will be taken through the process and told about where they are going, and where they can access what will then be cash payments. There will be a much more managed system. I hope that my hon. Friend will recognise that these changes substantially improve the administrative systems that we originally set up.
There were complaints about the £50 supplementary payments, which were often late. We now normally deal with those within two days, which beats NASS's target of five days. My hon. Friend will see a substantial increase in the effectiveness of NASS. That ties in with the more managed approach that we are taking with the induction centres. Accommodation centres are being trialled. It has always been clear that the 3,000 places are a trial. If the trial is successful we will consider extending accommodation centres to take more people. Clearly, until then it is important that we improve the effectiveness of NASS, and I hope that my hon. Friend will recognise that we are doing that.
Question put and agreed to.
Adjourned accordingly at one minute to Two o'clock.