Westminster Hall Sitting of 30 October 2002

Preamble
[SIR MICHAEL LORD in the Chair]

Fireworks
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Heppell.]
9.30 am
Mr. Michael Weir: It is perhaps slightly ironic that we are discussing problems arising from a celebration of an attempt to blow up Parliament. I have never been entirely sure whether the failure is celebrated or regretted. In 1605, Parliament was purely English, of course, as I hope it will be again soon.
I would be surprised if there were any Members who do not receive a steady stream of complaints about the misuse of fireworks at this time of year or who do not perceive a steady rise in the problem. There have already been two private Member's Bills and several early-day motions on the subject. The attendance at today's debate shows the level of interest among Members.
Fireworks can and should be enjoyed. As children, we all probably looked forward to 5 November, but time has moved on and the fireworks season has gradually extended well beyond both sides of Guy Fawkes night. The penny bangers and barking doggies of our youth have been replaced by modern fireworks, which are very powerful. Both of those developments have led to a great deal of misery within our communities.
I am sure that everyone present could list horror stories of incidents involving fireworks in their constituencies. We will hear some of them later. In my constituency, many incidents have been reported to me, both last year and this year. In one case, the front of a postbox was blown off by a firework that had been placed inside it. That is a dramatic illustration of the power of modern fireworks. In another village, more than £2,000 worth of damage was caused when a firework was jammed through a letterbox in the early hours of the morning. Think what could have happened if that fire had not been discovered quickly. It could well have been fatal.
There has already been a steady stream of other incidents. In Aberdeen, vandals destroyed the interior of a fire protection officer's car by dropping a lit firework on the back seat. That stupid action could have caused a serious explosion in a residential area. In another incident, fireworks set off in a block of flats started a series of fires, which, again, could have led to fatalities.
Those are incidents that have taken place just in my area. Since the debate has been publicised, I have received e-mails and letters from around the United Kingdom. I was struck by what I heard from John Taylor in Manchester, who told me that last year, idiots fired large rockets at planes coming into land at Ringway airport. The implications and possible consequences of such behaviour are horrendous, especially at a time when the whole of the western world is on terrorist alert.
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It is not only reckless, stupid and potentially fatal actions that cause problems. From early September to late November every year—a period of almost three months—many of our communities are subjected to night after night of disruption by the continuous use of loud fireworks. One constituent compared it to living on a battlefield.
Fireworks are meant for enjoyment and celebration, but, unfortunately, they are misused by a small minority and that is causing huge distress to our constituents and to animals. Fireworks are not toys. They are extremely dangerous and can be lethal. It is no coincidence that fireworks are governed by the Explosives Act 1875. Sadly, many of the people most at risk in our society are the most vulnerable: the elderly, the disabled and children.
The number of injuries from fireworks is increasing. In Scotland alone there was an increase of some 35 per cent. during 2000 and 2001. Last year I asked some parliamentary questions to ascertain the dates of accidents involving fireworks, and the answers showed that most incidents took place before and after 5 November, not on the date itself. Even more worryingly, the majority of those injured are under 18. In a submission to the Convention of Scottish Local Authorities, which is investigating the firework difficulties, the chief police officers of Scotland stated:
"the firework season in 2001 seems to have been a watershed with a significant increase in the use and abuse of fireworks."
The Government introduced the Fireworks (Safety) Regulations 1997, which among other things restricted the sale of fireworks to those over 18. To be fair, in 1998 there was a decrease in the number of injuries from fireworks. However, the level of injuries reported in 2001 was higher than that of 1996, and substantially higher than 2000. As I said earlier, there was a 35 per cent. increase in Scotland, but the numbers are also rising in England.
If the increase in the number of injuries is worrying, the age distribution of those injuries is even more disturbing, especially when one considers that under the 1997 regulations, youngsters should not be able to buy fireworks. Injuries to under-13s account for 34 per cent. of the total number of injuries, and a further 25 per cent. is made up of 13 to 15-year-olds. In essence, 59 per cent. of all firework-related injuries are to children under the age of 16—the very people who should not have access to fireworks. It seems clear that the age restrictions in the 1997 regulations are not restricting young people's access to fireworks.
Animals, too, are excessively disturbed by the misuse of fireworks, and some are killed or have to be put down. A recent survey of vets by the Scottish Society for the Prevention of Cruelty to Animals found that more than 8,000 animals were being treated for firework-related problems. The treatment for those animals varied from prescribing sedatives to being put down. Some 90 per cent. of vets reported that they were dealing with such problems. The animals treated by those vets were generally house pets. I could not find any data on the effect on farm animals or wildlife, but one must assume that they are also being seriously affected.
One specific problem has been raised by the Guide Dogs for the Blind Association. It states that every year, guide dogs and other working dogs are forced to retire

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after being traumatised by the irresponsible use of fireworks. Others have to be sedated, and some even retrained, leaving their owners without mobility for weeks at a time. The association reports that the problem has escalated during recent years, as fireworks have become more widespread. The association's chief executive stated recently:
"Sudden loud noises can distress guide and other assistance dogs to such a degree that they are unable to continue working. This means the end of the extraordinary partnership that has taken many months and years to develop. With the day to day costs of training, feeding, insurance and vets bills running at about £10 a day per dog, the financial costs to Guide Dogs are huge."
Although that misuse of fireworks directly affects only a portion of the population, the cost of the misuse hits everyone. It affects resources for the health service, fire brigades and police departments, let alone the cost of property damage and increases to property insurance. As the Under-Secretary of State for Trade and Industry, the hon. Member for Welwyn Hatfield (Miss Johnson), will be aware, the current fireworks legislation is based on the Explosives Act 1875, and the Firework (Safety) Regulations 1997. It is my contention that the legislation does not deal effectively with the problems of fireworks. The industry will point people to the voluntary code that limits the period of time over which fireworks can be sold. Unfortunately, it is a purely voluntary code and is totally unenforceable. Many hon. Members will have received a leaflet from the industry extolling the voluntary code and maintaining that it is more effective because it can react quickly to changing circumstances. That may be fine in theory, but what happens if retailers ignore the code? The answer is nothing, because the code cannot be enforced.
The voluntary code states that fireworks should be sold only during the three weeks leading up to 5 November. However, one large newsagent chain in Scotland has been advertising half-price fireworks since September, and many branches have been selling them since then. They are not alone. Such actions undermine any chance for a voluntary code.
Mr. David Drew: I apologise for missing the first minute of the hon. Gentleman's speech, which is obviously cogent and requests action.
Are not the shops that sell fireworks the problem? Standard sweet shops used to sell fireworks, but now virtually anyone can sell them and they do so over a much longer period.
Mr. Weir: I agree entirely with the hon. Gentleman's point, which I was about to come to. I stress that I do not believe in, or seek, a complete ban on fireworks because I do not think that that would be effective and it could lead to a black market in even more dangerous fireworks. However, the industry is very much drinking in the last chance saloon and, unless real improvements are made by a licensing system, fireworks will inevitably be banned altogether or allowed only for organised displays.
I ask the Minister to consider several points. First, in reference to the point made by the hon. Member for Stroud (Mr. Drew), I should like her to consider introducing a licensing system by statute to replace the
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voluntary code. Shona Robison, a Member of the Scottish Parliament, is attempting to introduce a Member's Bill—the equivalent of a private Member's Bill here. That Bill would introduce such a system under local government legislation, which is unfortunately the only route open to the Parliament for dealing with this matter. The Executive have indicated that they will take on some of the points that have been mentioned.
John Barrett: Does the hon. Gentleman agree that the Bill being introduced in the Scottish Parliament is supported on an all-party basis? It has Labour, Conservative, independent and Green support.
Mr. Weir: The Bill was introduced by Shona Robison and has attracted some support, but it was only under pressure from the Scottish National party that the Executive decided take the issue on, and they have done nothing about it ever since.
Mr. Iain Luke: Does the hon. Gentleman accept that the control of fireworks is not a political issue in Scotland, and that the need for a licensing scheme is of general concern to a broad consensus of political parties? I believe that there should be a total ban. Does the hon. Gentleman agree that cross-party consensus has been achieved, and that my colleague, the Member representing Dundee, East in the Scottish Parliament, has sponsored the Bill there?
Mr. Weir: I do not dispute that there has been some cross-party involvement in the issue. We should also find some cross-party involvement in this place. It is a great pity that the Government did not take on board the private Member's Bill.
Linda Gilroy: I congratulate the hon. Gentleman on securing this important Adjournment debate. I am chair of the fireworks group, soon to be called the all-party fireworks group because enough Members of the official Opposition want to join. The hon. Gentleman will be most welcome to join the group, which has more than 60 members.
Mr. Weir: I am glad to hear that. I am sure that the group will push for a control of fireworks Bill to be introduced by the Government.
Shona McIsaac: Will the hon. Gentleman join?
Mr. Weir: I shall certainly do so.
Such a local authority-based registration scheme would ensure uniformity, rather than a piecemeal system of individual local authorities deciding their own approach. Such a scheme would be able to deal with the type of fireworks that can be sold and to whom and., crucially, the time scale within which they can be sold. On the matter referred to by the hon. Member for Stroud, local authorities would decide which shops could sell fireworks. The scheme would also include the essential feature of it being possible to take action to enforce the code if its rules were broken.

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It is not enough merely to strike at the retailers of fireworks—the 1997 regulations imposed restrictions on them. The users and producers of dangerous fireworks must be tackled. The restrictions on the Scottish Parliament mean that it can deal only with retailers, but this House can take further action, and there have already been two private Member's Bills and several early-day motions. It is unfortunate that the Government did not take up the private Member's Bill introduced by the hon. Member for Brent, North (Mr. Gardiner), because it would have dealt with many of the problems.
Although it is a crime under the Explosives Act 1875 to set off a firework in the street, it is almost impossible to prove and to prosecute. I had an e-mail from someone in Edinburgh who took up the matter with a local policeman. It states:
"I spoke to our local community cop who just laughed his head off at these points—when they are so under-resourced, the police just cannot afford to go chasing kids who are letting off bangers. More to the point, in order to secure a conviction, the police must see the firework being let off, indeed, see the person light it and then recover … the used banger."
The existing law is difficult to enforce. Perhaps the time has come to consider amending it to make it an offence to possess fireworks or to carry fireworks outside protective containers, which might prevent the perpetrators from setting off fireworks in the first place. Such moves would lead to a reduction in the number of inappropriately sold fireworks, especially before 5 November, and, more importantly, would lead to a reduction in their use.
I said at the outset that I am not in favour of a complete ban on fireworks, but it is clear that some of them should be banned because they are far too powerful. Even the industry recognises the justice of that case, and it has agreed voluntarily to withdraw air bombs from 1 January next year. That is good but it is not enough. There needs to be strict limits on the power and noise of existing and future fireworks, and only a statutory code can achieve that.
Measures need to be taken to ensure the safe use of fireworks. Statistics on injuries from fireworks show that the vast majority of them occur away from organised displays. Last year, more than 76 per cent. of injuries occurred at private or family parties or in a "casual incident" in the street or other public place, while only 11 per cent. occurred at large public displays. There should be moves to ensure that more fireworks are used in organised displays rather than sold individually.
Well-organised displays are a better way for everyone to enjoy fireworks safely, but a problem is emerging. In my constituency, a well-organised display that has been held in Carnoustie for more than 20 years has been put in jeopardy because insurance premiums have increased massively and the organisers cannot afford them. In that case, Angus council has stepped in and the display has been saved. However, other people from around the country who are facing similar problems have contacted me. Some underwriters are no longer prepared to run the risk of court action by those injured by powerful fireworks, and that is putting many well-organised displays in jeopardy. If those displays stop, there will inevitably be an increase in the use of fireworks by individuals, and a consequent increase in the number of injuries to people, animals and property.
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I drew that point to the attention of the House in early-day motion 1778, and I urge the Minister to discuss the matter with insurance companies to try to ensure that they reduce premiums for specific, well-organised displays, which would inevitably lead to some form of regulation. If it is not possible to get insurance companies to reduce their premiums—it is probably impossible to force them to do so—will the Minister consider the possibility of acting as an insurer of last resort for such well-organised displays, which would have to be subject to some regulation?
This is a matter of public safety and fire prevention. Taking fireworks out of the hands of individuals and leaving their use to well-organised displays would be far more effective than any number of public awareness campaigns. If the Minister fails to do that, there will inevitably be more calls for even tighter restrictions— even for a complete ban. That would be a pity, but public safety is paramount.
9.50 am
Linda Gilroy: I congratulate the hon. Member for Angus (Mr. Weir) on securing this timely Adjournment debate and look forward to welcoming him to our soon-to-be-constituted all-party group, which has more than 60 members. Its secretary is my hon. Friend the Member for Brent, North (Mr. Gardiner), who is unable to be with us today, and other members include my hon. Friend the Member for Birmingham, Northfield (Richard Burden), who first introduced the Bill that my hon. Friend the Member for Brent, North and I have introduced at various times in different Parliaments.
Other hon. Members have a long track record in this matter, including the Minister's predecessor, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths), who introduced effective regulations in 1997. Sadly, as the hon. Member for Angus said, the effect of those regulations has subsequently deteriorated. In my first year as a new Member, I was lucky enough to be selected in the ballot for private Members' Bills. I took a Bill through most of its stages—first, in the House of Commons, then, with the assistance of colleagues there, through the House of Lords, including the deregulatory Committee, then back to the Commons, where, sadly, it fell foul of Conservative Members who were intent on ensuring that the anti-hunting Bill was not debated that day.
In 1997 we were very much concentrating on trying to reduce accidents in the wake of two deaths that had occurred at organised firework displays. Since then, two factors—animal welfare and hooligans' use of fireworks—have come much more to the fore. The fireworks group has considered how to tackle those issues in the lead-up to the forthcoming ballot, in which we hope that one of our many members will be lucky in the draw and consider taking on a fireworks Bill.
There are two possible approaches. First—the route that several of us have already tried to follow—the Secretary of State can be given additional regulation-making powers to hold in reserve in case the current attempt to put the jack back in the box does not work. I share the concern of the hon. Member for Angus that it will be difficult to make the voluntary code work, because since the millennium celebrations, a tradition

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has built up of fireworks being on sale from September to February—in some communities, throughout the whole year. The second route is that taken in Northern Ireland—to ban through regulations, then positively to license certain activities.
Before I consider the pros and cons of each of those routes, I congratulate my hon. Friend the Minister on the work that she has been doing alongside the industry this year, which has resulted in a hard-hitting and targeted campaign for the current fireworks season that is very much aimed at the teenage group mentioned by the hon. Member for Angus. Its message is, "Fool with fireworks and bang goes your image", and hard-hitting posters show the nasty injuries and scars that can result from doing so. She has also worked with the industry in attempting to achieve noise reduction.
Ways have been found to get around the effective regulations introduced in 1997 by my hon. Friend the Member for Edinburgh, South. The voluntary ban on air bombs will not come into effect in time for this season, but will be in operation from early January. The Minister's action plan also includes anticipating European directives that will specify a limit of 113 to 120 decibels and selling the noisier fireworks only in costly packs so that people cannot just purchase them with other fireworks.
Dr. Nick Palmer: Does my hon. Friend share my concern that the voluntary code applies only to boxes of fireworks and does not actually rule out the sale of small numbers of air bombs?
Linda Gilroy: My hon. Friend is right. I praise the Minister's attempts to do something about the problem, but I also want to ensure that the Secretary of State has regulatory powers to put the restrictions on a statutory footing. My Bill, which was supported by several hon. Members, would have done that, among other things. It also would have provided for statutory footing to confine the voluntary sales period to the new year period and the week before and two or three weeks after 5 November.
The hon. Member for Angus mentioned the Guide Dogs for the Blind Association. In discussions with officers of the association, we were alarmed to learn that each year two or three guide dogs are spooked by fireworks to the extent that they have to be retired. The costs associated with that are £20,000, £30,000 or more. In addition, because of the extended period in which fireworks are misused, guide dog owners—and other pet owners, of course—have to sedate their animals. That means that the owners of guide dogs are unable to call on their services, upon which they rely to such a great extent.
The most recent in a long series of letters from Mrs. Robinson in my constituency bears out the description given by the hon. Member for Angus. It says that what used to be
"3 days on either side of firework's night"
is now
"a relentless pounding from first dark to 2.00 or 3.00 am, every evening at least one month on either side of firework's night."
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She says that her female dog
"will very probably have to be put down as she is unable to cope with the intensity of the noise levels."
She goes on to say:
"Vandals in the area are using these fireworks as weapons aiming them at animals being walked in parks."
She said that if I went round and spoke to people in her area I would get a feedback of despair.
On Saturday morning a week ago, I was in the Barbican area of my constituency where some of my constituents are being pursued under the antisocial behaviour order procedure. One aspect of their antisocial behaviour is firing rockets from the top flat of one block of flats to another. The incidents are legion—no doubt some of my colleagues will tell us of others that occur throughout the length and breadth of the country.
The Minister is doing good work to try to deal with the problem. We wish her well, but we also want to ensure that the Secretary of State has the necessary regulatory powers to take swift action without having to resort to primary legislation. Such powers would include giving enforcement agencies a crystal-clear basis on which to prevent hooligan use of fireworks, making statutory the voluntary code and—the industry was very supportive of this part of the Bill—licensing display operators. The hon. Member for Angus may be interested to know that I spoke at a conference of display operators, which was held in my constituency—in fact, the national fireworks championships are held in my constituency each year—and learned that the insurance issue is very real. An insurance broker is promoting voluntary standards that could well form the basis of the sort of standards that would be necessary under a statutory licensing system. If that did not work, my right hon. Friend the Secretary of State should have reserve powers to bring in a statutory licence system quickly.
The other route is that taken in Northern Ireland. There are, of course, special circumstances in Northern Ireland with different legislation-making processes. This year, the Secretary of State has taken powers to ban fireworks. That sounds draconian and I know that most of my hon. Friends want people to be able to enjoy fireworks and to do so safely, but the positive licensing system enables the Secretary of State to license the availability of fireworks in certain circumstances. We should consider that route seriously in the debates that will take place during the next Session of Parliament.
I want to quote from the Derry Journal in which Dessie Lowry, the Social Democratic and Labour party councillor on Limavady borough council, said:
"There are definitely fewer problems on the housing estates where these fireworks were thrown about. People are not having them thrown into gardens and dogs and cats are not being terrified."
I understand that other council areas have also reported a significant reduction in the number of incidents involving fireworks since the new legislation was introduced earlier this year.
Whichever route emerges from this debate, it is essential that we find ways of putting the jack back in the box. Our constituents are deeply upset. Some animals are spooked and have to be put down and many others are not able to give their valuable and necessary support to blind people because they have to be sedated for long periods of the year.

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I want to ensure that none of us is faced with the death of a constituent or with the severely injured sons and daughters of constituents. My hon. Friend the Member for Enfield, North (Joan Ryan), who campaigns vigorously on this issue, had to face the very sad death of one of her constituents last December. We want to be able to enjoy fireworks safely and I look forward to the observations of my hon. Friend the Minister.
10.2 am
John Barrett: I congratulate the hon. Member for Angus (Mr. Weir) on securing this topical debate on an issue in which I have taken a strong interest. He made a commendable speech, which set out clearly the dangers to human and animal life arising from the misuse of fireworks.
I also congratulate the hon. Member for Plymouth, Sutton (Linda Gilroy) on her contribution. If I am not already a member of her all-party parliamentary group, I shall join very soon and I look forward to it being fully constituted. The hon. Member for Dundee, East (Mr. Luke) said that this is not a partisan issue and that hon. Members from all parties are concerned about the issues that we are discussing today.
I was elected to the House about 17 months ago and an issue that has constantly loomed large in my postbag and at my weekly surgeries is that of fireworks. With 5 November only days away and with serious safety concerns about a firefighters' strike, the issue is uppermost in many people's mind. It is clear from what has already been said in the Chamber today and from the large number of early-day motions, private Member's Bills and parliamentary questions, that my experience is not unique.
I want to take this opportunity to pay tribute to organisations in my constituency that have campaigned long and hard—many of them long before I became a Member of this House—for new legislation on fireworks. I recently met Betty Stevenson of the north Edinburgh fireworks safety campaign group, which covers my constituency and that of the hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz). The organisation has worked long and hard to tackle the misuse of fireworks and, particularly, the problem of the under-age sale of fireworks, which has plagued many communities in my constituency such as Corstorphine, Muirhouse, and Drylaw.
I represent a constituency in Edinburgh, which is well known for spectacular fireworks displays. At new year, Edinburgh puts on one of the most spectacular hogmanay events in the world and the highlight is a fireworks display that is regularly attended by more than 200,000 people. During the Edinburgh festival, Edinburgh castle is lit by another spectacular fireworks display, and only last Sunday, at the end of the week-long Hindu festival organised by the Scottish Indian arts forum, there was yet another fireworks display. Like many of my constituents, and like people throughout Edinburgh and Scotland, I enjoy those displays; they mark out the city as unique.
I am not anti-fireworks and I do not favour an outright ban, as some do, but the current laws governing the use of fireworks are clearly ineffective and drastically need to be updated. As the hon. Member for Angus said, the problem is that much of the law governing fireworks
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is almost 130 years old. That may be difficult for some to comprehend, but fireworks technology has moved on since the Explosives Act received Royal Assent in 1875.
I do not wish to belittle the measures introduced by the Government, which were mentioned by the hon. Member for Plymouth, Sutton, but the regulations prohibiting the sale of large or more dangerous fireworks and the Government's safety campaigns, including educational kits for schools, although positive, have only tinkered at the edges of the problem. Comprehensive new legislation is required to bring United Kingdom fireworks laws into the 21st century.
It is important to note that the misuse of fireworks affects not only people. The Scottish Society for the Prevention of Cruelty to Animals, whose headquarters is in my constituency, produced the excellent but disturbing and chilling report mentioned by the hon. Member for Angus. The report makes it clear that the impact of fireworks on domestic and wild animals concerns many people. It was that report that prompted me to table early-day motion 791, and I was glad that more than 100 right hon. and hon. Members chose to add their names in support of that—the largest backing of any fireworks-related early-day motion in this Session.
The hon. Member for Angus also mentioned the number of vets who responded to the SSPCA survey. A total of 80 per cent. of vets in Edinburgh admitted having to treat animals for stress and injury directly related to fireworks. Those injuries were reported not only on or about 5 November, but for at least a three-month period. There are stories of deliberate attacks on animals—of cats being affected by inhaling smoke and of dogs being in cars where fireworks were set off.
Other dangers have already been mentioned, including the danger to human life. Recently in my constituency, a young, pregnant mother of a two-year-old was burned to death because someone put inflammable material through her letterbox. It was not a firework, but it shows that hooligans who think that they may be participating in a prank sometimes have no idea of the tragic consequences that can result.
After consulting community councils, the local police force, GPs and others in my constituency, I began a petition campaign calling on my right hon. Friend the Secretary of State to take serious action as a matter of urgency. I was truly overwhelmed by the response. I now have thousands of names on the petition. Many people chose to send letters with their returned forms, which provided me with a catalogue of horror stories—of accidents, injuries to animals and people, and of the fear and distress that fireworks can cause. If there was any doubt in my mind about the seriousness of the issue and its impact on communities, the response to my campaign has removed it.
Why are we in such a sorry state of affairs? I believe that the voluntary code of practice is ineffective and that it fails properly to protect the public. The maximum penalty or custodial sentence has never been imposed under the law that prohibits sales to those under the age of 18, which makes a mockery of the law. It is time for the voluntary code that limits the time of year when fireworks can be sold to the public to be enshrined in law. The code does not work because too many outlets fail to adhere to it. As the hon. Member for Angus said,

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many outlets sell fireworks long before 5 November. Fireworks can therefore cause fear and misery all year round.
We need rules to ensure that properly trained and licensed pyrotechnicians are at all public displays. I realise, however, that that will not stop all accidents because at a large community fireworks event in my constituency, which was organised by a licensed pyrotechnician, a young girl was hit by a rogue firework. We cannot rule out accidents, but we could minimise the danger, and the presence of trained, experienced operators would certainly help.
I do not want to portray everything as doom and gloom. We seem to be closer in Scotland than in England and Wales to tackling the problems of selling fireworks. The hon. Member for Angus highlighted Shona Robison's Bill in the Scottish Parliament, which has received all-party sponsorship. Last week, the Scottish Finance Minister, Andy Kerr, signalled the Executive's intention to press ahead with new laws on the sale of fireworks. That attitude, and the actions that it promotes, contrast starkly with the inaction at Westminster. The Government are so concerned with focus groups and popularity that it is incredible that they are not taking a bigger lead on the issue. The public would clearly welcome positive action, particularly in our city communities.
It is not a case of being a killjoy. Like other hon. Members, I enjoy a good fireworks display, but it is time for tighter regulations. There is much that the Government can do, and all parties in the House are determined that we should take action. All we need is some direction from the Government, and I hope that the Minister will provide it today.
Several hon. Members rose—
Mr. Roger Gale (in the Chair): Order. It will not have escaped hon. Members' notice that a significant number of their colleagues are rising to speak. I will call the first of the three Front-Bench spokesmen at 10.30 am, and it is up to hon. Members how they use the time up until then.
10.11 am
Vera Baird: I am grateful for the opportunity to speak, and I shall be brief. I congratulate the hon. Member for Angus (Mr. Weir) on obtaining the debate.
The council in Redcar has taken a lead on firework safety issues. In particular, it has initiated a voluntary registration scheme for licensed retailers. Those who sign up agree to comply with legislation prohibiting the sale of fireworks to under-age children. They also agree not to sell fireworks to people they think are likely to misuse them and to tell the local authority of anyone who uses them inappropriately. The scheme is supported by a dedicated freephone number, which came into operation on 14 October. It has been widely advertised in the local papers, and shop owners and members of the public can use it to report illegal bonfires, nuisances and people who they think are selling fireworks unlawfully.
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In tandem with the scheme, the council runs a bonfire strategy and a fuel management scheme. In a nutshell, those measures ensure that materials that could be used for a bonfire can be quickly removed from a public place, particularly if children have collected them for a bonfire. We are well able to remove such materials in Redcar and Cleveland because we have an effective team of neighbourhood wardens.
This year, Redcar council is spending more than £10,000 on four public firework displays, one of which is at Redcar racecourse. The benefits are obvious, and I will not set them out. Such measures will go a long way to ensuring that 5/11, as we should learn to call it, is no longer a public hazard, but a way of enhancing community involvement.
That sentiment is echoed by Chief Superintendent Kelly of my local police division. In parallel with the council's efforts, he has initiated Operation Tinderbox in Redcar, which involves the police taking education packs to schools. Contrary to the experience of the Edinburgh correspondent mentioned by the hon. Member for Angus, the initiative is being supported by a crackdown on antisocial behaviour and damage over the relevant period and in relevant locations. The police are also vigorously pursuing intelligence on the illegal storage and sale of fireworks. Chief Superintendent Kelly tells me that, again, the wardens play an important role. Like the police, they have high visibility and can deter nuisance by dealing quickly and robustly with incidents.
Those manoeuvres and tactical measures are important. The big concern in Redcar is not that there is no legislation, but that catching and prosecuting perpetrators is a problem. That is the view of Mr. Gary Flynn, the council's community safety co-ordinator, who believes that the council's measures are having an impact and that things are nowhere near as bad as they were last year.
The council's fallback position is represented by a petition in all the local libraries in Redcar. It calls for a ban on the sale of fireworks to everybody except those whom the Health and Safety Executive has licensed to make professional use of them. That petition will be brought to the House on 16 November, and the number of signatures on it will offer a final judgment on the effectiveness of the well thought-out efforts of the council and the police. Until then, in Redcar at least, the jury is out on a total ban.
10.15 am
Mr. Russell Brown: I congratulate the hon. Member for Angus (Mr. Weir) on securing the debate. I shall be brief, because other colleagues want to speak.
There are two elements to the debate—the nuisance element and the safety element. I served for several years as a health and safety representative in a workplace, and I believe that safety is of paramount importance. Last year, there was a 50 per cent. increase in injuries to young teenagers, which was the highest rise in seven years. That is quite horrifying. Parliament has tried to do as much as it can to prevent accidents, and after 1997 there was a welcome decrease in injuries. Last year's figures, however, tell a totally different story.
Hon. Members who have spoken this morning have referred to the months either side of bonfire night. From the first week of September, life has been made

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unbearable for many people in my area. A lady told me that she witnessed something last week that was like something one might expect to see on television. One evening, a group of six or seven youngsters were standing on a street corner when a car drove up the street at high speed and did a handbrake turn. The back door opened, and a large box was thrown from the back of the vehicle. Some 20 minutes later, everyone in the neighbourhood discovered contained that the box contained fireworks. The lady told me that she could not believe her eyes and, that if someone had told her the story and she had not witnessed it herself, she would have thought that it was pure imagination.
There is one individual in my home town who, from the first week in September, has supplied youngsters with fireworks that he procured in the Newcastle area. I immediately reported the fact to the police and trading standards people, but I was disappointed by the outcome. One of my fears was that the guy might be storing the fireworks in the locality, and that they might put those in the vicinity in danger. However, I discovered that legislation would kick into force only if he was storing them somewhere for more than 14 days. It was patently obvious that the guy was simply part of a system for passing fireworks on from his supplier to his customers.
I worked for 18 and a half years in the explosives industry. That had nothing to do with the fireworks business, but because of that experience I realise how fiercely fireworks burn—they are white hot. Recently there was a horrendous incident in Holland that caused devastation in the neighbourhood, which should be a lesson to people about how much damage fireworks can do.
Linda Gilroy: As a warning to our constituents, I believe that I am right in saying that sparklers are as hot as chip pan fat.
Mr. Brown: My hon. Friend is right.
Last year, I received a tremendous amount of correspondence, but this year I have had only a couple of letters. That is probably down to the good work of Dumfries and Galloway constabulary, who at an early stage have tried to stamp out some of the things that have been going on. Last week the constabulary issued a press release saying that a local man was charged with supplying fireworks to juveniles in the town of Dumfries. We are moving in the right direction.
Along with my hon. Friends, I applaud the work done by my hon. Friend the Minister and her Department. However, I draw to her attention something that my hon. Friend the Member for Motherwell and Wishaw (Mr. Roy) drew to mine. Some firework manufacturers have said that they can make fireworks that do not produce the amount of noise that we have all experienced in neighbourhoods in our constituencies for many years. If she has not already done so, I would encourage the Minister to start talking to manufacturers about what they can do. I appreciate that a tremendous amount of the fireworks on sale in shops are imported, which creates another difficulty. However, we need to make a serious attempt to cut down on the nuisance caused, whether it is to elderly citizens or animals.
I encourage the Minister to speak to manufacturers to see if a positive start can be made to cut out the nuisance that so many people have to tolerate—not only for a
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couple of weeks before bonfire night and perhaps a couple after, but, in my experience, for at least the two months before it.
10.21 am
Mr. Adrian Bailey: I congratulate the hon. Member for Angus (Mr. Weir) on securing the debate, and I pay tribute to those who have far greater experience of campaigning on the issue than I.
In common with virtually every other hon. Member, I have been made aware of the increasing levels of noise, nuisance and antisocial behaviour, and the adverse effects on animal welfare in my constituency, which seem to have escalated year by year. In common with other hon. Members, I do not wish to be a killjoy. Fireworks are colourful, pleasurable, exciting and a legitimate way for people to celebrate special occasions and events. I want any legislation to be sensitive to people's desire to celebrate with fireworks. I also recognise that in a multicultural society, different ethnic groups have festivals and celebrations at different times of the year during which they want to use fireworks.
None the less, I think that it is necessary to have a regulatory system that will enable responsible people or legitimate organisations to celebrate with fireworks, without giving those antisocial elements that exist in most areas the freedom to use them to make people's lives hell. What is a joy for some can be absolutely appalling for others. We must frame legislation to ensure that those who wish to use fireworks joyfully can do so without other people suffering as a consequence.
I welcome the voluntary code, but only in so far as it is a long-awaited recognition of the fact that there is a problem. I do not think that it will work. One of the arguments against the proposals is that they will create a black market. I do not take that argument very seriously. People who are prepared to bypass legislation have a field day bypassing voluntary restraint. Even within the terms of the voluntary restraint, some fireworks will be used by those who wish to use them antisocially to cause an enormous level of disturbance.
I am conscious of the time and so will wind up fairly quickly. I want to see some form of licensing system. My hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) commented on the fact that a licensing system already operates in Northern Ireland. Although we all recognise that there are special reasons why it is implemented in Northern Ireland, it will give us a body of experience on which we can draw to implement a similar system in this country.
I can see two great advantages in that. First, it increases public awareness about the legislation on fireworks. There is currently a range of legislation, most of it very old, and people do not know what their rights are when it comes to being affected by fireworks. The pet owner whose dog is disturbed by a flying rocket will hardly go to the perpetrator and say, "You are in breach of the Protection of Animals Act 1911 and I demand action." Similarly, many local authorities do not have the staff to implement legislation on noise and nuisance. We need a regulatory licensing system because, then, the conditions of the licence could be known both to the user and to the general public. That would increase people's awareness, enable the police and other law enforcement authorities to know on what basis they can act, and enable them to act quickly.

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That is my central point. I thank hon. Members for their contributions and for the benefit of their knowledge, but I believe that licensing fireworks is the route that we should take.
10.25 am
Dr. Brian Iddon: Like many others, I get a lot of pleasure from fireworks and do not support a total ban on sales to the public. In Lancashire, there is a tradition of community bonfires, with treacle toffee and black peas. The bonfires bring the community together. As my hon. and learned Friend the Member for Redcar (Vera Baird) said, Bolton council asks people to register their bonfires and those that are not registered are removed.
As a professional chemist, I am alarmed at the size of fireworks on sale to the general public. They can buy rockets of 5 ft or 6 ft long and 9 in cakes of fireworks with multiple charges that go off over a considerable period. Those are huge explosives, which should not be in the hands of the general public. They should be available only to professional people who have been trained to set them off.
The Government should examine the classification of fireworks. The current system differentiates indoor fireworks, garden fireworks, other fireworks for sale to the general public for displays and fireworks banned from sale to the general public, which can be set off only by trained engineers at public displays. Please will the Minister consider the classification of fireworks and prevent large fireworks from being sold all year round?
There is a large mixed ethnic community in Bolton. The Hindu and Chinese communities have celebrations at different times of the year from ours, so it would be hard on those communities to restrict the sale of fireworks to two weeks before bonfire night.
10.27 am
Huw Irranca-Davies: I thank the hon. Member for Angus (Mr. Weir) for securing this important debate on a cross-party and cross-region issue. Many of my colleagues who represent Welsh constituencies are equally concerned about the matter and their postbags are filled with letters of concern from residents who, for months leading up to 5 November, must put up with fireworks being set off in the streets outside their houses.
An elderly resident in a remote community in one of my valleys, who had been back in her home for two weeks recuperating from an illness, was disturbed in the early hours of the morning when her window was smashed by a firework. As a former lecturer, I know that one of the responsibilities of local authorities is to provide appropriate controls and appropriate leisure outlets. We must acknowledge that the voluntary system of regulation is insufficient, despite the many good examples of best practice shown by councils and neighbourhood watch schemes. If voluntary arrangements are not working, it is clear that we must go further and consider a licensing system. It is not acceptable that the quality of life of our constituents should be put in danger by the present state of affairs.
10.29 am
Dr. Vincent Cable: I also congratulate the hon. Member for Angus (Mr. Weir) on initiating a debate that is topical, and would have been even more so had a firefighters' strike been scheduled for the relevant day. The subject has considerable historical resonance in this place. What the hon. Gentleman and other hon. Members have perhaps been too polite to point out is that what we celebrate on bonfire night—its historical origin—is the ascendancy of English and Scottish Protestants over the Catholic population.
The hon. Member for Dumfries (Mr. Brown) made the point that several separate problems arise. First, safety is a distinct problem. Each year there are about 1.000 injuries requiring attention by accident and emergency departments. As the hon. Member for Bolton, South-East (Dr. Iddon) pointed out, the extraordinarily high explosive power of the new generation of fireworks has a lot to do with that.
Another issue to emerge from the statistics is that, although the rate of injuries is fairly stable, there has been a big increase in injuries to teenagers. That is associated with the second problem—antisocial behaviour, rather than fireworks themselves. The kids who throw fireworks around would otherwise be setting fire to vehicles and throwing rocks.
Shona McIsaac: Is the hon. Gentleman aware of the seriousness of such antisocial behaviour? For example, the front page of my local paper announced "Sixty evacuated in dangerous vandal attack". Fireworks were thrown into a crowded pub, and that sort of thing is not uncommon. No one was injured, but such incidents are not included in the figures, so matters are probably more serious than they may appear.
Dr. Cable: They are very serious. The event that the hon. Lady recounts could be described as a fairly serious crime. I know that the Minister has introduced measures to deal with the throwing of fireworks.
The third distinct element of the issue is the noise problem. Most of the people who write to us are primarily concerned about noise. They include elderly people and people with pets. My hon. Friend the Member for Edinburgh, West (John Barrett), who mentioned that the Scottish Society for the Prevention of Cruelty to Animals has is headquarters in his constituency, pointed out that there is great concern about noise.
Perhaps the Minister can help me to understand: at present, the loud noise of bangers is heard for several weeks before and after bonfire night. Why is this happening? Under the 1997 regulations, as I understand matters, category 2 and 3 bangers have effectively been outlawed. Is the problem that the regulations are being ignored and not enforced, or are category 2 and 3 bangers defined in a liberal way? It is important to understand the answer. The first explanation would present us with an issue of law enforcement, and the second, as the hon. Member for Bolton, South-East implied, an issue of industry standards and how to enforce them.
As to what policy we should adopt, I agree with hon. Members who have stressed the need for proper balance. One person's pleasure is another person's

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nuisance. We have all been children and most of us can see aspects of a rite of passage. Community firework displays are important and valued. Open air concerts, all of which seem to finish with Handel's firework music and associated visual effects, now happen at several places in my constituency. I do not know how many hon. Members present were on the Embankment for the phenomenal firework display on millennium eve. Such events are part of a tradition. Many people enjoy them and, if they are done in the right way, we should tolerate them. That attitude should be balanced against the noise, the antisocial behaviour and the danger.
How can we achieve that balance? I would start by considering not new methods of regulation—let alone bans—but enforcement issues. We already have a substantial range of regulations, and the Minister's approach of building on them incrementally is sensible. The issue is why they are not being more widely enforced. Part of the trouble is that trading standards officers bring few prosecutions for things such as under-age selling. Perhaps the Minister has more information about that. The underlying problem is that trading standards offices are hopelessly understaffed, underfinanced and ill-equipped, yet we like to pile more responsibilities on to them. The Minister is in the process of introducing the Enterprise Bill, which will extend consumer protection powers. That will place yet more responsibility on a weak arm of local government. Until it is beefed up and given adequate support, it will not be able to perform its role.
The same is true of the police. In principle, I support the idea of imposing spot fines on people who throw fireworks. However, the police must be able to enforce it. In areas like mine, where there are not enough police officers to have beat policing, the police just laugh at such measures because they do not have the capacity to enforce the law. The enforcement issue rests on the resources of those services.
Huw Irranca-Davies: I acknowledge what the hon. Gentleman says about the need for enforcement on the streets where the nuisance behaviour takes place. Does he agree that that is a good case for the deployment of community support officers to act as the eyes and ears of police, and would he therefore encourage more extensive use of such officers by other police forces?
Dr. Cable: Yes. The hon. Gentleman is right, and I support that. It is a good initiative. Recruitment in London has been encouraging and I welcome it.
Apart from enforcement, the other way in which the Minister can make progress without bringing in widespread bans and new regulations is to tighten up on industry specification, building on the 1997 regulations, particularly in respect of bangers and the dangerous fireworks that the hon. Member for Bolton, South-East has highlighted.
My final concern is whether there is a case for a ban on sales or widespread regulation. I am not sure. We would be introducing a new regulatory apparatus for objectives that are not clear. I have more sympathy with the narrow proposal that limits sales to a specific number of days, and would embody the voluntary code in legislation. There are still difficulties with that, not least the point about ethnic minorities—I have a Hindu
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community starting in the north of my constituency, heading into west London. There is also the risk of people buying within the restricted time period and storing the fireworks. There are many ways in which enforcement would be difficult.
Would it be sensible to allow local councils to experiment? There are many parts of the country where there is not a Hindu population, with its particular difficulties. Might the way forward be for the Government to empower local authorities, based on their local traditions, the strength of their trading standards departments and other factors, to have a moratorium on sales during a particular period, not necessarily to impose a nationwide restriction?
10.38 am
Mr. Andrew Robathan: I, too, congratulate the hon. Member for Angus (Mr. Weir) on having introduced this timely debate, which covers both Diwali and Guy Fawkes night. Could he let the rest of us know how he achieved that? I never seem to manage to secure debates that are so timely.
The hon. Gentleman used the term "irresponsible use of fireworks", and that is the point. I have a dog of whom I am inordinately fond, who is terrified of fireworks. When they go off close at hand, she will hide and shiver. It is worrying for me and even more so for her. I am sure that other pet owners will recognise the symptoms. The worst time was when we accidentally passed close to a public display and she very nearly bolted. If she had not been on a lead, I would probably have never seen her again. That has happened to many people's dogs. The issue is serious, and we all receive many letters about it.
There are far too many accidents. We have heard the accident rate today. One accident is one too many, and I regret that there are any at all. As the hon. Member for Dumfries (Mr. Brown) pointed out, we are dealing with explosives, and explosives are inherently dangerous.
What should we do? In a well-argued speech, the hon. Member for Plymouth, Sutton (Linda Gilroy) pointed out that the 1997 regulations, which were welcomed, have not achieved what we hoped that they would. Indeed, the accident rate went up rather than down last year. I remember that as a child, after much pleading on my part, my mother dispatched me with a note to the retailer that said that I was authorised to buy fireworks even though I was under 14. That was, I fear, some 40 years ago. We used to have a bonfire party in the back garden on 5 November or thereabouts, which was closely supervised by my parents, and there were no injuries. My parents were certainly responsible, and I was forced to be.
Things have changed. The hon. Member for Bolton, South-East (Dr. Iddon) mentioned the amount of explosives in some fireworks, which is an important issue. Furthermore, the antisocial behaviour of young people seems at the root of many of the problems. In Leicestershire last year, the Leicester Mercury ran a campaign about the irresponsible use of fireworks. As a result, I received many letters. They referred to the fact that the fireworks season now goes on for five or six weeks. The hon. Member for Angus suggested that it went on for three months, which I thought was a bit long, but we must remember Diwali and hogmanay,

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concerts in Twickenham, birthday parties and, this year, the jubilee. It is difficult to talk about time limits. People who say that fireworks should be sold for only, say, a month around a specific date might find that almost impossible to enforce. Apart from anything else, people will stock up on fireworks.
The big complaint is that fireworks are being let off in the street, especially bangers. As I understand it, bangers have been illegal since 1997 and it has been illegal since 1875 to let off fireworks in the street. Such acts are criminal. As the hon. Member for Twickenham (Dr. Cable) said, the question is one of enforcement.
Linda Gilroy: When I promoted my fireworks Bill, some people from the Police Federation were very supportive of it. From the point of view of the police, there is a problem in using the present powers. The proposal in the 1997 Bill, which fell, would have made enforcement much easier for the police.
Mr. Robathan: That is a good point. The time that the police can spend on enforcing the powers is another issue. Unusually, I commend the Government on their pilot schemes in which £40 fixed penalty notices will be imposed by the police for letting off fireworks in the street. The schemes are in Croydon, the west midlands, north Wales and Essex. That is a good way forward. The public need to show a more responsible attitude. When someone sees a teenager—it is typically a teenager—letting off fireworks in the street, perhaps the police will be informed and perhaps they will take greater action. The issue is one of education as much as anything else.
The other big issue that ties in with bangers and the point made by the hon. Member for Bolton, South-East is noise. It is just as frightening for an animal to hear an explosion from a public display as it is for them to hear an explosion in a garden or on the street. There are provisions on the subject in the Environmental Protection Act 1990 and the Noise Act 1996, but they are difficult to enforce. Again, I commend the Government. I quote from the fact sheet sent to me with the undated letter from the Minister, which states that the Government are
"Seeking to make it easier for local authorities to use the Night Noise Offence … which targets excessive noise … after 11pm".
That is extremely sensible. Let us see how it works.
The hon. Member for Plymouth, Sutton mentioned the national fireworks display in Plymouth. I bet that there are complaints about the noise from that.
Linda Gilroy: There certainly are. It is a problem, but we want people to enjoy fireworks and to enjoy them safely. That is why other hon. Members referred to the possibility of low noise fireworks, on which I look forward to the Minister's comments.
Mr. Robathan: Funnily enough, I again commend the Minister. I do not want to steal all her thunder, but in the same undated letter she refers to voluntary restraint on the noise of fireworks. I will let her cover that in more detail. As the hon. Member for Twickenham said, the key to the issue is a balance between an individual's
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freedom of enjoyment, danger to others, and the antisocial behaviour of some that restricts their consideration of others.
A degree of hyperbole surrounds the debate. There is irritation and upset, but not the misery that people claim. One of my constituents wrote to me:
"Older people are terrified and how young children sleep with this going on, I do not know."
I have two young children under the age of six, both of whom, I must admit, like sparklers. Like all of us, I have to lay my weary head down somewhere at night. During the week, I live in a very densely populated part of Westminster as, I suspect, do many of us. Although I find fireworks irritating, my children have never been woken up. The hon. Member for Edinburgh, West (John Barrett) prayed in aid the death of one of his constituents, but that had nothing to do with fireworks. The cause was petrol through the letterbox. No one is suggesting yet that we stop the sale of petrol.
Noise, however, is a real problem. If the voluntary restraint in the Government's plans works, there will be many fewer complaints because noise is what everyone notices. It is a question of consideration and responsible behaviour. It is also a question of parental control. One cannot buy fireworks if one is under 18—or rather, one should not be able to do so. So who is buying them, and who is letting their children out on the street with them? I am afraid that the responsibility lies with the parents.
More than anything, there is the issue of adherence to and enforcement of existing law. Hon. Members discussed the further licensing of sales, which might be sensible. The hon. Member for Bolton, South-East made a good point about the excessive size of fireworks. However, I wonder if we really want trained firework-display personnel? I am sure that we have all lit fireworks in our time. When I was in the Army, I went on a two-week fire-training course. It was rather fun going down the pole at a fire station and using a hose. However, the rest of what I learned was mostly common sense and would have taken about 10 minutes to read about in a book.
Do we really want a total ban? I suspect that one could download instructions from the internet on how to make gunpowder. I will make a bet with anyone here, if they like. There are at least a couple of people here who could do it straight away. Clever young physicists aged 15 or 16 are probably doing it already. That is another issue on which we should not dwell for too long. Do we really want more regulation and more restrictions on individual freedom? I do not believe that we do. We do not want to make this country more of a nanny state. The problem is that the law is not observed or enforced.
How will we ensure that new laws are observed and enforced? As a Conservative, I would prefer not to have unnecessary regulation that uses up our time.
Linda Gilroy: The hon. Gentleman might like to consider the Bill that several of us have promoted. It has regulation-making powers, which can be held in reserve, and might be an additional incentive to the industry to reach voluntary agreements.
Mr. Robathan: I am grateful to the hon. Lady. That is a very sensible way forward, which ties in with the

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voluntary code that the Government are promoting. As a Conservative, however, I am, in general, against further regulation unless it is proved necessary. I do not believe that some of the regulations that hon. Members call for in this House and elsewhere would be enforceable or effective.
Finally, I return to the subject of my dog, Otter, of whom I am inordinately fond. She is terrified of thunderstorms. When there is a thunderstorm, she cowers under the bed or the table, but I have not worked out what regulations we could introduce to deal with that.
10.49 am
The Parliamentary Under-Secretary of State for Trade and Industry (Miss Melanie Johnson):: I congratulate the hon. Member for Angus (Mr. Weir) on securing this useful debate. I am glad to have the opportunity to say a few words on the issue, as I know that it is one about which many people have concerns.
Since last year's Guy Fawkes period there has been an unprecedented level of public concern about the misuse of fireworks in terms of safety, noise and general nuisance. I have seen an increase in the amount of correspondence on the issue in my constituency postbag, as have most hon. Members, which has been reflected in increased parliamentary discussion.
I have heard the representations here today seeking restrictions on the sale and use of fireworks. I am sympathetic to those who are distressed by the noise and frightened by the rogue element that misuses fireworks in public places, and sets them off at unreasonable times of day and night. I also share the deep concerns that I have heard expressed this morning about last year's increase in injuries caused by fireworks.
No one can disagree with the need to control fireworks, particularly to protect the public from harm. The question that we must address today, therefore, is how rigorous those controls should be. We also need to consider the powers that the Government have, and how best those powers can be deployed, a subject to which several hon. Members referred.
Current legislation bans the throwing of fireworks in the street, regulates their storage, and bans their sale to children under 18 on safety grounds. It also restricts, on safety grounds, the sale of certain larger fireworks to the public. There are mandatory standards for fireworks sold in the United Kingdom.
The speakers this morning called for controls that go beyond that, and I understand their concerns. I must emphasise, however, that without further primary legislation the Government cannot take action to restrict the times of year when fireworks may be sold or used, nor can they cut noise levels or introduce licensing schemes.
Currently, the Government can make regulations controlling fireworks only in relation to the safety of the public. Loud noise is a serious issue, but is not directly a question of safety. The question is, therefore, whether there are other means by which we can improve the controls and increase the protection of the public from harm and nuisance, without imposing more regulatory burdens on industry and small businesses. Such means must also allow the large number of people who enjoy
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buying and using fireworks to continue to do so safely. I believe that that is possible, and on 15 October I announced a new package of measures to enhance protection and reduce nuisance. The measures will be brought forward immediately by the Government.
I will say something more on the safety of the public, because that is of primary concern to the Government. People continue to be injured by fireworks every year, and there are even occasional deaths. Even one death is too many. Sadly, during the 2001 firework season, 1,362 people required treatment of some sort at hospital casualty departments. That number is an increase on the previous year, and represents far too many people being hurt.
This year, we have focused a lot of effort on safety campaigns, targeting particularly the misuse of fireworks by teenagers. As the statistics make clear, injuries to that group are disproportionately high, and are more likely to result from casual incidents in the street or public places; they increased by nearly 60 per cent. over last year.
This year, we sent out thousands of information packs to local authorities, fire service authorities and police authorities. We also sent out 25,000 toolkit packs for schools, which include materials on organising private and public displays. In addition, we are funding posters to be displayed at prominent sites around the country, and distributing leaflets aimed at consumers. My hon. Friend the Member for Plymouth, Sutton (Linda Gilroy) has already mentioned our TV filler campaign.
In addition, many local authorities and fire services run their own campaigns. There have been excellent initiatives in Manchester and Middlesbrough, where trading standards officers have worked closely with retailers to ensure compliance with the voluntary code of practice. I was interested to hear my hon. and learned Friend the Member for Redcar (Vera Baird) speak about the scheme in Redcar, and I shall be interested to hear how that works out. It highlights the fact that the debate is about not only legislation, but enforcement. Several hon. Members addressed that.
Creative ideas exist to get key messages across to youngsters. I recently saw work in north Lincolnshire involving a CD-ROM for schools. I know that some people believe that we should go further and protect the public by banning the sale of fireworks. The Government do not believe that a case has been made for banning the sale of fireworks and limiting their use to organised public displays. Such a ban could lead to the development of an illegal firework market and might encourage people to produce home-made devices. Sensible and considerate use of fireworks is a popular family entertainment.
I reassure hon. Members that the Government are not complacent. We accept that there is real scope to improve the control of fireworks in order to improve safety further and to tackle the distress and annoyance that fireworks cause to people and animals. That is why we have explored with the industry what else can be done and, as a result, I announced on 15 October a package of measures designed to cut the number of firework injuries and to reduce problems of noise and nuisance. I shall not reiterate the existing controls at

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length because time does not allow me to do so. Safety regulations emphasise the fact that fireworks can be sold legally only to people aged 18 and over.
The hon. Member for Twickenham (Dr. Cable) made remarks about trading standards departments. They make a considerable effort by conducting mystery-shopping activities at this time of year to ensure that retailers comply with the ban on sales to under-18s. Of course, that is easier if fireworks are not sold out of white vans; that market is difficult for trading standards departments or anyone to deal with. I am assured that most shops that sell fireworks comply with the regulations.
Dr. Palmer: I welcome the package that the Minister announced and the stress that she puts on the problem of the use of fireworks by juveniles. I am puzzled that the spot fine pilot initiative applies to only over-18s. In Broxtowe, we are doing well on cracking down on pensioners throwing fireworks.
Miss Johnson: Under-16s are covered by legislation, but provisions under a Home Office Act—I am not prepared to quote it off the top of my head because I do not have it in front of me—do not allow spot fines that apply to over-18s to be imposed on under-18s. Such fines are restricted by current legislation. Powers exist that address the antisocial practice of letting off fireworks in the street. I have held several meetings to examine the work that enforcement authorities can do to ensure that existing controls are properly exercised.
Several hon. Members mentioned the private Member's Bill promoted by my hon. Friend the Member for Plymouth, Sutton in 1997. A future private Member's Bill might be suggested, and the Government will be sympathetic to the draft of such a Bill, although it would have to be considered on its merits.
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One of the first things that we did following discussions with the industry was to consider existing products on the market. Consequently, I announced the action that we have taken on air bombs, which I do not have the time to outline in detail. Several hon. Members discussed the power of larger fireworks that are on sale. The largest fireworks are restricted by the 1997 regulations and the powers that are already in place. Packs of fireworks—so-called cakes of fireworks—are considered to be much safer than other fireworks because only one fuse is lit—that is it. They are also more expensive, which puts them out of pocket money range. Evidence shows that such multiple packs are probably not the cause of many difficulties. We are much more concerned about things that fall within pocket money range, so we are considering raising pack prices—putting noisy fireworks into larger and more expensive packs at the point of sale. As I have said, we are banning air bombs.
For the information of the hon. Member for Twickenham, bangers are things that just go bang, but there are fireworks that go bang and make light and so forth that are not actually bangers. They are not covered in the same way as bangers.
Finally, I will turn quickly to the question of animals—
Mr. Roger Gale (in the Chair): Order. We should now move to the debate on consumer debt. Is the Minister present?
Miss Johnson: Yes.
Mr. Gale: I apologise to the hon. Lady. The notes that were given to the Chair indicated that there would be a different Minister for this debate.
Miss Johnson: I appreciate your difficulty, Mr. Gale. My name seems to be down for a number of things today.

Consumer Debt
11 am
Mr. Mark Lazarowicz: I am pleased to have secured a debate on an issue as important as consumer debt. I begin by declaring an interest: I am a member of Capital Credit Union Ltd. in Edinburgh, which is an expanding and successful credit union. I hope that time will allow me to talk about the role that credit unions can play in dealing with the issues that arise from consumer debt.
All hon. Members face the problem of debt in their constituencies. For this debate, I was fortunate to receive a briefing from Citizens Advice Scotland, for which I am grateful. I should like to put on record the thanks that I am sure many hon. Members would offer to the staff and volunteers in citizens advice bureaux up and down the country for the good work that they do in our communities.
In its briefing note, Citizens Advice Scotland confirms that debt and in particular consumer debt continue to be the most consistent problems with which bureaux have to deal. The problem is growing. In 2000–01, Scottish citizens advice bureaux dealt with more than 400,000 new cases, of which just over 50,000—one eighth of the total—related to debt.
In the two citizens advice bureaux in my constituency, of more than 23,000 inquiries in 2000–01, an even greater proportion related to debt. In that year alone, the service in Scotland dealt with 160,000 ongoing cases, involving around £70 million of debt. That was an increase of £10 million on the previous year. I have no reason to believe that figures for the United Kingdom as a whole or for any of our constituencies would vary greatly from those for Scotland or for my constituency.
Of course, consumer debt is not new and there is nothing inherently wrong with consumer borrowing.
Mr. David Marshall: I congratulate my hon. Friend on securing this debate. Does he agree that the service provided by citizens advice bureaux is very underfunded, especially in Scotland, where they have to deal with ever-increasing legislation from Holyrood as well as from Westminster? Given that 40 of the 52 forms from the Department for Work and Pensions—77 per cent. of the total—refer claimants to citizens advice bureaux, does he agree that funding of the bureaux should not be left only to local authorities and that there should be direct central funding to enable the bureaux to do their very important work?
Mr. Lazarowicz: I could not disagree with my hon. Friend's strong point. In Scotland, citizens advice bureaux have to deal with devolved legislation as well as UK legislation, so they have a heavy work load and an especially important role to play in their communities.
Consumer borrowing is not inherently wrong. At some stage in our lives, we may all have had a mortgage. credit cards, overdrafts and so on. As a result, we are able to enjoy lifestyles that would not otherwise be possible. Lending and borrowing can make the economy go round. However, the increase in the number of people taking their debt problems to citizens advice bureaux shows that the growing consumer debt
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in our society is now a major problem. Beneath the broad statistics, we all know of individuals who have become trapped in a cycle of debt from which they cannot escape and whose lives, as a result, have become miserable.
Mr. David Drew: This is an apposite debate. Does my hon. Friend accept that one of the biggest problems relating to consumer debt is that people who are already in serious debt may still be chased by companies that should know only too well of such people's difficulties and still offer them finance and credit? We are not talking about fly-by-night credit companies, but about the leading banks, mortgage companies, and so on. What is his view of that problem?
Mr. Lazarowicz: I agree absolutely with my hon. Friend. I was just coming to that point. We are not talking about just a few fly-by-night organisations. We are talking about a need for a culture change in the industry as a whole.
Debt can arise from many causes and, even now, poverty remains a major one. That is why I and most hon. Members welcome the measures that have already been taken by the Government to tackle poverty. Poverty is not, of course, the only reason why people find themselves in debt. The major contributor to the problem is the behaviour of several businesses, big and small, which sell credit and encourage consumers to take out loans.
We all know stories about loan sharks, who prey on the poor and vulnerable in too many of our communities. I include in that category not just the local moneylender, but shops that supply goods at ultra-high interest rates to those who could not otherwise get credit at fair rates, and lenders in the home credit market—doorstep credit providers—whose annual interest rates are often in excess of 100 per cent. That market is growing and expanding.
In 1999, Provident Financial plc, the largest home credit company, charged its 1.5 million customers a typical annual percentage rate of 164 per cent. and made pre-tax profits of £155 million. In the same year, Cattles plc, which owns Shopacheck, opened 75 new branches. Those companies alone accounted for more than £ 1 billion of lending to low-income households. If that money were recycled through credit unions, it could be invested in local communities rather than going to the type of organisation that I have mentioned. I welcome the recent Government consultation on tackling loan sharks and proposals to modernise the Consumer Credit Act 1974. It would be useful if the Minister gave some idea of the progress on modernisation.
Mr. Andrew Love: Does my hon. Friend agree that when it is easier to take out a consumer credit licence than open a bank account, something must be up and something must be done?
Mr. Lazarowicz: Absolutely. Nevertheless, as my hon. Friend the Member for Stroud (Mr. Drew) said, it is too easy just to single out a few obvious bad guys, such as the loan sharks, and think that by dealing with them we have dealt with the problem. Some of our biggest and most respected financial institutions are responsible for

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pushing people into unaffordable debt. Irresponsible selling by high street banks and credit card companies is a widespread phenomenon and it encourages too many consumers to bite off more than they can chew.
We all know from experience about the type of marketing and advertising that goes on. Our daily postbag at home probably contains half a dozen offers of credit at apparently attractive introductory rates. Telephone sales representatives may try cold calling, perhaps with an offer of a financial health check. One finds increasingly while paying bills that banks issue invitations to take out new credit facilities. In shops, too, there might be unsolicited invitations to take out new credit cards.
Most hon. Members have learned to throw junk mail in the bin or politely to decline the offer of whatever colour credit card is available under the latest wheeze of credit card companies. Given our generous salaries, if we get heavily into debt, we at least have some prospect of getting out of it. However, too many people are not in our fortunate position, and there are too many examples of consumers becoming trapped as a result of over-eagerly responding to invitations to take on credit.
I was struck by one example provided by Citizens Advice Scotland. I was told of the case of a 19-year-old woman who received a credit card from a well known high street building society. Accompanying her card were four cheques of £500 made out in her name. We are all familiar with that sort of marketing tool. The 19-year-old was just about to cash the cheques when her mother realised that credit card rates of interest would have to be paid on the amounts. It is not just loan sharks or moneylenders who lend at high interest; the big banks and the financial services industry need to look at what they are doing as well.
In the time available to me, I want to suggest a few ways that action could be taken. First, we must find some way of preventing people from being charged extortionate interest rates on their borrowing. Present legislation allows a court to set aside grossly exorbitant credit agreements, and to substitute them with terms that are fair and reasonable. However, those provisions are rarely used. I think that fewer than 30 cases have been considered in the courts in the past 25 years or so. In only eight of those have the courts actually held that an agreement was extortionate. The Department of Trade and Industry rightly pointed out in its consultation on tackling loan sharks that the provisions are too narrowly defined, and it suggested that the definition of extortionate credit should be changed so that the courts can deal more easily with examples of extortionate interest. I welcome that suggestion, but I think that we could go further.
Mr. Michael Weir: Does the hon. Gentleman agree that one problem with loan sharks is that there are no written agreements? Agreements are purely verbal, so there is no way for people to go to court to sort out the matter of excessive rates of interest.
Mr. Lazarowicz: Indeed; as I am sure the hon. Gentleman realises, there are many aspects to the problem. The problem of illegal moneylending is, by
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definition, one that must be dealt with differently. We also have to pay attention to regulated moneylending. Currently, it is difficult for the consumer to use the legislation that was put in place to help them.
The suggestions in the consultation paper on restricting extortionate interest rates are welcome, but I wonder whether we should approach the issue in a more simple and direct way. Why do we not consider simply setting a legally binding maximum interest rate—an interest rate cap—at a certain percentage above the base rate, so that any obligation on a debtor to pay higher interest would be null and void? If my hon. Friend the Minister would not go as far as accepting that—as I suspect may be the case—perhaps we should change the law so that there is a presumption that interest charged above that cap is extortionate. A creditor would then have to justify to the court why an interest rate in excess of such a cap were otherwise fair and reasonable.
Secondly, we must tackle the problem of inappropriate selling and marketing of credit.
Mr. Love: I apologise for interrupting my hon. Friend but I wanted to pick up on the point about a ceiling on interest rates. The argument against it is that companies would gravitate towards a maximum interest rate for a wider range of customers than is currently the practice. Many people would not be able to get conventional credit under those circumstances, would end up going to loan sharks and would be thrown into the hands of the illegal merchants. How does my hon. Friend respond to that?
Mr. Lazarowicz: I would not deny that there are issues that would have to be pursued if a cap were put in place. I suspect that the difficulty of interest rates drifting up towards the cap could be dealt with by ensuring effective competition in the marketplace. To allow lenders to charge annual rates of, effectively, 164 per cent. is wrong, so we should certainly consider a cap that makes such an extortionate interest rate impossible.
We also need to tackle the problem of the inappropriate selling and marketing of credit. I have a simple—perhaps too simple—suggestion. Why not bar the unsolicited direct selling of credit? By that, I mean no more unsolicited direct mail, cold calls from telephone sales representatives and the like. That may seem too radical for many—I am sure that it would represent too much regulation for the hon. Member for Blaby (Mr. Robathan), who speaks for the Opposition—but we should bear in mind that lots of professions and businesses are restricted in how aggressively they can market their services. For example, solicitors can advertise their services, but—certainly in Scotland—they cannot phone homes at 9 o'clock in the evening to ask whether somebody has tripped over a paving stone that morning or is feeling poorly and would like to make a will. There are many restrictions on the types of selling and marketing that can be undertaken. Indeed, the House has just passed legislation to restrict tobacco advertising.
I am not suggesting that lenders be banned from advertising. They can advertise in the media or in their shop windows and send information in response to queries or, within reasonable limits, to their existing clients. If people want to get credit, they will have no

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difficulty in finding out how. I am merely saying that no one wants unsolicited junk mail, telephone calls or e-mails. I observe in passing that any Government who passed such a measure might find themselves gaining a massive popularity boost in the opinion polls from people whose evenings were no longer disrupted by such telephone calls.
Mr. Drew: My hon. Friend has been generous in giving way, because many points need to be made. Does he agree that one of the worst aspects of advertising arises when advertisers who are trying to get people to roll up their debts do not make it clear that they will charge them the costs of that advertising to get them on to their books? I hope that my hon. Friend the Minister will give that urgent consideration, because it is compounding the misery of the very people whom we should be helping.
Mr. Lazarowicz: My hon. Friend makes a valuable point. If my simple suggestion to stop the unsolicited selling of credit does not find favour with the Government or with other hon. Members, I hope that it, together with the concerns expressed during the debate, will at least serve to emphasise to those in the financial services industry—big and small, respectable and not so respectable—that they must get their act together on advertising, marketing and the various ways in which they can push their products.
Thirdly, people need to be more aware of what they are getting into when they take on credit. Interest rates must be transparent and people must know their rights under existing law—even more so if the rights of consumer creditors are to be extended as the Government suggest. Several good initiatives have been introduced by the Government and by many in the financial services industry. I hope that the national debt helpline that is being piloted by the Department of Trade and Industry can be rolled out UK-wide as soon as possible. Nationwide building society provides its customers with a simple table containing details of the key features and costs of its credit card so that customers can more easily compare the costs and benefits of different credit cards. That is an excellent initiative, and I hope that other lenders will follow its example. I do not want to suggest that the work of the major high street institutions is all bad. Many of the big banks do good work in financial education by promoting awareness of the need to manage one's finances sensibly.
More alternative sources of credit at fair rates are required. A crucial role can be played by credit unions, as community-based suppliers of low-interest loans that can release people from the loan sharks and high-interest lenders in the home credit market.
I want briefly to mention a particularly Scottish aspect of the debate that was drawn to my attention by Citizens Advice Scotland. Consumer credit is a matter that is reserved to the Westminster Parliament, but the way in which UK-wide law is applied in Scotland seems to give rise to an anomaly whereby debtors in Scotland get less protection than those in England and Wales. Provisions in the Consumer Credit Act 1974 allow debtors in Scotland, as in England. to apply for a time order so that a court can both consider a debtor's ability to repay their debts and set a repayment figure that a debtor can afford.
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Citizens Advice Scotland had begun to use that procedure and had represented clients in court, but the Sheriff Courts Rules Council—the judicial body that sets down rules in court in Scotland—now states that because UK legislation is silent on the issue of lay representation, no lay representation can be permitted in a Scottish court on that matter. Indeed, because the legislation is UK law, it states that the matter can only be dealt with by changes to UK primary legislation—to the Consumer Credit Act. I am not sure whether that interpretation is correct, but I ask my hon. Friend the Minister to look into the anomaly identified by Citizens Advice Scotland. If legislation is required in the UK Parliament, I hope that she will modernise the Consumer Credit Act.
I have spoken for longer than I intended, but I have taken several interventions. The problems that arise from unaffordable levels of consumer debt affect us all. Too many people find themselves crushed under mountains of debt from which they find it almost impossible to break free. The problem is getting worse and I welcome the Government's action to tackle it, but I urge them to press ahead with their plans for radical reform of the laws on consumer credit and to shift the balance firmly in favour of the consumer.
11.21 am
John Barrett: I congratulate the hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz) on securing this morning's debate. I agree wholeheartedly with many of the points that he raised. In fact, I wondered whether I should declare an interest as someone who has relatively large debts—a mortgage, a credit card and an overdraft. As he pointed out, consumer debt is not such a problem if one has a regular income and is able to manage one's debt.
In areas of my constituency, house prices are rocketing and few people do not have significant debts. Consumer debt is not a problem for the majority in my constituency, but sadly that is not the case throughout. Areas such as Muirhouse and Pilton, which border the hon. Gentleman's constituency, have high unemployment and deprivation. I regularly see an increasing number of elderly people who are living close to the breadline and young, single parents who are struggling to get by. I recently visited my local citizens advice bureau and sat in on some cases in which, as has been mentioned, debt was a recurring issue. The funding of local citizens advice bureaux is key because they have experts who are able to give advice that people need.
I should like to raise the issue of the constant pressure on people to take on more debt. I must admit that the Liberal Democrat party constantly hounds its members to take up the Liberal Democrat credit card, but that is not a major problem—[Interruption]. I believe that the rate of interest is very competitive. People are constantly being put under pressure through not only the post but the medium of television. There are regular advertisements about rolling up debt and somehow replacing it with payment of a lower weekly or monthly amount. Such commercials are often aimed at people who have no job and are watching daytime television. They are given the misleading impression that all they have to do is make a telephone call and their problems will be sorted out. Clearly, we need to ensure that people avoid loan sharks and high rates of interest.

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We need to consider the practices of reputable establishments. Some years ago, I held an account with a bank in the United States. Its literature stated that a bank should be more than a source of money; it should be a force for positive change. Frankly, I do not see that among many of our banks, which do not go out of their way to attract poorer customers because they want those to whom they can sell insurance and for whom they can provide more credit and finance.
We must look forward to adequate resourcing of those who are giving expert advice. Protection of the vulnerable is one of the key issues. The way forward is for people to avoid debt if they can. Many cannot manage to live week by week, and providing such vulnerable individuals with access to credit is not the way forward. I look forward to hearing what the Minister says about how we can protect the most vulnerable.
11.24 am
Mr. John MacDougall: I am grateful for the opportunity to contribute to this important debate, and I pay tribute to my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) for securing it.
I recognise that the Government have already acknowledged the issue under discussion. I am advised that the actions that they have taken so far have been supported by the setting up at the end of 2000 of a debt taskforce that has called for clearer and more understandable credit agreements. On 19 March 2001, in answer to a written question, my right hon. Friend the Chancellor of the Exchequer stated:
"Tackling financial exclusion is an essential part of the Government's strategy to tackle social exclusion."—[Official Report, 19 March 2001; Vol. 365, c. 30W.]
I recognise the Government's work, and that they have embarked on a massive and complex task. That has been recognised by many of the organisations involved. My hon. Friend rightly paid tribute to the work of citizens advice bureaux, as well as highlighting issues in Scotland.
We must ask what else can be tackled to minimise the scale of the impact of consumer debt. Issues that have cropped up highlight what we need to do: clamp down on lenders who prey on vulnerable consumers; put a stop to irresponsible lending; help consumers who want to settle loans early; protect a greater number of credit agreements and stop the so-called free credit deal sting; enable online agreement; improve the transparency of loan information; and simplify advertising regulations and curb misleading marketing. All of that has been referred to this morning in one shape or another.
The main issue, however, is the hidden enemy: loan sharks who approach vulnerable people—perhaps those in their younger years with high aspirations, or elderly people who fail to understand what is being presented to them, sometimes in the form of a cheque. Such people are easy prey and can be duped into signing for something for which they cannot deliver the repayments. That worries me greatly.
Much has been done in Central Fife to encourage the use of credit unions and to establish their value as a credible way of borrowing. Someone can try to sell
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themselves as a friend on the doorstep when they are really one's worst enemy. No mercy is shown in the marketplace. Areas in which there has been high unemployment through the loss of traditional industries—my area has suffered badly in that regard despite the best efforts—are particularly vulnerable. Debt can lead to other problems such as desperation. Hon. Members have already raised the issue of heavy handedness during debates in the House.
The issue is not political inasmuch as no one can disagree that such serious problems must be tackled. Consumer debt is a big industry. Total UK consumer debt is somewhere in the area of £700 billion, which is by no means a small figure or one of little concern to the Treasury or us as parliamentarians. The amount of outstanding, unsecured consumer credit in the UK has increased 11-fold since 1979. In August 2000, unsecured credit had reached £122 billion. Clearly, behind it is a certain amount of human misery, which breeds other reactions and must be addressed.
As I said, much has been done. However, I hope that the debate will allow us the opportunity to focus on the scale of the challenge ahead and on the legislation that is necessary to minimise the effect of this serious problem in our society. A solution to the problem of extortionate credit rates lies in effective legislation. Although the issue is complex, such legislation could make a significant difference. It must be accessible to the consumer and help to improve the ability of consumers to make more informed choices from a range of credit options, as opposed to the hard sell option that frequently confronts them on their doorstep.
Mr. Love: The matter is being considered at European level. It is likely that the discussions will result in a recommendation to ban door-to-door selling of credit agreements. Would my hon. Friend agree with that?
Mr. MacDougall: Any measure that minimises the present scandal, in which exploitation is on the wrong side of the equation, must be considered seriously. Clearly, the Government must take the proposal on board and develop a considered opinion on it. My hon. Friend makes a good point, which highlights the need to consider other options, such as the proposal of my hon. Friend the Member for Edinburgh, North and Leith on maximum interest on loans. If that is not acceptable, we must at least appreciate the scale of the problem and try to make changes in addition to the measures that have been taken to minimise effects.
Mr. David Marshall: Will my hon. Friend comment on another insidious practice that is in the small print of some agreements? So-called reputable finance houses, often the subsidiaries of major banks, are used by retail outlets that advertise zero per cent. finance. People who sign such agreements make monthly payments totalling half the amount, leaving one final payment of 50 per cent. of the total debt, which they often cannot make. If they buy televisions, videos or hi-fi equipment for £1,500, for example, they are left with a final one-off payment of £750. If they do not pay it in time—the deadline is also in the small print—they are usually

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charged 30 per cent. interest on the full original loan—not on the amount outstanding. Is that not a sharp practice that the Government should stamp out?
Mr. Roger Gale (in the Chair): Order. I remind hon. Members that interventions must be interventions, not mini-speeches.
Mr. MacDougall: Members of the public must have more information about their choices and a range of credit options from which to choose. I do not think that anyone in this Chamber could honestly say that they would clearly understand every agreement that they may be asked to sign. We are not ignorant of the problem, yet such agreements would present a challenge to us. How can we expect the citizens of this country to understand the options that are presented to them?
I referred to the need for legislation that prevents the imposition of what I would classify as extortionate credit rates. We have already highlighted the scale of the problem and the work that has been achieved so far, but we have yet to contend fully with that very important issue. I do not know whether we will ever find the absolute answer, but any measures that the Government can take to improve on the work that has been carried out so far would not go amiss. As the Chancellor of the Exchequer has highlighted, there are strong links between debt and poverty and financial and social exclusion. I hope that the debate serves as a reminder that the issue is very serious. It requires serious attention and a continued effort to try to make a difference.
11.35 am
Mr. David Drew: I shall keep my remarks as brief as possible, because I know that other hon. Members want to speak. I congratulate my fellow collaborator, my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz). It is good that we have already heard one of the answers to the problems: the growth of the credit union movement.
I pay tribute to citizens advice bureaux. When I am at the annual general meeting of the citizens advice bureaux in Stroud, I notice that, more and more, the discussion is given over to consumer debt. That does not belittle the other problems of housing and employment difficulties, but consumer debt is the problem of our age. Much as it pleases me that through the prudent operation of the Chancellor of the Exchequer we seem to have got a hold on public debt for the first time in a generation, on the other hand there has been an enormous growth—
Mr. Andrew Robathan: What about the Chancellor of the Exchequer's off-balance sheet debt, which many people are talking about? It is at its highest level ever, and it is growing.
Mr. Drew: I will not take the opportunity to discuss financial prudence in the macroeconomy, but I do want to make the point that the huge burden of consumer debt is growing.
I pay tribute to the citizens advice bureau in Stroud, which is under the managership of Caroline Pym, who is supported by Lindsey Waddington, Ann Horner and Chris Lingarde. They pick up issues with me all the time.
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In the past week, they have picked up on the need to deal with the social fund. The most vulnerable people in society still face arrangements that many of us think are ineffective and which go about trying to help people in the wrong way.
I want to concentrate on a couple of detailed areas and then to consider consumer education, which has not been discussed, even though many people get into debt because of the complexity of the arrangements. First, I return to an issue that has already been raised: without labouring the point, I want to emphasise that what seems to be wrong at the moment is that even the reputable financial companies try to offer more and more debt to their customers. The companies might call it credit, but, in reality, we are talking about debt. We need to recognise that.
I am not going to mention the companies by name because I have not got time, but we all know that they could do more about the situation. When people are in serious debt, companies tend to exact the last penny by imposing additional interest and chasing people. That is the wrong way to handle the situation; indeed, it is reprehensible. When people are in difficulty, there ought to be a point at which they are no longer chased. At the moment, companies offer even more opportunities for people to borrow, which is extraordinary, and then they go after people. That damages those people for the rest of their lives.
When people are at the ultimate stage of not being able to pay back their debt and seek to wipe the slate clean, two courses of action are open to them. They can either seek an administration order through the county court, or they can sue for personal bankruptcy. The problem with the former is that the amount of money that people are allowed to write off through an administration order has not changed since the 1970s. It is still stuck at £5,000, which almost certainly means that, owing to the complexity and level of their debt, more and more people have to sue for personal bankruptcy. My hon. Friend the Minister may want to write to me about that.
Suing for bankruptcy comes at a cost; people must have the money to be able to do it. To us, £250 plus court fees and a petition for bankruptcy may not sound a lot, but if people have no money, it is an added difficulty to raise it, so they go further into debt. We must search for a mechanism whereby people can try to work their way out of that dreadful problem.
In the short time available to me, I want to consider the other side of the matter. One of my constituents, Marie Jennings, who is—I hope—well known to my hon. Friend the Minister, has spent a lot of time trying to work through the complexity of consumer issues. She writes regularly for the Daily Mirror, the Daily Mail and other earnest publications, and her starting point is that it is not the fault of the individual that such levels of complexity are allowed to increase. The industry fails to explain, often deliberately, what people need to know. She has spent her lifetime trying to get those points across and I pay enormous credit to her.
Mr. Love: The recent Treasury Select Committee report highlighted the issue of transparency. Does my

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hon. Friend agree that there needs to be much greater transparency and simplicity in all the arrangements so that consumers know exactly what they are getting into?
Mr. Drew: My hon. Friend puts the matter more succinctly than I could. The nub of what is wrong is that we are encouraging greater complexity instead of simplification and transparency. Marie Jennings has told me many times that achieving the latter is not impossible. It may be difficult due to the myriad of different schemes, but that is up to the industry, the regulators and, therefore, the Government who appoint the regulators. I know that that is not the responsibility of my hon. Friend the Under-Secretary, but the Financial Services Authority needs that to be at the centre of its work in this area.
We have just had the Sandler and Pickering reports. My friend, Marie Jennings, is critical of the way in which they fail to go to the nub of the issue: how to enable people to understand their pension provision, what their pensions consist of, what is happening to them, and so on. That may seem to be irrelevant to consumer debt, but we must look at people's whole-life experience. They get into debt because their financial affairs go wrong not in one area but in multiple areas. If older people are kicked out of a final salary pension scheme on whose income they were relying, they will have difficulties. Marie Jennings has told me many times that we must recognise that consumer education, starting in school and continuing, is essential and possible, but the industry, through the regulator, must take responsibility for that. It is the only way in which to prevent some of the awful situations about which hon. Members have spoken today.
That is the main message that I want to leave with hon. Members. It would be particularly useful if my hon. Friend the Under-Secretary considered it in terms of education and the way in which we deal with specific problems, including the one to which I referred. The problem will not go away; it will increase and it is time that we in this place and elsewhere took it seriously.
11.43 am
Mr. Michael Weir: Before I was elected, I practised as a solicitor for many years. Consumer debt always caused problems and I often had to go to court to deal with small claims and summary cause cases. I reiterate the point made about the time orders under the Consumer Credit Act 1974. It would be helpful not only to individuals, but to courts if representation were available in such cases. There is nothing more frustrating for a court than to be faced with someone trying to conduct their own case and getting completely out of their depth. It takes up an extraordinary amount of time and goes nowhere.
The citizens advice bureaux give very good advice on these cases. Allowing them to be represented in court would be a major step forward, and should be instigated jointly with the Scottish Parliament. Under the Debtors (Scotland) Act 1987, there is a similar time by which to pay an order, and representation is allowed. There seems to be an inconsistency, which the Minister should examine, which perhaps highlights the complexity of the matter in that it crosses not only Parliaments but Departments.
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In its briefing note, Citizens Advice Scotland referred to what it calls the
"failure of the Social Fund",
which, I appreciate, is not directly under the Minister's control. It also says:
"The Social Fund was set up to help those on benefits cover large expenses such as household furniture or funeral payments."
It finds that the fund is failing those people, however, because a criterion for receiving the money is the ability to repay the loan. Many people who are in dire need of a loan cannot repay it, so they are turned down for the loan in the first place. Citizens Advice Scotland says that 40 per cent. of applicants are turned down for budgeting loans, 66 per cent. are turned down for community care grants, and 27 per cent. are turned down for crisis loans. Its point is that that drives away many of the people who still need to get the money to doorstep lenders, loan sharks and others, which leads to the problem of debt. I ask the Minister and her colleagues to examine how the social fund may be reformed to tackle those problems, although I appreciate that that does not fall within her remit. As I said, such people turn to unrestricted lenders.
There is also a particular problem in Scotland with in-court advisers, which, again, this Parliament and the Scottish Parliament should tackle jointly. Many courts in England have in-court advisers who can advise people in debt cases, but there is only one in-court adviser in Scotland—in Edinburgh. I ask the Minister and her colleagues to re-examine the social fund in relation not only to consumer credit, but to other forms of credit, as they all affect people.
11.46 am
Mr. Russell Brown: I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) on securing the debate. This morning, we have heard about high levels of personal debt, which, we would all agree, can cause misery for hundreds of people, especially at this time of year in the run-up to Christmas. People are often lured into credit agreements to buy presents on the basis that they receive interest-free credit for a few months. My hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall) described some of the things that can go wrong when people cannot afford to pay for the goods. A one-off payment needs to be made within a given period. When that period expires, the amount due, as he explained, can increase by as much as 30 per cent. of the initial cost, even though a downpayment was made.
In today's society, it is becoming much easier to obtain credit. Regrettably, however, it is becoming more and more difficult to escape the problems that can be caused by debt. In 2000, the citizens advice bureaux in Dumfries and Galloway had 1,930 people on their books who owed approximately £4.5 million in debt. During the following financial year, the advice service handled another £2.8 million of new multiple debt, which resulted in the overall debt figure rising to some £5.8 million.
The manager at my local citizens advice bureau recently gave me an indication of some of the horrendous problems with which people are confronted. I shall briefly mention three of them. She mentioned a client on income support who had an outstanding debt of £12,018 with a high street bank. It had refused its

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client's offer to repay the debt by £10 a week. Thankfully, however, they managed to agree the terms of repayment with the intervention of the citizens advice bureau. A single man who was off sick long term following a nervous breakdown owed £22,000 to five different finance houses. The only feasible option was sequestration, but the delay in the process took its toll on his precarious state of health.
In another case, a single parent with three part-time jobs had a total weekly income of £84.40 and debts amounting to more than £5,600, including money owed to two banks and the local authority. We must appreciate that people do not have only one debt; they tend to have several debts, which may include council tax payments or rent arrears.
Mr. Drew: My hon. Friend is making an important point. One of the problems in the case of multiple debts is that those who are owed money will not talk to one another, and I regularly hear that the debtor in a case will not talk directly to the CAB. Those complexities add to the confusion and increase the problem.
Mr. Brown: My hon. Friend is right. The various parties will often not talk to one another. I am sure that he and other hon. Members have experienced difficulties helping individuals who have similar problems and are familiar with the standard letter in reply, which says, "Sorry, we cannot disclose any information until we have something in writing from our client."
I have recent experience of two cases. My bank manager may think that I am just hitting high street banks, but, worryingly, high street banks have caused some of the most significant problems. The staff at banks seem to have information at their fingertips, almost at the touch of a button, and some problems seem to flow from the availability of information. In one case, the main breadwinner in a family, the husband, had become ill. The family decided to go to the bank for a small loan to cover a family event. After some detailed discussion at the bank, they were granted the £200 loan that they sought.
A couple of weeks later, the bank contacted the family saying, "We see that you also have a car loan, which you pay through the bank by direct debit. Would you like assistance with that?" The outstanding car loan was for £500 or £600, and the couple decided that it would be a splendid idea to pay it off. They paid off the car loan, increased their monthly repayments, and then the bank telephoned again to say, "It is getting near to Christmas. We realise that you are not receiving any money from your husband's employer. Is he still unwell? Would you like some assistance over Christmas?" In the end, a £200 loan became a £4,000 debt, hanging around the family's neck. It reached the stage when the family had to seek loans from the bank to make their payments to the bank. The situation became ridiculous and the family got out of the mess only when another family member assisted them.
In another case, a gentleman in his late 70s or early 80s, who had worked in a profession for many years, used his experience to provide holiday cover for businesses in a certain sector of the community. On the basis of that work in retirement, he managed to secure a loan from his bank. Regrettably, he contracted a life-
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threatening illness and his part-time work stopped, but the interest charged by the bank on his loan caused him great distress and he became almost suicidal on one occasion. Finally, with the assistance of my constituency office staff, we managed to establish a new repayment scheme, which eliminated all interest.
Since summer last year, the Government have taken significant steps and introduced a package of proposals, including increased protection for some of the most vulnerable consumers by clamping down on loan sharks—we have all heard sad stories involving them. Steps have also been taken to try to stop irresponsible lending. I include banks and other high street organisations in that category. Lenders must now consider whether their prospective borrower is overcommitted.
The issue of consumers wanting to settle loans early is important. It is difficult for people to get their minds around it. It is ridiculous that people should face tough penalties for settling early. I suspect that, like me, other hon. Members have dealt with people who have tried to settle a mortgage early and found that the building society wants an astronomical figure to allow them to do so. There should be a clampdown on such practices.
The point made by my hon. Friend the Member for Stroud (Mr. Drew) on educating the public about credit was right. Consumer education needs to be part of structured systems in the 21st century. We live in a consumer-driven society. Regrettably, many people fall foul of the systems in their continual striving to keep up with the Joneses. People suffer at the hands not only of loan sharks but of lenders who are perceived as responsible.
11.56 am
Dr. Vincent Cable: I add my congratulations to those that have been offered to the hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz). I do not know whether it was good luck or inspired judgment on his part that led to the debate being held after the release of the recent striking set of figures on consumer debt, but the circumstance prompts me to begin my remarks on a slightly different note from other contributors.
The consumer debt problem can be viewed at a micro, personal level—and rightly, because of its effect on people's lives and because of the working of the consumer credit market for individuals. However, it is also useful to look at the big picture and what is happening in the economy as a whole. There has been striking growth in consumer credit—13 per cent.—in the past year. We are in the middle of an extraordinary boom in consumer credit, at least as substantial as that of the 1980s.
I understand that in the past five years consumer credit debt has grown by about 55 per cent. In the 1980s it roughly doubled, so we are in the middle of a boom of the sort that last happened when Nigel Lawson was Chancellor, which came to a messy end. One hopes that this time things will not end in the same way. One must ask under what conditions the boom could come to a sticky end. The relevant figures were accompanied by a veiled warning from the Bank of England, in the coded language of its chief economist, that there could well be trouble along the road.

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How could the trouble arise? The one thing that makes individual consumer debt unsustainable is unemployment. My hon. Friend the Member for Edinburgh, West (John Barrett) referred to that. As the Liberal Democrat Member of Parliament for Edinburgh, West, he has long-term, secure employment, but many of our constituents do not.
I am forcefully reminded of that when I think about my constituency, which is in many ways a model of the new prosperity. We have virtually no unemployment. House prices have gone through the roof and the prosperity is visible. However, last month, for the first time in seven years, there was a sharp increase in unemployment. People are being laid off on a serious scale by the IT industry and by City accountants. That effect is spreading through the hitherto highly prosperous suburbs of south-west London. The first signs of serious problems are beginning to appear.
What happened in the 1980s will happen now. As people are laid off, their first task is to protect their mortgage. Many of them have heavily over-borrowed. They give first priority to their mortgage payments, but that puts pressure on their other consumer debt, much of which is credit card debt and conventional bank loans. Half of all consumer debt is credit card debt. Such people then find it difficult to escape their obligations, so they borrow in order to finance their borrowings and end up in a distressing cycle.
Although the British economy is in relatively good shape compared with those of other rich countries, recession is rolling in from the United States, Germany and Japan, and compounded by deflation—which none of us has experienced because it last happened 70 or 80 years ago—it might affect us. A world in which prices are falling is an horrific environment if one is a debtor because the value of the debt rises instead of falling over time, and one gets into a debt trap. I can envisage an alarming situation arising for people who already have high levels of consumer debt.
Mr. Drew: I totally concur with the hon. Gentleman on the macro side. To return to individual cases, job loss is often compounded by relationship breakdown and by illness. It is difficult to deal with a situation in which various forces have come to bear on multiple debt. In such circumstances, people need advice very quickly, but it is often not forthcoming.
Dr. Cable: That is a helpful point. Divorce has been a key factor in personal financial distress and, as the hon. Gentleman says, people need advice. The latest figures from the CAB suggest that there has been a 35 per cent. increase in people seeking financial advice—usually in distress. That is the context of the debate.
I should like to consider some positive ways forward. The hon. Member for Edinburgh, North and Leith seems to be promoting mutuality as a way of dealing with consumer debt. I strongly endorse that and I know of his work, and that of the hon. Member for Edmonton (Mr. Love), on credit unions. Mutuality is a way out of the trap for many who are caught with escalating debt obligations. The problem with credit unions, however, is that although the regulatory environment has
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improved, we are far short of the large-scale mutual lending practice in Ireland and the United States. I hope that we shall pay more attention to that.
Secondly, as the hon. Member for Stroud (Mr. Drew) has said, there are various ways in which Government and the regulatory agencies can assist with the problem of financial illiteracy. I do not mean that in a pejorative way. We are all financially illiterate to various degrees—the FSA pointed out yesterday that collectively we lose some £700 million a year as a result of not doing elementary things like checking the relative costs of bank accounts and credit. We can all learn. The FSA could help by placing more emphasis on financial education.
The hon. Member for Stroud made my third point too. A lot of problems arise not because of rogue lenders but because of mainstream ones. The problems with banks and credit card companies are real; they often charge more than they should. I always raise the following matter in debates relating to the financial sector, but in the interests of teasing the Minister, I still ask what is happening to the Government's proposals to deal with the banking system. Three years ago, a report suggested that the cost of credit was too high. The Government have made helpful suggestions on business lending, but there has been nothing about bank lending and no follow-up on the Cruickshank report. The regulation of the payment system is still out in the ether. All those things affect the cost and availability of credit.
Where do the Government stand on the credit card market? It has been argued that credit card interest rates are simply too high. The effective rate of interest is 15 to 20 per cent. in an environment in which the actual interest rate is 2 to 3 per cent. That is a high cost of credit, and the interest is often not transparent. I know that the matter has been considered by the Office of Fair Trading, but are the Government satisfied that the credit card market is working effectively and in the interests of consumers, bearing in mind that more than half of consumer debt is credit card debt? There are big questions to be asked about banks and credit cards.
Most hon. Members have mentioned non-status borrowers and non-status lenders—companies at the fringes of lending. I share many of the concerns that have been expressed, but it is important not to stereotype all companies in that line of business. Moneylenders are not necessarily a bad thing; they exist because the banking system fails and because people who cannot get credit from mainstream banks are bound to turn elsewhere. Some moneylenders are responsible and conscious of the fact that they deal with vulnerable people, but many are outright crooks. We must acknowledge that we are dealing with a spectrum of companies with different standards of integrity.
Certain practices are, however, clearly unacceptable. The hon. Member for Dumfries (Mr. Brown) mentioned the obvious and especially bad example of individuals who are penalised for trying to repay loans early. There are also the classic free-credit scams. People buy a washing machine on free credit, but incur penal interest rates if they miss any of the instalments by as much as a day. Their cheque or giro may have taken seven days to clear, but the credit company takes no account of that and is happy to impose penal interest rates. Other

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companies start imposing much higher rates once a debtor gets into difficulties. There are all kinds of malpractice.
What does the Minister think is the best way forward? How should we deal with the many malpractices that have been highlighted in the non-status lending market? There seem to be various options, and the OFT has considered the issue. The Enterprise Bill, which recently went through the House, will give the Government new powers to make stop-now orders. How many practices could be dealt with in that way? Will it be necessary to introduce legislation to update and strengthen the Consumer Credit Act 1974? I do not know the answer, and I am interested to hear how the Minister would deal with abuses that we all recognise as real and that clearly need attention.
12.7 pm
Mr. Andrew Robathan: Like the hon. Member for Twickenham (Dr. Cable), I shall focus on the macroeconomic causes of the increase in debt and on what the Government can or cannot do about it.
As the hon. Gentleman said, this debate is timely. The headline on the BBC online news at 10.16 yesterday was "UK shoppers build up record debt".
The accompanying article noted:
"Total lending rose by £8.9bn in September, the strongest monthly rise since records began in 1993"
It added that the level of debt was
"13.1 per cent. higher than the same time last year."
Similarly, mortgage lending has surged.
Like the hon. Member for Edinburgh, West (John Barrett), I should disclose a small interest. I, too, feel crushed by a mountain of debt, because I have a distressingly large mortgage. However, that was my choice and, like all hon. Members, I am privileged to have a regular income and relative job security. It is about two and a half years to the next election, so I will not take out any debts that extend beyond that time. I address that remark to every hon. Member, because no one can be certain in the game of politics. None the less, we are relatively privileged. Other people have limited or irregular incomes, and many suffer the problems of consumer debt.
Like other hon. Members, I shall briefly quote NACAB Its annual report states:
"Debt cases have continued to rise this year, with a 46 per cent. increase in the number of consumer debt problems dealt with by CABx over the last five years."
It notes:
"the top three reasons for indebtedness were job loss, poverty and over-commitment."
We all have tremendous sympathy with those who plan their lives reasonably but who are struck by job loss—perhaps as a result of illness—and whose lives fall apart. One third of those surveyed owed more than £10,000.
Sue Beaumont runs an excellent citizens advice bureau in Lutterworth, in my constituency. It gives me a good service, and I hold my advice sessions there. Sue Beaumont also keeps me well briefed on issues such as this.
I turn to another point that the CAB mentioned: in September 2001, there was £1.2 billion of unsecured consumer debt. That is an enormous problem and its
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impact on individuals' lives is dramatic, as we have heard. What should the Government's role be? I look forward to what the Minister has to say.
The net debt position—the difference between total saving and total borrowing—is the important and alarming factor. According to the figures from the Bank of England, the savings ratio has fallen to 3 per cent. As recently as five years ago, it was 10 per cent. Everybody in this Chamber believes that individuals are responsible for their own actions; they make choices from which they may or may not benefit. I do not think that anyone believes that the state is in the business of bailing out people who have become over-indebted. However, I think that we would also say that, notwithstanding individual responsibility, the Government are not absolved from their duty to create and maintain the right incentives so that individuals are neither encouraged to borrow too much, nor discouraged from saving too much.
The Government have discouraged savings—an issue on which I take the macroeconomic position. That is why the savings ratio has fallen. They abolished tax-free TESSAs, replacing them with less generous ISAs, which are a simple way of saving that many have taken up. The taxing of pensions through the abolition of the advance corporation tax credit has taken £5 billion a year out of people's savings.
We are now enduring a succession of leaks about how pensions will be less attractive in future—for instance, the reduction of the tax-free lump sum that people may take out. That is another discouragement to saving. The Government are so proud of their spending plans, though we now know that tax rises—perhaps up to £20 billion-worth—may be required by as early as 2006. That means that people's incomes and savings will be taxed further.
People are beginning to feel that no matter how carefully they try to save their money—in a bank account, on the stock market or in a pension fund—it will be taxed again. That is at the root of why the savings ratio has fallen. Individuals are therefore spending money, running down savings and amassing more debt, because they fear that the Government may take the money off them. The problem is not that people do not want to provide for their futures, but that the Government have not made it worthwhile for them to do so through personal savings. People are therefore spending money in a way that is traditional in this country: investing in the property market. The result is a debt-fuelled property boom, as the Bank of England identified, which is in danger of over-heating. We must all be concerned about that.
Through the Enterprise Bill, which I think the House is finally discussing again this evening, the Government plan to make bankruptcy easier. That will exacerbate the problem. Commenting on the Bill, the Institute of Chartered Accountants in England and Wales pointed out that the incidence of bankruptcy arising from consumer debt, as opposed to failed entrepreneurship, is rising. The institute argued that to reduce the bankruptcy period to 12 months will encourage consumers to embark on feckless financial behaviour. It stated:
"Our overall impression on the proposals on bankruptcy is that they appear too radical. Bankruptcy will become increasingly easy, to the extent that potential bankrupts will have little

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incentive to come to an agreement with their creditors, or avoid a repeat of their problems. Figures quoted in the White Paper confirm that at present more than half of personal bankruptcies, a proportion that is rising fast, are caused by consumer, not business debts."
The institute went on to argue that to reduce the period of bankruptcy to a maximum of 12 months for "honest" bankrupts would increase the number of bankruptcies. As the stigma and disadvantages of bankruptcy are reduced, there will be less incentive for debtors to reach an agreement with their creditors and so they will be more likely to opt for full bankruptcy.
Other hon. Members have mentioned the problems that confront individuals, and perhaps that is the basis on which the hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz) initiated the debate. I was appalled by the story told us by the hon. Member for Dumfries (Mr. Brown) about a high street bank encouraging a customer to get into such debt. That was plainly irresponsible. We know about predatory lending at high rates to poor people. We all have constituency cases of that sort. I would not necessarily describe such people as financially illiterate, but they may not be as privileged as we are, and may not have had a decent or reasonable education with some understanding of maths. However, they are plunged into debt with little hope of getting out of it often because of ghastly loan sharks. The credit unions can do a good job of helping such people, and the citizen advice bureaux do a good job in helping them to reschedule their debts.
The other, more difficult issue is the bombardment from credit card companies, which encourages debt by offering over-generous introductory rates. That could be considered a demonstration of how successful and competitive the consumer credit market is, but I think that anyone who pays debt on a credit card is foolish, because the annual percentage rate on such debts is higher than almost anything else. Nevertheless, I understand that the average credit card debt is in excess of £500 per card.
I have great sympathy with the points raised, particularly those by the hon. Member for Edinburgh, North and Leith—for instance, about the encouragement caused by the advertising of unwanted offers. I do not receive unsolicited junk mail because I am registered with the mailing preference service, which I recommend to everyone, including to my constituents. However, that does not get us away from the problem. I am generally against banning things. I am generally against banning unsolicited mail, but the Government have taken on board the fact that that some practices are unhelpful and should be discouraged—if not more.
I thought that the hon. Member for Stroud (Mr. Drew), with an intervention from the hon. Member for Edmonton, made a good point about the need for transparency and simplicity in offers. If one does not have the wherewithal to understand things—not every one does, and not all our constituents are as fortunate as us—one can be trapped by the headline offer. Those who do not understand the small print often end up in
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dire straits. On that note, I look forward to hearing what the Minister has to say about the Government's plans on the subject.
Mr. Deputy Speaker (Sir Nicholas Winterton): In calling the Minister to reply to the debate, may I congratulate her on her stamina in sitting through two full debates this morning.
12.17 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Miss Melanie Johnson): Thank you, Mr. Deputy Speaker, although I must add that colleagues have joined me.
I first congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mr. Lazarowicz) on being selected to lead this debate. I am glad to have the opportunity to say a few words in response because personal debt is on the increase. Indeed, hon. Members have commented on the fact that we read of it almost every day in our newspapers. The nation is increasingly using credit facilities, but the majority of the population do so successfully and can cope with their repayments. It is the use of credit as a tool—an enabler—that is increasing, and credit is a growing part of our day-to-day lives, but most of us can manage our loans or other credit without difficulty.
Borrowing can be a useful tool; it can help households to smooth their incomes over time, and such debt is not necessarily a problem. Manageable debt is not the same as unmanageable over-indebtedness. Debt becomes a problem only if people cannot afford the repayments, and when that happens it turns into over-indebtedness. Such debt has a cost. It has an impact on people's lives, and a cost to industry in terms of outstanding loans and goods not paid for.
We need to ensure that all consumers can manage their credit effectively. The Government want to build a nation in which all consumers understand that it is important to be able to master their finances and know how they might achieve it. People need to be able to make appropriate decisions about their finances and understand the choices open to them—and their implications.
Ultimately, individuals have a responsibility to manage their own finances effectively, but the Government's role is to empower them to do so. We need to be able to create the right regulatory framework to facilitate a competitive market environment and ensure appropriate consumer protection. My hon. Friend rightly pointed out that consumers need to be fully aware of what they get into when they take credit. One way in which we might help consumers is to consider how we can address the amount of small print in credit agreements, and identify ways in which lenders can minimise it and make such agreements easier to understand.
We need to ensure that individuals are financially literate. In doing so, we need to enable consumers to make informed judgments and take effective decisions. We must ensure that the appropriate generic information on financial management and products is available to them. Also, we have a role to play later in the debt cycle in dealing with over-indebtedness when it

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happens. We all need to ensure that consumers have access to debt advice and debt-management programmes when they need them.
We want to ensure that the Government's many initiatives that are designed to empower the sensible use of financial services are joined up, and that as a Government we always work in partnership with consumer groups, the voluntary sector and the credit industry to ensure that we get things right. I join several of my hon. Friends and other hon. Members in paying tribute to the work of citizens advice bureaux, National Debtline and others that provide invaluable advice and assistance to consumers with debt problems.
I want to address the debt statistics Although I do not deny that there are some concerns, hon. Members' worries may be unduly out of kilter with the overall debt environment. Although the sum of money owed is clearly rising, as are the number of calls to citizens advice bureaux, the number of accounts in arrears is equal to that in some previous years. County court judgments are falling. The percentage of accounts in arrears for one to three months was lower in July than it was in November 1996. I could give other figures, but I shall not spend time on them. The facts suggest that we use more credit facilities, but not necessarily that consumers are in general increasingly over-indebted. That is not to minimise the problems of over-indebtedness and the difficulties that several hon. Members have set out in persuasive detail.
The immediate question raised today is about irresponsible marketing. Two years ago, the Government set up an over-indebtedness taskforce to examine credit industry marketing techniques, among other things. I published the taskforce's first report in July 2001. At that time, the taskforce recommended that all relevant trade associations should either agree a general code of practice on marketing credit or develop their existing codes to cover best practices by no later than March this year. The taskforce agreed that best practice included, among other things, not giving the impression that easy credit was readily available and encouraging consumers to consider fully whether they could afford repayments. It concluded that the Office of Fair Trading should ensure relevant principles of marketing best practice when endorsing credit industry codes. The taskforce was reconvened this summer. It reviewed the progress of industry codes since its first report, and I expect to receive its second report soon.
An additional recommendation of the taskforce in 2001 was that a DTI working group, which includes representations from the credit industry, regulators and consumer groups, should be set up to examine specific marketing techniques. Those include the sending of unsolicited, pre-approved loans—they have been much mentioned by my hon. Friend the Member for Edinburgh, North and Leith and other hon. Members—credit card checks and overdraft facilities. The marketing techniques working group met several times between autumn 2001 and summer 2002. Its recommendations have been considered by the reconvened over-indebtedness taskforce.
The 2001 report also recommended a review of advertising regulations as part of the review of the Consumer Credit Act 1974, which hon. Members have mentioned. I am proposing to consult on reforming advertising regulations in the spring, with the aim of
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achieving clearer regulation and ensuring that consumers receive clear and understandable information to help them in their decision-making processes.
I turn to one further aspect of over-indebtedness. I refer to the performance and innovation unit's report, "Lending support: Modernising the Government's use of loans", which recommended a review of Government policy on over-indebtedness. The review, which is co-ordinated by the DTI, will investigate the demand for debt advice and financial literacy programmes. It will clarify the roles and responsibility of Government Departments on over-indebtedness, including the role of the social fund, which was mentioned by the hon. Member for Angus (Mr. Weir). It will make recommendations on future Government policy on reducing over-indebtedness.
The Government have a key role to play in ensuring that the market framework is right and that there is the right regulatory framework to foster a competitive and innovative financial services industry with proper consumer protection.
As hon. Members are aware, I have undertaken a radical shake-up of our consumer credit laws, which are now some 30 years old. The review of the Consumer Credit Act will ensure that it is up to date and relevant to today's modern environment, and will deliver the Government's manifesto commitment to improve protections against loan sharks. I have already consulted on increasing or removing the Act's financial limit, and I expect to publish our response to the consultation shortly. Before the end of the year, we will publish our proposals for allowing credit agreements to be made online. Most crucially, improvements will be made to the consumer credit licensing regime to make it more focused on enforcement and on strengthening consumer protection against extortionate credit of the kind that hon. Members have described.
I agree with my hon. Friend the Member for Edinburgh, North and Leith that it is too easy to get a credit licence. As part of my review of the licensing regime, I am also considering introducing a fitness test for applicants and an increase in the licence fee to enable the Office of Fair Trading and local trading standards departments to undertake effective enforcement in the marketplace. I shall consult on that issue before the end of the year.
As for legislating on loan sharks, I expect to make legislative changes next year. How that will be achieved will depend on the outcome of consultations that will be undertaken this year and early next year, but I expect some of those changes to be made through secondary legislation or through regulatory reform orders.
On the question of whether the big financial institutions are equally to blame for getting people into debt, I do not think that interest rate ceilings are the best way in which to deal with extortionate credit. The National Association of Citizens Advice Bureaux concluded in a report entitled "Daylight Robbery" that a ceiling rate could not operate effectively in the United Kingdom. I shall consult shortly on toughening the protections under the Act against extortionate credit, thereby making it easier for consumers to ask for the agreements to be re-opened. That will tackle the

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problem more appropriately and effectively than risking the removal of a sector of the credit market that actually helps some consumers.
Citizens advice bureaux do an excellent job in helping vulnerable consumers with debt and other problems. The Government give significant financial support to the service through a grant to NACAB, which amounted to nearly £17 million last year. Individual bureaux provide a local service, however, so it is right that they should be funded locally to provide services appropriate to their local communities.
My hon. Friend the Member for Stroud (Mr. Drew) mentioned the role of financial education and literacy. There are many issues to consider, not least that some 7 million adults in Britain have literacy skills below those expected of the average 11-year-old. An even greater number have a big problem with numbers. Research shows that adults with the poorest skills are those least likely to have savings and investments and those more likely to admit to being in debt. That is why we are working to improve financial literacy and to ensure that consumers have easy access to information. Students have the opportunity to be taught personal financial education in school through key stages 1 to 4 in the school curriculum. An adult basic skills agency is working on financial literacy and basic skills and we are working with the FSA in the ways that hon. Members mentioned.
May I conclude by drawing attention to work being done—
Mr. Deputy Speaker: Order. I regret that the Minister will not be able to complete her speech because time is up. We thank her for her reply, and we come to the next debate.

Parcelforce
12.30 pm
Sue Doughty: Parcelforce is a wholly owned part of Consignia, which is run by the Government; or not, depending on how one looks at it. We have a strange problem, in that Parcelforce has failed to make a profit for 10 years, but now it looks suspiciously as if areas of Parcelforce's business might turn in a profit. However, it has started choking on the part of its business that might make a profit. During the company's restructuring, it pushed a different type of service on to its customers. It said that that service would be better, but was amazed when the service was accepted; it said, "We did not expect you to do this."
The company is owned by the Government and subject to regulation. I have written to the Secretary of State about the company, and I hope that the Minister knows about the problems that we have encountered. The company seems to be rushing headlong over the cliff despite the fact that the problems are avoidable. Parcelforce's operation could affect many people; people in business who sell goods and use Parcelforce to ship them to customers and people who enjoy shopping from their homes and receiving deliveries.
One of my constituents drew the problem to my attention. He owns a successful mail order company that has been in business for many years. It employs 35 people and dispatches 40,000 items a year. It pays its bills on time and does a good job. It delivers to household addresses, does catalogue work for itself and others and deals with offers in newspapers. For example, people might read their favourite newspaper and scan it for readers' offers to find the garden gnome of their dreams. They might think, "That's just the offer. The price is right. What's the charge for postage and packing?" Such a person might send away for the garden gnome to complete a collection, and my constituent might handle that business. He would wrap up the gnome, take the customer's details, sort out the money and label up the package. Parcelforce would then deliver the package, or that was the plan.
At this time of year, demand for such services increases due to a seasonal uplift. Looking at my favourite garden gnome, I might think, "Gosh! Wouldn't my dad really like a garden gnome? I'll send for one for him for Christmas." The time at which the events that I shall discuss happened is pertinent to seasonal uplift. Businesses print their catalogues around August because they want an uplift of their autumn and winter trade. Their prices must remain consistent, which is an important part of the running of the businesses.
My constituent has used Parcelforce for many years. He has considered other carriers but decided that Parcelforce understands the business. Parcelforce said that it could provide a better service using track and trace technology—I shall refer to that later—which was essential. My constituent invested £12,000 in software to run the technology, so that if a customer rang up to say, "I haven't had my garden gnome. Is he lost?" my constituent could reply, "No. He is running around a particular depot and you, madam, will receive your garden gnome tomorrow." That is important and it is what customers expect in this day and age.

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After Parcelforce's announcement of the restructuring and rationalisation of its business, it met each of its customers to explain that it was withdrawing its 72-hour delivery service but could provide a 48-hour delivery service at an increased price All the businesses said, "We do not want to hear that. We have already published our prices, but we accept that we will have to take that hit because we feel that Parcelforce is the right company to do business with. Having examined the options, we feel that the company is the only one we can do business with."
In June, Parcelforce said that it was withdrawing the 72-hour delivery service and would provide a 48-hour service, which could be better for customers. However, that service is offered at the increased price of £3.20 a parcel. On 22 August, after the contracts had been signed with all its customers, Parcelforce went back to those customers and said that it was sorry, but it had got its sums so badly wrong that it could not renegotiate on price. It then said to some, but not all, of its customers that it would stop working for them in three weeks, although the contract had been signed for a year. That was Parcelforce's approach.
I took the matter up with the Ministry, although I did not get very far. We also negotiated a short extension with Parcelforce to the end of October, for which the price has increased again.
Some of the parcels business is being absorbed by the Royal Mail, but mail order businesses do not have parcels that are all of equal weight. For a book-ordering business, a transfer to Royal Mail might he possible and, if so, Royal Mail has options to pass business on to others. However, that choice was not offered to my constituent. He asked Parcelforce if he could pay a higher price rather than look around to see what other options were available. Parcelforce said that he could not pay a higher price because it could not take his business.
There is no problem with Parcelforce wanting to make a profit—that seems a sensible thing for it to do—but what will happen to my constituent's business? If he gets his costs wrong, it could be the difference between being in business and going out of business. It is possible to absorb price rises. It may be tight and businesses do not like doing it, but in the interests of continuity they may decide to do so until they enter into a new contract.
Other issues would arise if my constituent moved his business to another company. The issues around domestic delivery are very different from those of commercial delivery. If a parcel is delivered to one of the big commercial companies, there is always someone there to sign for it and delivery is usually no problem. A signature is also needed for domestic deliveries, but an arrangement needs to be made for cases in which the customer is out. Is the price of delivering on an alternative day or holding on to the parcel included? Is there a different price for delivering to a different address?
Domestic deliveries work in a different way. If someone orders, for example, a set of garden gnomes—a whole family—the price is related to weight, not to where the person lives. There is a universal price. If there is an established relationship with a customer, there are cages in which to pack things so that they are transported safely. Is international delivery possible,
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and what are the compensation levels? Those are all things on which any business would want a proper deal and a contract. Parcelforce has always offered that.
Mr. Alistair Carmichael: I agree with absolutely everything that my hon. Friend has said so far. The impact on end customers in my constituency is more fundamental, because if her father wished his garden gnome to be delivered to Orkney or Shetland, for example, he would probably find that, in the small print of the terms and conditions of the Sunday supplement, the delivery would not be free or cheap. In many instances, delivery would not be made at all to those islands. Even if delivery were possible, there would very often be an extra charge of £15, £20 or even £30 for the package.
Sue Doughty: I thank my hon. Friend for pointing that out. We are concerned that that will also be the case in the more far-flung parts of the mainland.
Mr. Alan Reid: I am grateful to my hon. Friend for giving way and for making the point about remote parts of the country. Is she aware that Parcelforce has drawn a line across the country, stretching from Fraserburgh on the North sea to Arrochar at the head of Loch Long, and that those living north-west of that line are disadvantaged, because prices are doubled for delivery to that area? For example, in two villages that are seven miles apart, it costs more than double to deliver to the village that is further away.
Mr. Deputy Speaker: If the hon. Member for Guildford (Sue Doughty) can answer that, she is a better hon. Lady than I thought she was.
Sue Doughty: I cannot answer that, but I thank my hon. Friend for drawing that to my attention, because we do not have those problems in the south of England. The point of mail order is to help those people who cannot get to shops. That includes people with disabilities, pensioners and people who do not have their own transport. A range of people want to shop at home, but may not be able to choose other places.
The problem cuts across other Government initiatives, such as e-commerce. I believe responsibility for postal services lies with the same Department as e-commerce. If my father, for example, had chosen his favourite garden gnome from a website and wanted it delivered to the north of Scotland, the e-commerce company might be deeply unhappy. The problem does not just apply to my constituent's business; it is much more widespread. My constituent contacted 15 companies to try to get them to take on the business. They had all sorts of reasons why they could not deliver: for example, they did not deliver in different parts of the country, there was differential pricing, they could not track the parcels and they did not have any arrangements to deal with signatures for domestic deliveries. Even worse, many of the 15 were going to come back with a price but had been rung by other mail order companies and backed off.
One major company, a well-known name in commercial delivery, has said that each of their 80 depots was receiving three of four calls a day from

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customers dropped by Parcelforce. That is not insignificant business. That company had an appointment to see my constituent with a view to taking on his business, but it suddenly realised that it would be overwhelmed by Parcelforce moving out of the sector and would not be able to make the investments necessary or the changes to its systems. That company then backed off as well.
I wrote to the Department of Trade and Industry, and hoped for an answer in three weeks. I rang and rang and, eventually, an extension was given. However, that did not really help because it takes six months to bed in a new supplier, not six weeks. There is some discrimination going on, as well. There is another mail order company on the same trading estate as my constituent's business. In fact, it is a competitor. One was allowed to renegotiate the price, but not the other. Is that fair?
We wrote to the Office of Fair Trading. It replied that it was not its responsibility, but that of Postcomm. We contacted Postwatch, which seems to be rapidly going out of business, and were told that it had nothing to do with such cases, and in any case the man I spoke to was about to leave his job. That was the end of that.
Dr. Vincent Cable: Is not the essence of the problem that the company has a de facto monopoly in many areas of its business and is abusing that monopoly, and that the regulator is—for whatever reason—unable or unwilling to intervene?
Sue Doughty: Absolutely, and that is clear when we address the real nature of Parcelforce. The Government made it clear to me that the activities of Parcelforce were a commercial matter for the board of Consignia. However, we are now learning from Postcomm that Parcelforce may be in breach of its licence. I should like the Minister to follow that up with Postcomm, look at the licensing terms of Parcelforce and check whether Parcelforce is in breach of its licence. If it is a commercial issue—we have no problem with Parcelforce becoming commercial, and no problem with competitiveness—where do we stand?
Let us consider the Government's history on the issue. In March, the Secretary of State announced the restructure. She said that Parcelforce Worldwide would concentrate on the growing market of guaranteed next-day and two-day deliveries in the UK and overseas, and transfer its universal service to the Royal Mail. However, when Parcelforce was renegotiating its contracts in June, was it looking to fit its customers into that growing market of 48-hour guaranteed deliveries? My constituent was moved on to that basis; it cost him more but he accepted it because he thought that there would be benefits, as well as disbenefits.
Parcelforce said of itself in an annual report:
"We see real potential in the express marketplace where we've grown our revenue by 10 per cent. in the last year. It's clear that this is where a successful future lies, and …builds on the success of our Coventry hubs and on track and trace technology"
Like Consignia, Parcelforce is repeatedly examined. When its representatives appeared before the Public Accounts Committee, they said that the introduction of
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track and trace technology—in which my constituent invested £12,000 to be compatible with—would make them more able to take on competitors. The Government saw the business plan and invested the money, so they must be stakeholders. Perhaps they care about their investment, even if they do not care about the customers whom Parcelforce is dumping.
I have brought the matter to hon. Members' attention not only because I am deeply concerned about my constituent, but because I want to raise with the Minister the inconsistencies involved. The Government own the business. On 28 May last year, the then Secretary of State denied privatisation plans.
We must query the role played by Postcomm. It stated that the "threat of competition" is the best way of dealing with Consignia's inefficiency but, as my hon. Friend the Member for Twickenham (Dr. Cable) said, there is no real competition in the domestic delivery market; we wish that there were. To achieve what we want, consumers must be taken into account. Yes, let it make a profit—there is nothing wrong with that—but it is important to maintain the domestic market, and nothing is happening to generate that. It is rather like the Government taxing fuel to manage a traffic-related problem, yet failing to invest in alternative transport.
I have other concerns. Do the Government really know what is going on with Consignia and Postcomm? Does Postcomm really know what Consignia is doing? Although Postcomm is now on the case, does it really understand what is happening? In April and May this year, the then Minister implied to the Select Committee on Trade and Industry that he had cautioned Postcomm about the possible effects of its proposals and stressed the need for Consigina to share information.
It seems that nobody has a clear strategy as regards the changes. In June, the Secretary of State said of the Consignia business:
"The challenge …is to improve the quality and reliability of its services, so that it can keep its customers rather than losing market share."—[Official Report, 13 June 2002; Vol. 386, c. 1017.]
I wish that Consignia could see it that way, because we need to encourage a business that is good at this very specialist market.
My constituent starts with a new supplier this week. He will work hard to make the system work, but switching takes six months, not six weeks. If there are snags in the system, his business will get the blame. When other mail order companies or newspaper businesses are looking for another supplier, he may fail because his track record has been damaged by the teething problems that he has encountered. I hope not, because he is desperately keen to make it work. How will all the other suppliers that are being dumped fare? Many jobs will be lost in those companies, as well as at Consignia, and the Government may be hearing from them before too long.
The Government have responsibilities, and they must meet them. I look forward to hearing the Minister explain just how they will do so.
12.48 pm
The Minister for E-Commerce and Competitiveness (Mr. Stephen Timms): I begin by referring to the wider position of Consignia, which provides the background

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to the debate. My right hon. Friend the Secretary of State for Trade and Industry made two statements to the House, in March and in June, following the announcements by Allan Leighton, the chairman of Consignia, about plans to restructure its postal services. The first phase of those plans concerned the restructuring of Parcelforce and the transport network of Royal Mail; the second related to changes in the way in which deliveries are made to households. Between them, those plans will reduce by £1.4 billion a year the costs that are being borne by the business. As my right hon. Friend made clear, that means significant reductions in the size of the work force. The chairman of Consignia announced the company's intention of achieving that on the basis of voluntary redundancies and by offering alternative jobs elsewhere in the company.
The process will be very difficult for everyone, but it is very much needed. The company showed a pre-tax loss of £1.2 billion for the last financial year. Much of that comprises exceptional costs from restructuring, but there was still an underlying loss of £318 million on its day-to-day operations—about £1.2 million for every single working day. Turnover in that year grew by 3.6 per cent., but there was a 4.8 per cent. rise in costs. Clearly, such losses cannot continue. An aim of the renewal plan that has been announced by Consignia is that losses will be eliminated and the company will return to profit in the next three years.
The Government's view is that greater commercial freedom in the public sector is the right way forward for the Post Office. We know that in exercising its new freedoms, some decisions were made that, with the benefit of hindsight, were wrong. In his announcement, Allan Leighton made the point that
"management mistakes have been made over a number of years".
Some of the international ventures that the company entered into illustrate that. However, the renewal plan is intended to address such problems and get the company back to profitability.
The Government have agreed a package of measures to help put the company on the right financial footing. They were outlined by my right hon. Friend the Secretary of State in June. The company will be able to use its balance sheet reserves of £1.8 billion, which represent accumulated past dividends and cash generated by the business, to back investment in the mails business to implement the renewal plan and to support the nationwide network of post offices, subject where necessary to the relevant state aid clearances. In addition, the Government do not intend to take any cash out of the business by way of dividends during the three years of the renewal plan.
Let me turn specifically to Parcelforce and the points that were raised by the hon. Member for Guildford (Sue Doughty) and other hon. Members. Parcelforce has been losing £15 million per month. As the hon. Lady said, in its 10 years it has never made a profit and has now amassed losses of nearly £400 million. Repeated attempts to make it work have not succeeded. Clearly, the situation could not be allowed to continue, because losses on the parcel business were draining the rest of the business of much-needed investment. For the sake of the company as a whole, the board decided that it had to restructure Parcelforce's operations in order to achieve profitability.
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Radical reshaping has begun. Once it is complete, annual savings will be £500 million. In the future, the company will concentrate on high value, time-guaranteed express services. It has withdrawn its standard three-days-plus delivery service and is reducing its depot network from 100 depots to 51. The changes will mean that Parcelforce will have a capacity of 40 million parcels a year, reduced from 120 million in the past. The company considers that trading in excess of that capacity would put at risk the quality of service provided to its remaining customers. In particular, Consignia is concerned that delaying the restructuring or not going ahead with it would result in the board reconsidering the possibility of closing Parcelforce completely, with the loss of a further 5,000 jobs. Therefore, it is most important that the changes are put into effect.
Parcelforce will be smaller but it will be more efficient and competitive and better able to respond to the needs of its customers. It is in a fully competitive market, in which many hundreds of competitors offer courier and parcels services.
Mr. Carmichael: I am very interested in the Minister's remarks about competitive markets and commercial freedom. Today, he has heard a description of the deregulation of Parcelforce, which has meant the end of a universal service for my constituents. Postcomm seems hell-bent on doing exactly the same thing to the delivery of letters. Will what happens to letter post be any different from what has happened to parcel post?
Mr. Timms: It is important to emphasise that a universal parcel service will continue. Consignia is licensed to provide a universal postal service by Postcomm, which can take action under that licence if Consignia fails to meet its obligations. The Parcelforce division of the business will not deliver the universal service, but will be integrated into the Royal Mail, which will, of course, operate on the basis of a uniform tariff. Consignia will continue to meet the universal service obligations that we have enshrined in legislation, and the Royal Mail will take on that task. People will be able to send parcels from their local post office, just as they do now, at a uniform tariff to every part of the country.
I want specifically to comment on the case raised by the hon. Member for Guildford. She has pursued it diligently, and I commend her on that and the work that she has done on behalf of her constituents. She will recognise that Consignia now has greater freedom to operate commercially without interference from the Government, and that it is for the company to determine how to deliver a range of services that best meet its customers needs and to decide the structure it needs to deliver those services.
As a result of decisions taken by Parcelforce, there is no doubt that some services used by some customers will be changed, or even withdrawn altogether, and replaced by others. I understand that 350 out of the total 30,000 account customers will be affected by the termination of express contracts in the way in which the hon. Lady has outlined, due to the reduction in capacity by Parcelforce. That is because Parcelforce has concluded that it cannot serve those contracts profitably.
In the case of the particular organisation in the hon. Lady's constituency, Consignia tells me that the price offered was too low to fit in with its restructuring plans,

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and the decision was taken to cancel the contract. The contractual requirement was for two weeks' notice and, as she has stated, that period, which ends tomorrow, was extended to nearly three months to give the company the opportunity to find an alternative supplier. I welcome her making the point, which matches my understanding of the matter, that the company has found an alternative supplier.
Consignia has also offered to support the company in reconfiguring its software systems to allow them to be used with the new supplier. The hon. Lady made a fair point about the difficulty facing the company in changing its system, which it had recently done, making a substantial investment in doing so. It is absolutely right that Consignia should make an offer, which I understand has been agreed, to help the company to reconfigure its system to deal with the new supplier.
Sue Doughty: My constituent would dispute the point about prices because he offered to pay a higher price, but it was made clear to him that his business was not wanted.
Mr. Timms: It is helpful that an alternative supplier has been found. The hon. Lady was right to draw attention to the importance of e-commerce because online purchases increased by more than 40 per cent. last year; it is an area of rapid growth. It is important that the needs of everybody in the industry should be met, whether they are supplying garden gnomes or other products. Given the variety of suppliers in the marketplace, we can expect that to happen.
The hon. Lady referred to the Office of Fair Trading, which investigated the case and concluded that Parcelforce did not infringe the requirements of competition legislation. I understand that Postcomm is considering whether there was a breach of the licence conditions, and it will shortly notify the hon. Lady's constituent of its conclusion.
I well understand, as do all hon. Members here, the desire of many of Parcelforce's customers to remain with a well-known and trusted postal service supplier. Royal Mail and Parcelforce will between them continue to offer a wide range of services, including the standard universal service, at a uniform tariff to every part of the country and a range of competitive services that have been developed to compete with other suppliers—
Mr. Deputy Speaker: Order. I regret that time is up. We thank the Minister for his reply.

Gloucester South-West Bypass
1 pm
Mr. Parmjit Dhanda: I am grateful to be granted an Adjournment debate on Gloucester's south-west bypass. The issue has transport, regeneration and economic implications for my constituency, the whole county of Gloucestershire and the south-west region.
For reasons that I shall outline, I seek £17.6 million of Government funding through the local transport plan to support Gloucestershire county council's bid to complete—at long last—the building of the Gloucester south-west bypass. In taking up the cause, I am supported by the South West of England Regional Development Agency, whose chairman, Sir Michael Lickiss, has already written to the Deputy Prime Minister and the Secretary of State for Transport. I am also supported by the regional branch of the CBI, with which I met on Friday, Gloucestershire county council, Gloucester city council and, including me, five Gloucestershire Members of Parliament, encompassing all three major political parties. Such is the urgency of this matter.
I begin with the transport implications of the scheme. The bypass will bring great public transport benefits and improve road safety throughout the area. It will provide a new strategic link from the M5 south of Gloucester to the A417 west of Westgate bridge, and relieve congestion on the existing A430, known as Bristol road. It will create an efficient high-quality public transport corridor through the city and improve the immediate environment of local residents. It will also provide a long-awaited bypass for the local village of Hempsted in my constituency. In addition, it will link up with the Gloucester inner relief road to enable a substantial reduction in traffic and congestion in the centre of Gloucester, bringing environmental benefits, including pedestrianising the Gloucester docks area. Those public transport benefits are much needed in themselves and formed a chief part of the original scheme for the bypass, which was devised in the early 1990s.
However, the bypass does not just relate to transport. More than £500 million of town centre regeneration and development are hanging on the completion of the Gloucester south-west bypass. Sir Michael Lickiss, the RDA chairman, said:
"There is now a real opportunity to secure very substantial regeneration benefits in the heart of the city which could have a major impact on the economic performance of Gloucester. The completion of the bypass will act as a catalyst to create the commercial confidence needed to stimulate the regeneration of the City."
Gloucester's western waterfront is one of the most significant waterfront regeneration projects in the UK, made up of a series of interconnecting development areas that wrap around the western and southern parts of central Gloucester and overlook the canal, the docks, the river and areas of flood plain. The scheme could unlock more than £500 million of public and private investment in jobs, retail, tourism, leisure, housing and education; part of the scheme includes a new further education college in the docks. Part of the key is £17.6 million from the Government when they make the local transport plan announcements in a few weeks.
The potential output of the scheme meets all the Government's targets for brownfield development. Part of the scheme would ensure the regeneration of more

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than 70 hectares of brownfield land. Almost 90 hectares of greenfield land would be protected. More than 2.000 new homes would be created. More than 4,250 m of waterfront would be improved. More than 80 historic buildings would be repaired with the support of English Heritage, which is also a key partner in the developments in the Gloucester docks area. Importantly, there would be a significant reduction in the flood plain with the removal of obstructions when putting the road in place.
Gloucester's schemes tick all the Government's boxes concerning brownfield development. The major development proposals in the area include the St. Oswald's park development, also known as the cattle market site. It is a mixed-use scheme, blending employment, retail, leisure and residential uses. It is valued at more than £100 million and would create a whole new urban quarter for Gloucester on what is at the moment a rather unattractive former landfill site. There are no major objectors to the scheme and, although the Office of the Deputy Prime Minister has called the scheme in, I hope that we shall get the green light this week for the scheme to progress. Part of the difficulty is that the scheme encompasses a £700,000 contribution to the bypass, as do so many private development schemes. Uncertainty over the planning process brings about greater uncertainty in terms of section 106 moneys, on which I shall elaborate in a moment.
Westgate island is another key part of the scheme that would create a new entrance to the city centre from the west and provide a new setting for Gloucester's 900-year-old cathedral for those approaching the city. The docks basin is the key site on the western waterfront because it would provide a link between the waterfront developments and the city centre. The site has recently been bought by the RDA, which demonstrates its commitment to development in the town centre. It would provide a mixed-use development, including housing, in the city centre.
Perhaps the biggest part of the scheme is the Gloucester quays development, which is a mixed-use development, including more than 1,000 homes, a superstore, an hotel, a designer outlet centre and the new Gloscat college of further education, which would be in the docks. The new college in the docks would be alongside the 12th century Llanthony priory, which is now alone and derelict in the docks and could be used as part of a performing arts venue if it were revived alongside the campus with the support of English Heritage. Gloucester quays is valued at well over £200 million and an outline planning application has already been lodged. The key to unlock the development is £17.6 million.
The Government first accepted the bid for the bypass back in 1994 and it was made clear that that acceptance was based on Government expectations of maximising developers' contributions, but therein lies part of the difficulty. The size and scale of the now massive potential development has grown since 1994 and it is now even more in the Government's interests to complete the south-west bypass and unlock that potential. The benefits of the project are not in doubt locally and throughout the country. All local Members of Parliament have signed up in support of the scheme and I believe that the Government accept that there are
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real benefits. What is uncertain is the funding. Gloucester's south-west bypass is an approved road scheme dating back to 1994. but its funding has always relied on securing significant contributions from private sector developers.
The current estimated cost for the whole bypass is £35.3 million. Contributions from developers amounting to £6.2 million have already been secured and £11.5 million of Government funding has previously been approved. That has allowed two sections of the bypass to be built, but those currently stand in isolation and do not offer the benefits that would be provided by the overall improvements. A completed bypass would make a huge difference. The two isolated parts are simply a reminder to the people of Gloucester of what could have been achieved and, perhaps, what still might be.
Original cost estimates presented in 1994 were significantly lower than the £35.3 million figure that is currently being reported. I share what are bound to be the concerns of my hon. Friend and the Department about the escalation of the costs. The speed of progress has been held back by the need to capture developer contributions as schemes led by the private sector have emerged. Indeed, the inflation of construction costs, year by year, has added more than 5 per cent. to the cost of the scheme.
Other factors have led to price increases. Those include the need for enhanced flood protection works and constraints on working due to difficulties with underground gas and oil pipelines. Time slippage and general cost inflation have also had a significant impact on the scheme. In some respects, it is a bit like a game of poker. Let me give my hon. Friend an example; a major potential private sector contribution to the bypass was linked to the development of the former RAF Quedgley, or Eastchurch site, lying to the south of the city of Gloucester. The developer had offered a £6 million contribution to the bypass, subject to its securing planning consent for a mixed-use development that would include a substantial number of houses.
As a result of a planning appeal the development proposals became the subject of a public inquiry. The inspector recommended that the proposals should be approved and that the Government office for the south-west also recommended approval. The Secretary of State, however, issued a minded to refuse letter and requested additional submissions from the parties who were represented at the inquiry. That is not intended as a criticism of the Deputy Prime Minister or his Department, but it is an example of how things can go awry if we expect all the dominos to fall into place. There are, in addition, two issues to deal with: planning, which falls under the remit of the Office of the Deputy Prime Minister, and transport, which is overseen by the Department that my hon. Friend is representing today.
In the interim period, both the timetable and the outcome of the Secretary of State's decision are uncertain and, as time drags on, the costs will inevitably increase. In the Gloucester quays area, other developers see the viability of their project begin to suffer, and Gloscat is left in the dark as to whether the new further education college can go ahead without guarantees about the bypass; and so it goes on. The result is an

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increasing lack of confidence on the part of the developers who are waiting for the road and would, in turn, encourage private development in the city.
My hon. Friend and his Department can remove the confusion and hesitation in one fell swoop by accepting the bid. In this case, it is desirable to break the link between the private sector contributions that are being sought for the bypass and the sensitivities of the planning process. I know that there have been several meetings between the Department for Transport and the city and county councils to discuss the additional funding requirements. It is understandable that Department for Transport officials have been keen to explore whether other private sector contributions might be captured and whether the regional development agency and local authorities might offer more direct support.
The city and county councils, the RDA and local Members of Parliament are confident that all reasonable avenues for support have been exhaustively explored. All the key partners appreciate that the Gloucester south-west bypass needs to be completed within a committed time scale. That is a fundamental precursor to unlocking the full regeneration potential in the city and will have a knock-on effect on jobs and prosperity in the rest of the county and wider region.
The Government have a clear opportunity to resolve the issue with an increase in the local transport plan settlement for Gloucestershire. A sum of £17.6 million will enable us to complete the bypass on budget and on time in 2005. My hon. Friend is a good friend of Gloucester and has been a regular visitor over the years. I hope that he and his Department will accept my arguments and I hope that he will listen to the partners who are involved in this massive scheme. Those partners include the regional CBI, the Learning and Skills Council—which is backing the further education college plan to move to Gloucester docks—Gloscat, the private developers, Gloucester city council, Gloucestershire county council and the South West of England Regional Development Agency.
The partners also include Members of Parliament; my hon. Friends the Members for Stroud (Mr. Drew), who is here today, and for Forest of Dean (Diana Organ), the hon. Members for Cotswold (Mr. Clifton-Brown) and for Cheltenham (Mr. Jones) and myself, the hon. Member for Gloucester. We encompass all political parties. We need this road; it is a road to prosperity and regeneration.
Mr. Deputy Speaker: I call the Minister, who is a regular attender in Westminster Hall.
1.16 pm
The Parliamentary Under-Secretary of State for Transport (Mr. David Jamieson): Thank you, Mr. Deputy Speaker. Sometimes I feel that I am as regular an attender as you.
First, I congratulate my good friend, the hon. Member for Gloucester (Mr. Dhanda), on securing this debate and on the cogent and powerful way in which he has presented his case. At the risk of embarrassing him, it has been good to witness someone who speaks so
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forcibly, volubly and knowledgeably about his area and constituents. I am flattered to be called a friend of Gloucester. If there are friends of Gloucester, it is mainly because of the charm and personality of my hon. Friend.
The Government recognise the importance that the hon. Gentleman places on the completion of the bypass. I recognise his role, both in improving transport in his constituency and in the wider aims that he has set out so clearly. I appreciate that there is strong local support for the scheme.
In the time available, I want to set out what the Government are doing to ensure that local authorities can deliver improved integrated transport in their areas. I will address the specific issues that my hon. Friend has raised on the Gloucester south-west bypass. The Government are committed to sustained, long-term investment to improve local transport. That is a key element of our 10-year plan for transport. We have already made clear the importance that we place on the improvement of local transport provision.
The 1998 White Paper on integrated transport introduced the concept of five-year local transport plans—LTPs—which set transport within our wider objectives for local authorities and within our national framework for integrated transport. In December 2000, we illustrated our commitment to delivering improvement by announcing an £8.4 billion investment package to implement five-year local transport plans across England outside of London.
The local transport capital settlement, which was announced in December 2001, gave details of the second instalment of the funding, with £1.5 billion being made available to authorities in the current financial year. That increased and sustained funding will help to deliver the Government's vision of a high-quality transport network that meets people's needs and offers more choice to individuals, families, communities and businesses.
We have schemes that will help to meet the targets and deliver the outputs that are set out in our 10-year plan. They will reduce the environmental impact of traffic by improving air quality, reducing emissions and noise and reducing congestion in large urban areas. However, the projects are not only to do with infrastructure. We are providing the investment that will allow authorities to deliver a huge range of small-scale integrated transport projects, from local safety schemes, bus priority measures and park-and-ride services, to schemes to encourage cycling and walking.
I have seen at first hand, especially in Gloucester with its go-ahead thinking, what a difference such schemes can make to the safety and well-being of local communities. An especially successful local transport project is the Gloucester safer city project, which has been a major success and is a flagship for the work that a local authority can do when it uses its funding to improve transport in its area.
I referred to the increase in investment in local transport at a national level, but it has been much in evidence in Gloucestershire. We allocated £16.5 million to Gloucestershire county council in 2001–02, and £18.1 million in 2002–03, making more than £34 million in the first two years of its five-year local transport plan. That compares with a total of £16.5

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million in the previous two years, and is more than a doubling of the resources available in Gloucestershire for improvements to transport. It reiterates our commitment to boosting the resources for local authorities to implement five-year plans and provides Gloucestershire with the opportunity greatly to improve its local transport provision.
I am sure that my hon. Friend would agree that the Government are committed to improving local transport. We have provided local authorities with not only the funding to implement the measures in their plans, but the flexibility to determine their own priorities within their local transport allocations. That is in line with the Government's policy on providing local accountability. In giving local authorities in Gloucestershire the extra resources to which I referred, we have also given them the discretion to allocate those resources within their local transport plan. Local people can now make local decisions in accordance with local priorities.
That means that local authorities, like the Government, will have to make choices and sometimes take difficult decisions about where their priorities lie. Greater local discretion may mean that local authorities have to reprioritise their allocations to meet changing demands, such as increases in the costs of individual schemes. That is just a summary of the general points that the Government have made and where we stand with Gloucestershire.
Mr. David Drew: I apologise for my lateness, which was due to my complete inability to read the Order Paper correctly. Before my hon. Friend the Minister talks about the south-west bypass, I must emphasise that our problem is that other parts of that bypass have already been completed. That is causing so much inconvenience and stress, and I hope that he will bear that in mind when he talks about how we can find the money for it.
Mr. Jamieson: That is very kind of my hon. Friend the Member for Stroud (Mr. Drew). He may not be able to read the Order Paper, but he has certainly read my speech because he has anticipated some of the points that I was about to make.
On the specific issues of today's debate, the Gloucester south-west bypass has a long history that dates back to the mid-1990s, as my hon. Friend the Member for Gloucester said. The proposal for Government funding was first put forward under the predecessor of the local transport plan system, the transport policies and programmes, or TPP, system.
My hon. Friend very adequately described what the bypass would do and what has been developed so far, and I will not detain the House with another description. The scheme was approved for Government funding in December 1994, and has been receiving financial support through the transport supplementary grant since April 1995. Successive Governments have demonstrated their continuing commitment to that scheme with allocations totalling £11.5 million over the past seven years. Last year, for example, we gave Gloucestershire more than £1.6 million, and £0.8 million in the previous year.
When the scheme was originally accepted for funding, the estimated total cost was £17.7 million, with £5 million provided through developer contributions.
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The original programme completion date was 2000. According to current estimates, the total cost of the scheme has risen to £35.3 million, and the completion date is now about 2005. Any Government would be concerned about such delays in completing the scheme and the substantial increase in projected costs. I am sure that my hon. Friend would agree that we want the benefits from our investment delivered to the travelling public and the local community as quickly as possible. I am sure that that is true locally, for the development of the local economy.
I readily accept my hon. Friend's point that some of the cost increases have been unavoidable and are for additional works that could not have been anticipated when the scheme was first proposed. However, I am sure that he will appreciate that the Government, rightly, cannot provide a blank cheque for every cost overrun on every scheme. We cannot plan effectively on the basis of funding cost overruns that may happen as a matter of course.
Mr. Dhanda:It is worth remembering that £6 million has been secured in developer contributions. My hon. Friend the Under-Secretary has made that point himself. Part of the difficulty is that the scheme dates back to the early 1990s, when the value of the scheme to Government, the county and the region was nothing like as great as it is now. The scheme now has a value of about £500 million, and is annually worth billions of pounds of revenue in jobs and opportunities. I hope that his Department will consider that when it deals with the bid for £17.6 million. It is supported not only by local agencies, which would obviously support it, but the RDA, which has put a significant sum of money—well over £20 million—into the docks area.
Mr. Jamieson:I was not trying to pour cold water on the scheme. My hon. Friend was looking a little concerned, but I was making the strong point that we must have good value for money. The people of Gloucestershire would want that as well in terms of the expenditure. It is for the local authority to make the case for increased funding and to provide adequate assurances that the scheme will be delivered without delay and further additional costs. That would be in his interests and those of Gloucestershire. If the Government unquestioningly met such increases, every pound spent on an overrun on one project would be a pound not spent on another. It could be a pound not spent on another scheme in Gloucester.
I welcome the fact that Gloucestershire county council has made good progress on securing further contributions towards the scheme from private developers that will benefit from it. My officials have been in discussion with officers from the county council on the case for additional funding for the scheme.
My hon. Friend made a coherent and well argued case for the Government to provide additional resources for the bypass to be completed. My ministerial colleagues will carefully consider the case made by the local authority for additional funds. They will assess not only the transport benefits of the scheme at the increased costs, but the points that he made so clearly today. I welcome Gloucestershire county council's agreement in principle to provide funds from its transport budget towards the additional costs, especially as that further

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demonstrates its commitment to the scheme and the recognition of the priority that the council places on its completion.
The local authority has provided my Department with the required additional information to support the case for increased funding. We shall consider it carefully in coming to a decision in December on the level of further Government funding, as part of the local transport capital settlement. I assure my hon. Friend that, in considering the case for further funding, we will be all too aware of the persuasive arguments that he has made today in relation to the vital role of the bypass in the delivery of transport and economic improvements in Gloucester. However, I remind him that sometimes authorities have to make difficult decisions, just as Governments do.
I hope that, in the short time that I have had available, I have been able to convince my hon. Friend the Member for Gloucester that my ministerial colleagues and I are well aware of the case that is being put forward with respect to the Gloucestershire south-west bypass, and that we shall endeavour to reach a decision as soon as is practicable.
Mr. Deputy Speaker: Order. We now move on to the next debate, but, sadly, without a Minister. [Interruption.] The Minister has arrived. I confess I was padding things out a bit.

Cross-Channel Shopping
1.30 pm
Mr. David Laws: I am delighted to have an opportunity to raise this important issue, and I welcome the Economic Secretary to his place. As you said, Mr. Deputy Speaker, he was delayed slightly, and one could perhaps say the same of yesterday's announcement by the Government. We should be grateful that they both turned up eventually.
I do not know whether to describe the debate as timely or particularly untimely in the light of yesterday's announcement by the Economic Secretary, which, broadly speaking, I welcome. However, the debate provides an opportunity for us to scrutinise the announcement, to ask questions about the implications for relevant Treasury policy and to find out whether the Government's new policy is likely to deal with the problems that have been created in the past couple of years.
According to the press release issued by Customs and Excise and to the Economic Secretary's statement, yesterday's announcement was not a change in policy. He described it, in his introductory comments to a press conference, as the next stage in a Government strategy to combat cross-channel smuggling. A Treasury source seemed particularly insistent about this, telling the Evening Standard that it was ridiculous to speak of a U-turn, as the announcement was part of a long-term strategy. That will surprise many people who have for some time been lobbying on the matter, including many of my parliamentary colleagues, Members of the European Parliament, the European Commissioner Mr. Bolkestein and others.
The Economic Secretary's comments yesterday seem to jar somewhat with those made by his right hon. Friend the Chief Secretary to the Treasury at a meeting we had with him some months ago. I am glad that there has been a rethink of the issue and that the Government have decided to move in the direction suggested by the legal judgments, the EU Commissioner and, perhaps, some of the newspapers that have campaigned on the issue recently, not least The Sun and the Daily Express.
You will probably recall, Mr. Deputy Speaker, that, in September, the Economic Secretary was criticising the European Commissioner, Mr. Bolkestein, for raising the question of the UK Government's attitude to cross-channel trade in tobacco and alcohol. He criticised Mr. Bolkestein for trying to be a popular hero on this issue and for trying to whip up enthusiasm among the press over cross-channel trade. I was therefore rather surprised by an article in The Sun on 21 October—only a few days before this announcement—with a headline suggesting that the Economic Secretary was ordering a U-turn; that seems somewhat off-message. A rather nice picture of the Economic Secretary bore a caption stating that he was backing shoppers. The Government's thinking about this matter seems to have undergone a welcome change, but it is not yet clear whether legal pressure forced them into it, or whether they have had a change of heart.
I welcome the substance of yesterday's statement, because it is intended to deal with three areas of concern raised by, among others, the Commission, Members of Parliament and Members of the European Parliament.

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The first issue that it deals with, in part, is the burden of proof. It is outrageous that, in a single market—and in a legal system such as ours, under which people are assumed to be innocent until proven guilty—control of cross-channel trade in tobacco and alcohol by Customs and Excise should result in people having to demonstrate their innocence, rather than Customs being obliged to establish that they are bringing in alcohol and tobacco not for their personal use, which is not restricted under EU rules, but for on-sale to other parties. For the past year or so, Customs has been operating on the presumption that the burden of proof is on individuals coming across the channel to prove that they are not smuggling.
The extent to which the burden of proof has been balanced in that way is shown by another aspect of the crisis. The Minister who formerly had responsibility for these matters—the current Chief Secretary to the Treasury—contacted me about a case that I had raised on behalf of a constituent. The lady concerned lent her car to her son so that he could travel to France. He was stopped on the way back and was found to have an amount of tobacco that was over the guideline amount but not the limit amount. The car, of course, was seized by Customs, but it was not returned to the lady; as a consequence, she had problems getting to work—Somerset is a rural area—and was in danger of losing her job.
The Chief Secretary indicated that where the owner of the vehicle was not present, they must be able to demonstrate that they were genuinely innocent of any involvement. Customs interprets that to mean that aside from where a vehicle is stolen and reported to the police prior to seizure, a person who has consented to the use of the vehicle by others accepts a risk by doing so. In other words, if you lend a vehicle to someone, you are assumed to be as guilty as they are if they come back with an amount of cigarettes or alcohol in excess of the guideline amounts. It is outrageous, by any standards, that people should be assumed to be guilty until proven innocent, but that is how the assumption of guilt has been working; people who lend out their vehicles are assumed to be guilty unless the vehicle has been stolen. That is bizarre, and I am glad that the Government have tried to address the issue.
The second issue that the Government have tried to address is the fact that, in many cases, the penalties are draconian in relation to the offence. We are not here to defend those who engage in serious, large-volume cross-channel smuggling and fraud, but some of those who have brought back alcohol and tobacco, been aware that there was no personal limit on the amount that they could bring back for personal use and been caught out by Customs officers, who have accused them of bringing back amounts over the guideline amount. For small excesses, their vehicles are then confiscated and may not be returned.
Vehicles with a value of £ 15,000 or £20,000 could have been seized and not returned as a consequence of an amount being brought back in excess of the guideline amounts by only a moderate amount. That seems draconian and unfair. Equally unfair is the fact that those bringing back tobacco or alcohol over the guideline amount by a larger amount who drive vehicles of a lesser value would, by losing that vehicle, incur a much smaller penalty than those with large and
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expensive cars who, in the view of Customs officers, happened to be over the guideline amount with no good reason.
The third issue that the Government have sensibly sought to address is the mismatch between the guideline amounts for alcohol and for tobacco. People were able to bring back 90 litres of wine, which is a substantial amount by anybody's standards; one certainly could not whistle through that in a few days. However, the number of cigarettes that could be brought back was far less in magnitude and could be consumed by a household within a short time. Increasing the guideline amount for cigarettes was extremely sensible and welcome.
It is important that we do not simply focus on the good things, much though the Economic Secretary might want me to. We should highlight concerns and ask where the changes may lead and what problems may arise.
First, we must press the Economic Secretary on the amount of resources that will be available to Customs to police the new arrangements, which, in some respects, will be no easier to police than the previous ones. He will he aware of the difficulty that Customs has had in dealing with the huge amounts of tobacco and alcohol that have been smuggled during the past few years and of the need properly to resource its efforts. I hope that he will say something about that.
Secondly, will the Economic Secretary clarify the issue of stop and search, which came up in the Hoverspeed legal judgment? The Government's approach was challenged, and it was suggested—with good reason, I suspect—that Customs officers randomly stopped and searched people coming back over the channel to see whether they had more than the guideline limits. Should Customs officers stop and search individuals returning from the continent in a free and open single market? Will the guidelines for officers be clear in that respect? What evidence will give officers reasonable grounds to stop and search a vehicle?
Thirdly, we need assurances about the vehicles that Customs has seized and which are still in the pounds. People who are waiting on appeals will have heard yesterday of the change in policy and will be wondering whether the Government will now take a more reasonable line. That is particularly true, now that the guideline limit has been changed, of those whose vehicles were seized because they had more tobacco than was allowed. Will the Economic Secretary consider an amnesty to return cars that have been seized? Is he prepared to compensate those whose cars have been destroyed in the meantime? Such people will be angry to discover that the Government have changed their mind and acknowledged that it would be sensible to treat the amounts that those people brought back as being for personal use.
Fourthly, there is the substantive issue of how the new rules will work in relation to the burden of proof. The Government have given the impression that the burden of proof will again fall on Customs staff and that it will

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not be for the citizen to prove his innocence. However, yesterday's Treasury press release, and the notes to editors, clarify show how the burden of proof will be treated, stating:
"In practice, this new policy also means that individuals who bring back more than that required to keep the average smoker in supply for more than six months will be required to provide an explanation to Customs for their purchase. If they cannot, then Customs may very well conclude that the goods are for a commercial purpose."
How different will that be in practice from the current arrangements? Will Customs not still put the onus on the individual to explain his circumstances in a way that meets its requirements? The approach in the press release is very different from that in the rest of the law, which assumes that people are innocent until proven guilty. If I walked down the street outside the Palace of Westminster with an expensive stereo, the police could not ask me to justify why I had it; they could arrest me only if they had good reason to assume that I had stolen it. I am not sure that the new Government guidelines are sufficiently clear in that respect.
Lastly, there is a much wider issue, which I urge the Government to consider. I had a useful meeting yesterday with the chairman of Shepherd Neame, the brewers, which has been active on this issue. There is a wider concern about the misalignment in alcohol duties between this country and the continent. Although the Liberal Democrats are not in favour of the enforced harmonisation of taxes in Europe and believe that the issue should be resolved through tax competition, there is concern about whether the arrangements can be policed satisfactorily in a single market in which people are assumed to be innocent until proven guilty. It is not acceptable to stop and search people randomly.
I urge the Economic Secretary to hold an independent inquiry, or at least a Treasury inquiry, to consider the consequences of reducing duty in the UK towards European levels in order to tackle illegal trade. In addition, I urge him to consider the health effects of putting higher duties on tobacco and alcohol to see whether they are working and whether a reduction in duty towards the European average would have the desired effect.
Hugh Robertson: I represent a brewing town, so the jobs of many of my constituents and the survival of many local pubs are directly affected by illegal imports. I am sure that we would all agree that cutting excise duty would reduce smuggling, but Shepherd Neame has proved comprehensively that, by cutting excise duty, we could also increase the legal take, and therefore the amount of revenue available to the Treasury. Will the hon. Gentleman ask the Economic Secretary whether he would be prepared to meet representatives from Shepherd Neame to discuss that proposal?
Mr. Laws: The hon. Gentleman raises a powerful point subtly. As an economist, I am not yet persuaded that a reduction in duty would be self-funding, but there is a case to answer. The Government have raised the issue to some extent by freezing duty on alcohol over the past few years, rather than continuing with the policy of
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over-indexation pursued by the Conservative Government, as well as by the Labour Government when they first took office.
There is a case to answer and, although I realise that I am raising a wide issue at the end of a narrow debate, I urge the Economic Secretary to keep an open mind on the subject and to be willing to commission research in the Treasury to find out whether there is a case for reducing the duty differentials between the European continent and the UK.
1.47 pm
The Economic Secretary to the Treasury (John Healey): I begin by congratulating the hon. Member for Yeovil (Mr. Laws) on securing the debate. His membership of the Treasury Select Committee gives him particular expertise in the area. He wondered out loud whether the debate was timely or untimely in the light of my announcement yesterday. It is timely for me, because it gives me chance to explain further what I said, but I always welcome the chance for Parliament to play its proper role in scrutinising Government policy.
I welcome the hon. Gentleman's welcome for my announcement, and particularly welcome the fact that the new regulations will clarify the burden of proof and refine the penalties. As of yesterday, we dealt with what he described as the mismatch between the guidelines on alcohol and tobacco.
I shall deal with the questions about resources and stops in my other remarks. I shall also give some explanation of the burden of proof. On vehicles, we have already put in place procedures for reviewing any seizures and procedures for the proper restoration of fees. I have no intention of making the new package retrospective or of putting in place an amnesty because procedures are in place to deal with the problems.
To reassure the hon. Gentleman on tax, we can enforce the regime, and yesterday's announcement was an important part of enabling us to do that in future. I emphasise to the hon. Gentleman and to the hon. Member for Faversham and Mid-Kent (Hugh Robertson) that low duty rates are no defence against tobacco smuggling. Italy, Spain and other European countries have much lower tobacco duty rates than we do, but they also have a serious cigarette smuggling problem.
Despite the common talk of booze cruises, the most serious problem lies with tobacco; the hon. Member for Yeovil, a member of the Select Committee, will be aware of that fact. Some 20 per cent. of the tobacco market is illicit, compared with only 4 per cent. of the beer market and 3 per cent. of the wine market. That was the reason why, in the 2000 Budget, my right hon. Friend the Chancellor announced the tackling tobacco strategy.
The Government put £200 million into that strategy, which has led to the recruitment of nearly 1,000 extra staff at our frontier ports and inland. The hon. Member for Yeovil was concerned that not enough resources were in place to operate the regime, but the resources are there. We have also installed more high-tech equipment, including a national network of x-ray scanners to detect the high volume of smuggling in freight containers. As part of the strategy, we introduced tougher sanctions and penalties, including the seizure of vehicles used for

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smuggling, along with a fiscal mark to help to identify those cigarettes that have been smuggled and those on which duty has been paid.
Mr. Laws: Is the Economic Secretary saying that, in spite of changing the regulations yesterday, he can offer no comfort to people who had their car seized last week because they were 200 cigarettes over the limit? Will no flexibility be given to those cases?
John Healey: The review procedures are in place to deal with such instances, and we shall see that they are followed through. The announcement that I made yesterday does not have a retrospective impact.
I shall proceed, because the time available to me is shorter than I should have liked. Without the action that we took two years ago, it was forecast that, by this year, the illegal tobacco market would have been 34 per cent. Customs is bringing the problem under control and reversing the growth in smuggling. I shall publish figures alongside the pre-Budget report in a few weeks' time that show the improvement in Britain's tobacco market.
The results of the tobacco strategy's first stage have been especially dramatic. They include a 75 per cent. cut in smuggling alongside a 10 per cent. growth in spending in legitimate shopping. It is worth dwelling on the juxtaposition between smuggling and shopping, which offers strong evidence that the crooks, not the consumers, have been the target of customs activity. Each year, 14 million people cross the channel and nearly 99.9 per cent. pass through customs without a problem. Tobacco and alcohol is seized from only around 14.000 annually. Customs has a tough job to do in difficult circumstances. Most worryingly, we have seen recently cheats and smugglers becoming increasingly clever at mixing with and posing as honest shoppers.
It is now time to move to the next stage of our tobacco strategy, which is the new package of measures that I announced yesterday. The package of measures has the twin aim of reinforcing our action against smugglers and reinforcing our protection of the rights of genuine shoppers. It is fair for shoppers, tough on smugglers and clear about the difference between the two. It is designed to resolve arguments about the legality of customs actions, guarantee fairness for honest shoppers and bear down harder on bootleggers who corrupt the system.
The regulations that I laid before Parliament yesterday will repeal the Personal Reliefs Order enacted by the previous Conservative Government in line with European Union advice in 1992 and replace them with new regulations. The changes will make it clear that alcohol and tobacco on which tax is paid elsewhere in the European Union and which is imported into the UK for own use is not liable for duty. It will also make it clear that tobacco and alcohol imported for payment in cash or kind for profit or for reimbursement is subject to UK duties.
The new regulations remove the burden of proof on the individual to show that goods are for their own use. That was introduced in 1992 by the last Government and reflected guidance at that time from the European Union. It would be for Customs to be satisfied that goods were for a commercial purpose, and the decision would be based on criteria set out in the new regulations
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in UK legislation for the first time, including the explanations offered by people importing large quantities. Customs will widely publicise those criteria and stand ready to explain its reasons for reaching its view to any court or tribunal as necessary.
In practice, Customs has always had to be satisfied that, when challenged, it can explain and defend the judgments it makes. The new regulations reflect recent interpretations offered by the courts, and represent a useful overhaul of 10-year-old EU-based legislation. They bring the UK legislation into line with the court ruling in the Hoverspeed case in July, and the reality of existing practice.
Only a tiny proportion of those entering the UK are stopped by Customs. Stops are made due to a range of factors, based on knowledge of smuggling techniques and behaviour that changes constantly. Often, they occur as a result of pre-arrival selection, informed by general, and sometimes specific, intelligence. That is supplemented by professional observation. A typical stop only lasts a few brief moments, unless the exchange gives rise to increasing doubts.
I reaffirmed yesterday the absolute commitment of Customs to ensure that its actions fully comply with its legal obligations and I called on others to ensure that they, too, met their obligations. In particular, I made clear that I expected those in the international passenger transport industry to ensure that the records kept on transport movements were complete and accurate, that the information provided to passengers did not mislead and that they co-operated fully with Customs to prevent criminal use of their operations. The best already do; the rest must now do the same.
However, there is confusion. There have been arguments concerning popular campaigns, court actions and questions raised by the European Commission, and these have sown confusion for the cross-channel traveller. They have also made it more difficult for the frontline Customs staff to run the current regime. That is why I announced the refinement of our tobacco strategy in the package yesterday. I am determined to make the position clear.
Yesterday, I announced new indicative guideline levels for cigarettes and hand-rolling tobacco.
Mr. Laws: The Economic Secretary said that yesterday's announcement would clarify policy and help to clamp down on smuggling. Is he predicting that the amount of cross-channel smuggling will be cut by yesterday's measures?
John Healey: The package of announcements made yesterday mean that we will be able to achieve the targets that we have already set for our tobacco strategy. We have reached the second stage of that strategy, so we are still committed and on track to reduce the level of the illicit market in the UK by 2005–06 to 17 per cent.
Let us be clear about two things. First, those new indicative levels will help draw a clearer distinction between the shopper and the smuggler, and, in doing so, both the shopper and Customs staff will benefit. Secondly, travellers may still be stopped and have goods seized when they have amounts below the new indicative levels if Customs staff are satisfied that those goods are for resale either for profit or reimbursement.

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However, we can do more to ensure that our excise duty regime draws the clearest possible distinction between the shopper and the smuggler. I confirmed yesterday that I have also asked Customs to adapt its vehicle seizure policy, to publish a clear new guide to appealing and complaining—available from yesterday—and to undertake a review of the present appeals and complaints system with the Lord Chancellor's Department.
Yesterday I also confirmed that we would not relax the regime or soften our actions against smugglers. I confirmed that those who use vehicles to smuggle on a large scale or a repeat basis would be offered no opportunity for restoration. I confirmed that Customs expects to conduct an increased number of
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prosecutions, and would examine the scope to hit finances of criminal gangs using the new proceeds of crime legislation. I confirmed that violence against Customs officers in carrying out their duties will not be tolerated and will be subject to prosecution. Finally, I confirmed that cross-channel operators would be expected to play their full part in helping to tackle smuggling and helping shoppers know their rights and responsibilities.
I can do no better than cite the leader in the Evening Standard today, which said that the package struck a reasonable balance between the right of the public to purchase drink and tobacco in the EU and the duty of the Government to pursue lawbreakers who smuggle goods—
It being Two o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.