Westminster Hall Sitting of 26 February 2003

Preamble
[MR. FRANK COOK in the Chair]

Refugee Benefits
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Kemp.]
9.30 am
Mr. Peter Lilley: I am grateful to Mr. Speaker for selecting the issue of benefits for refugees and asylum seekers for debate. When I first clashed with the Prime Minister on it, I was astonished by how many Members—[Interruption.]
Mr. Deputy Speaker: The word "clashed" worried me.
Mr. Lilley: Opposition Members sometimes clash with the Prime Minister during Question Time. I was astonished by how many Members, not least Labour Members, said that the issue of immigration and related matters is becoming bigger in their constituencies, that people are angry about some issues and that there is a danger of that anger fuelling the growth of extremist parties, or even being vented directly on immigrant communities. Today, we hear reports of a Labour Minister pandering to those feelings by saying that he will no longer deal with asylum seekers at his surgery.
I want to make it clear that, in my view, the vast majority of refugees and economic migrants are decent, ordinary people who want to better their lot and that of their families. They are simply responding to a situation created by others. In the matter of immigration, immigrants are as pure as driven snow. If people want to vent their spleen, it should absolutely not be on individuals who have come here from other countries, but on Ministers and their friends in the liberal media who have fuelled the inflow from abroad to unmanageable proportions, aggravated the resentment of people already here by saying one thing and doing another, and suppressed, or tried to suppress, debate by accusing their critics and opponents of racism and inhumanity whenever they make reasonable proposals for reform. I want to use the specific issue of benefits for refugees and asylum seekers to illustrate those points.
On 22 January, the Prime Minister responded to a well-aimed criticism from my right hon. Friend the Leader of the Opposition by brazenly boasting that he would be removing benefits from asylum seekers who claimed after they had entered the country. I welcomed his decision to reinstate a measure that I first introduced and I invited him to admit that he was mistaken in allowing benefits to be reinstated in 1997, as that led to the number of asylum claimants doubling fairly soon afterwards.
I asked the Prime Minister to say how many extra asylum seekers we had to receive and support as a result of five years of mistaken policy. He characteristically denied all that, although he later—it was perhaps post
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hoc, ergo propter hoc—responded with his pledge to halve the number of asylum claimants coming to this country.
Let me remind the House of the history of the benefits changes affecting refugees and asylum seekers. In October 1995, I announced proposals to remove the right to benefit from all those who claimed asylum after entering the country on false pretences. After a debate in Parliament, regulations implementing that measure were introduced on 5 February 1996. I acknowledge that I was initially reluctant to introduce those measures. I would always prefer to restrict entry to this country, rather than make conditions less attractive or benefits less generous to people once they had entered. However, I was persuaded that action was necessary, as the number of asylum seekers had risen tenfold in 10 years.
Our share of the number of asylum seekers coming to European countries had trebled and, indeed, over the past couple of years, it had fallen on the continent while rising in the UK. That was partly, though not entirely, because countries such as France and Belgium time-limited benefits to 12 months and there were none thereafter. Italy gave no benefits at all and consequently received only 1,800 asylum claims.
What is more, it became clear that we were giving benefits that could not really be justified to three categories of people. The first was those who entered the country illegally. They had broken the law, and it seemed wrong to reward that by giving them entitlement to benefit. To come to the UK, they had invariably crossed other safe countries, where they could and should have claimed asylum and to which they could return if they did not like the terms and conditions facing them here.
The second group was people who entered on false pretences—those who did not just "fail to claim", as it is often put, asylum on arrival at the port of entry, but claimed to be here for some other purpose than claiming asylum. For instance, they claimed that they were here to study and showed that they had access to a course, they claimed to be tourists or visitors, or they claimed to be here on business. Usually, such people had visas. Invariably, they had had to convince either the visa authorities or the immigration authorities that they possessed the means to support themselves and that, once in this country, they would not be a burden on the taxpayer. In those circumstances, it seemed wrong to extend to them the right to benefit simply on the basis of uttering the magic words, "I claim asylum."
Finally, there was a third category that I will not dwell on today because, I regret to say, it does not feature in the Government's latest measures. We withdrew the right to benefit from those, even if they had entered and claimed asylum at a port, who were subsequently found not to be genuine asylum seekers. They were thus placed on the same footing as British claimants of benefit who, once having their claim rejected, were not allowed to claim benefit while appealing against the initial decision. We do not allow that for British citizens, because we know that, if we did, everybody would always appeal against any rejection of an offer of benefit as they could

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thereby prolong their right to it. There seemed to be no reason to offer better conditions to asylum seekers than we offered to our own citizens.
Simon Hughes: For clarity, will the right hon. Gentleman tell the House how asylum seekers can legally come to Britain?
Mr. Lilley: They can arrive at our ports and say, "I seek asylum". However, if the Liberal party wishes to create a situation in which a person can go to an embassy or high commission and say, "I would like to come to Britain and claim asylum," it should make that known to the electorate. We already have a system whereby, having reached these shores, any inhabitant of the globe has the right to enter, claim asylum and then claim benefit, appeal against any refusal of a claim, have a judicial review, claim under human rights legislation and prolong the process.
Mr. Neil Gerrard: Will the right hon. Gentleman give way?
Mr. Lilley: Yes, but when I have finished answering the previous question, if I may.
It seems to me unwise in those circumstances to make it even easier for those who wish to come here for economic purposes to exploit the system.
Mr. Gerrard: Will the right hon. Gentleman explain exactly which benefits he thinks that anyone arriving in this country has a right to claim?
Mr. Lilley: They have the right to claim benefits provided by the Government.
Mr. Gerrard: Which benefits?
Mr. Lilley: If the hon. Gentleman does not know, I am sure that the Minister will explain to him in due course. The benefits were originally social security benefits, but they are now provided by the Home Office with the help of local authorities and funded thereby. I am here not to spell out the difficulties, but to recount the history.
People prefer, and are advised, to make their claim for asylum once they have entered the country rather than at the port, as it then becomes more difficult to deport them. They have to go through a deportation procedure rather than just a removal procedure. We were therefore rewarding those who were most canny or best informed about how to make it more difficult to remove them when they were found not to be genuine.
Despite those powerful arguments, Labour party Front Benchers "strongly opposed"—those were their words—the measures, describing them as uncivilised and inhumane. A string of epithets were used to demonise and denigrate my party, the measures and me.
Mr. Andrew Mitchell: And your Ministers.
Mr. Lilley: And my excellent Ministers.
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It was predicted that the changes would result in widespread destitution, and churches were encouraged to open shelters. Happily, those fears proved to be grossly exaggerated. Partly as a result of the benefit changes and partly because of changes introduced by the then Home Secretary, the number of people entering this country and claiming asylum after getting through the ports fell from 30,000 in 1995 to 17,000 in 1996, and to below 16,000 in 1997. The overall numbers, which include those claiming at port, also fell by 40 per cent. between the 12 months before the measures were introduced and the 12 months afterwards.
There were two court challenges to the changes that I introduced. The first came in June 1996 and challenged the use of secondary legislation to introduce those changes. The courts ruled that that should have been done by primary legislation. I accepted that, and within days introduced an amendment to legislation then passing through the House to give primary legislative authority, which both Houses endorsed, for the changes.
There was a second challenge in the February before the 1997 general election, and, again, it was upheld by the courts. It could easily have been reversed, either on appeal or through primary legislation, but the incoming Labour Government chose not to appeal against the court finding, nor to legislate to reinstate the arrangement that the courts had overthrown. They simply endorsed the court's ruling, and allowed benefits and support to be re-established. They could scarcely have done otherwise without inviting charges of hypocrisy, given what they had so recently said. What happened? The number of claimants doubled, and then doubled again, even though that in some neighbouring continental European countries was declining.
Before last Christmas, the Government underwent a Damascene conversion. Normally, there is more joy in heaven over one sinner who repents than over 99 who know no repentance, but this was a case of one Pharisee taking to the very sin that he had once most sanctimoniously condemned. In short, the Government decided more or less to reinstate the regime that I established in 1996. They did so, of course, with a minimum of debate, and amendments to legislation were introduced at the last minute in the House of Lords.
There were precisely 15 minutes of debate in the House of Commons, as the hon. Member for Southwark, North and Bermondsey (Simon Hughes) pointed out at the time. Characteristically, he used most of them. There was no debate at all in the House on the statutory instrument implementing those changes.
Those Members of Parliament who used such strong and severe language against the parallel statutory instrument that we introduced must feel shame that they did not even pray against an identical measure introduced by their Government. We have had little debate—democracy has gone out of the window, along with integrity, under this Government.
Mr. Mitchell: My right hon. Friend has already answered my question, but did any Government Members, either Back Benchers or Front Benchers, pray against the regulations that they opposed so bitterly when he introduced them?
Mr. Lilley: My hon. Friend is quite right to emphasise that point. None did, neither from the Labour party nor from its subsidiary, the Liberal Democrat party, although Liberal Democrat Members were at least honourable enough to oppose the measure when we were given 15 minutes to debate it on the Floor of the House.
There is a further twist to the sorry tale. Last week, the court rejected the Government's new measure. It is no longer simple to appeal or reinstate such provisions by primary legislation, as it would have been in 1997. The decision was made under the Government's human rights legislation—their own measure, which was deliberately introduced to allow judges to judge Parliament and to rule that the Government were mistaken. That puts the Government in a quandary. We should ask them to face up to the problems that they have created. One of the most important human rights of all is that of the British people to govern themselves through Parliament and set their own laws, and not have laws laid down for them or reinterpreted by judges according to their human rights impressions, prejudices and subjective opinions.
Simon Hughes: Does the right hon. Gentleman accept that the High Court judge who dealt with the matter last week made it clear that he was only interpreting the will of Parliament? He relied on what Parliament said and the proper interpretation of the statute passed by us, including our obligations under the Human Rights Act 1998.
Mr. Lilley: Above all, the latter. The judge was operating under an Act passed by the Government. It gives judges the power to exercise a subjective judgment over the whole sphere of our operations.
Simon Hughes: The Act was passed by Parliament.
Mr. Lilley: Indeed, and against my vote. If and when I become Home Secretary, I shall introduce legislation to alter that position. I shall restore the supremacy of the British people through a British Parliament in the making of laws.
We must hold the Government to account and we must make Ministers eat their words, however unpalatable the diet. They must eat them in public and accept that they have performed a complete volte-face, in the meantime making the situation impossible to remedy. The Government have for five years presided over a benefits regime for refugees and asylum seekers, which they adopted deliberately and which they now admit is a serious problem. They face a massive inflow resulting from their changes and they want to reinstate the very Conservative measures that they originally reviled, but they can no longer do so because of legislation that they introduced deliberately to restrain Parliament.
Ms Karen Buck: Is the right hon. Gentleman aware that Home Office research has confirmed that there is no indication whatever that asylum seekers coming to this country have knowledge of either the benefit system or the particular workings of the asylum application process?
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The link that he is making between the ability to claim benefits and the desire to claim asylum in this country is not evident.
Mr. Lilley: The hon. Lady is saying therefore that the fact that the number of asylum seekers halved after the measures were introduced and that it doubled after they were reversed is a pure coincidence. She is asking us to accept that people do not send back messages to their country saying that their application was successful and that they are here, being looked after and doing well. The message is about not the details of the benefit system, but the fact that there are no problems and that people do not have to bring resources with them to live here.
People have to provide resources to live en route and they may have to pay tens of thousands of pounds to undertake the journey, but they do not have to provide for themselves when they arrive here. All they have to do is convince the authorities, when they receive their visa, that they will be able to support themselves. The hon. Lady's argument is that people pick at random which country they go to and are entirely unaffected by circumstances in different countries. She is suggesting that the fact that they pass deliberately through other safe countries to come here does not reflect their overall impression of the situation here.
Ms Buck: Will the right hon. Gentleman give way?
Mr. Lilley: I am drawing my remarks towards a close to allow other Members to participate. The hon. Lady can spell out her points later.
I fear we have reached a point at which the problem is too great to be solved simply by restoring the Conservative status quo ante on benefits. We can now tackle the problem of unrestrained inflow to this country only by regime change and renegotiating, or resiling from, the Geneva convention on asylum seekers. Support and endorse the proposals of my right hon. Friend the Member for West Dorset (Mr. Letwin), the shadow Home Secretary, on that front. We need a change from the shameless and incompetent regime in this country to a regime with the openness, humanity and integrity of my right hon. Friend and his excellent team. I hope that we see that change sooner rather than later.
9.50 am
Mr. Neil Gerrard: The debate so far has taken the course that I expected. There has been a lot of rehashing of history from six or seven years ago. I noted that the title of the debate was "Government policy on refugee benefits", but we have heard precious little about refugees and everything has been about asylum seekers.
I am often struck by something when I attend such debates as this. At an event last Saturday, it was put to me that some of my colleagues in this place are not terribly knowledgeable about asylum. I said that we all have to specialise to a degree and that if I were asked about the Government's policy on agriculture, I would be found to be woefully ignorant. The person to whom I was speaking responded—at the time I thought that it was flattering, but I now realise that it was true—by

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saying, "At least you wouldn't talk about agriculture policy, but people who know very little about asylum feel perfectly able to get up and make speeches about it." That has been amply proved this morning.
May I go back over the history of how we got here today? I do not want to dwell too much on 1996 but there has been some rewriting of history this morning. What happened in 1996 was very simple: there was an attempt to deny asylum seekers inside the country from applying for mainstream benefits. The right hon. Member for Hitchin and Harpenden (Mr. Lilley) was the architect of that policy. At the time, it was predicted that the policy would cause destitution and lead to people living on the streets, and I am confident that it would have done if there had not been two court decisions. One decision said that the measure could not be introduced using secondary legislation, which led to changes to the Asylum and Immigration Act 1996—the primary legislation. After that, a court decision in February 1997 said that local authorities would have to use the National Assistance Act 1948 to support asylum seekers who were otherwise destitute. If that had not happened, we would have seen people on the streets, just as people are now on the streets as a direct result of the policy that the present Government have implemented, which I shall talk about in a moment.
The result of the events of 1996 was a complete shambles in the asylum system. Some people were supported on benefits while some went to local authorities and local authorities incurred expense. Pressures were placed on local authorities in London and the south-east, and we still have to live with some of those. The right hon. Member for Hitchin and Harpenden was the architect of that shambles, which we inherited when we came into government in 1997. If he had been so keen on introducing primary legislation to deal with the Court of Appeal decision in February 1997, there would have been ample time to pass a simple one-clause Bill before the general election in 1997. The incoming Labour Government in 1997 were right not to try simply to reverse existing legislation, but to try to find an alternative mechanism meaning that asylum seekers would not be supported by local authorities, but by the Home Office through the National Asylum Support Service. Whether we got that right is another matter, but it was a perfectly legitimate and correct decision.
Mr. Oliver Heald: Is it not true that the major problem was that the then shadow Secretary of State, the right hon. Member for Islington, South and Finsbury (Mr. Smith), was in an impossible position? He believed that to reverse the decision of the courts would lead to people starving on the streets; he was totally wrong in that.
Mr. Gerrard: I do not think that my right hon. Friend was wrong about what would have happened. There is already evidence that the implementation of section 55 of the Nationality, Immigration and Asylum Act 2002 is leading to people being destitute and living on the streets.
Lynne Jones: Indeed, did Mr. Justice Collins not describe such situations in the decision on 19 February?
Mr. Gerrard: Absolutely. Those situations were the foundation of the case heard by the judge. If the hon. Member for North-East Hertfordshire (Mr. Heald) examines the evidence for the court judgment earlier this month, he will see that evidence spout out.
In 1999, the system changed and vouchers were introduced, against the advice of many Labour Back Benchers. The system proved to be the disaster that some of us predicted and was removed in the 2002 Act. Unfortunately, it has been replaced with something that will be even worse.
The issues raised by the right hon. Member for Hitchin and Harpenden are frequently mentioned in debates such as this one—specifically, how the benefits and support given to asylum seekers affect the number of claimants. The rationale presented for each of the past four Acts—the Asylum and Immigration Appeals Act 1993, the Asylum and Immigration Act 1996, the Immigration and Asylum Act 1999, and the Nationality, Immigration and Asylum Act 2002—is that benefit support acts as a draw and that cash in asylum seekers' hands leads to more applications. It is assumed that genuine asylum applicants would apply at the port of entry the minute that they stepped off the boat or plane and would not apply in-country. No hard evidence has ever been produced that backs up those claims.
On the question of genuine applicants claiming at the port, over the past 10 years the difference between the success rates of asylum claimants in-country and at the port of entry has not significantly changed; any change has been negligible. In fact, for a considerable number of years, the rate of success for in-country applicants has been higher. No hard evidence supports the assertion that a port claimant is more likely to be a genuine applicant than an in-country one. The figures vary from year to year, but no significant patterns back up that assertion.
On the suggestion that people come to the UK because they know about the benefits system and the cash, I am sure that many hon. Members will have had the same experience as me of sitting in constituency advice surgeries and dealing with people who were born in the UK and have never stepped outside the country. They come along with the type of problem that arises from a failure to understand the benefits system, such as failing to claim for a benefit for which they are eligible, failing to know when they should have claimed something or failing to understand the consequences of a late claim for benefit.
We see such problems all the time involving people who have lived in the UK all their lives. The idea that someone sitting in the middle of another country 1,000 miles away will do a detailed calculation and say to themselves, "If I make an asylum claim in Germany, I'll get this amount, if I make one in France I'll get this and if I make one in the UK I'll get this" is ludicrous.
Mr. Lilley: Can the hon. Gentleman explain why Italy, which alone in Europe has no benefits for asylum seekers, also has the lowest number of claims, even though it is one of the main sources of entry of asylum seekers?
Mr. Gerrard: I suspect that for some years there have been very large numbers of people working illegally and

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living on the streets in Italy. The claim that the Italians have somehow solved the problem cannot be justified. That raises the question of why people go to particular countries.
There is a variety of reasons why people come here. People come to a country because they know someone who lives there; or there may be long-standing connections with that country. Some Commonwealth countries have been the source of significant numbers of asylum applications to this country when there have been problems there. The civil war in Sri Lanka led to significant numbers of Tamil asylum seekers coming to the UK.
People go to a country where they can speak the language, and English is probably the commonest second language in the world. I am sure that I will never be in the position where I have to flee this country because I am being persecuted—
Mr. Lilley: Wait until the Whips get at you.
Mr. Gerrard: I am not worried about that. I would not want to go to France, which is the nearest safe country. It is not that I have anything against the French, but I would be looking for a country where I know people, or where I can speak the language. Those are the factors that have an impact on where people go to try to claim asylum.
Ms Buck: Will my hon. Friend accept that a criticism can be made of the system in this country regarding processing times? Historically, decisions have taken so long both to complete, and then to exercise if there is a deportation consequent upon them, that this has become a pull for asylum seekers. Does he accept that in 1997, and even today, the processing time for appeals is up to two years? For the first six months of my time as a Member of Parliament the system was clogged up with cases of applicants who had submitted their asylum application in 1992 or 1993, and who by 1997 had not heard a word from the immigration and nationality directorate.
Mr. Gerrard: That is absolutely right. If we want a system that will deter people who are not genuine applicants, we will not achieve that by fiddling around with the benefit system, or by policies of deterrence in legislation. If we want a policy of deterrence for a fraudulent applicant, a decision must be made quickly and efficiently, and subsequently enforced: that is something that we have singularly failed to do over 10 years.
The Government inherited a huge backlog in 1997, which then got worse. As an incoming Government we accepted the Siemens computer system that had been ordered for the Home Office. It was claimed that it would solve all the problems and reduce staffing levels. That was built into the Home Office budget of 1997. Unfortunately we went along with that, and the result was that the backlog increased, rather than decreased. It is only now that we are starting to get on top of it and turn it round.
If we want to deter people from making fraudulent applications, the knowledge that they will not buy two, three or four years in the country by making that
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application—the knowledge that a decision will be made quickly and efficiently and will be enforced—is the most powerful deterrent. We would have done far better if we had not bothered with any of the last three Acts, and had simply got the systems within the Home Office working properly and efficiently.
I want to say something about the serious position that we are currently in, and which we got ourselves into by aping what was done in 1996. The Home Office's justification for where we are, which was given to the court recently, is that there is widespread abuse of the system because, for example, some people enter to work illegally and claim asylum when they are found out, while others run multiple claims, or have already claimed in safe countries, or have to wait for weeks and months before they make a claim.
Unfortunately, I am unaware of the Home Office ever having produced evidence to back up the assertion that many people wait weeks and months before they make their claim. I tabled parliamentary questions about how many people apply for asylum within a week and a month and three months and six months of being in the country, and about the relative rates of success of applicants, and I was told that the Home Office did not have that information—that it was not kept. However, the bald assertion is made that many people wait for weeks and months before applying so we must do something about that.
Simon Hughes: No answer was given to the question that I asked about the impact of the 8 January legislation. No figures have yet been forthcoming from the Government. No adequate monitoring is going on, even at this stage.
Mr. Gerrard: That is correct.
There is another crucial point about how this new legislation will be applied. There was a very short debate—only 15 minutes long—in which several hon. Members wished to speak but were unable to do so, and during which a question was asked about how reasonable we would be with regard to people who did not claim asylum at the port of entry. The Home Secretary said:

"We need to be reasonable and to take into account the trauma that people experience. We need therefore to allow a reasonable period before we presume that people have come into the country for another reason and have been sustaining themselves, and that when they could no longer do so they decided that the asylum system would sustain them". —[Official Report, 5 November 2002; Vol. 392, c. 199.]

The Home Secretary dwelt on the need to be reasonable, and in meetings with hon. Members, Ministers went further than that. They said, "We are not in the business of penalising people who have been in the country a few days: you need not worry that we are going to behave unreasonably and penalise people who have only been in the country a few days or a week or two. We want to catch people who have been here three, four, five or six months before they make an asylum claim. They ought to be able to justify why they now need support." If the regulations had been interpreted in that way—the way that we were told they would be—the Government might well not have lost the court case this month; they would have found it much easier to persuade the court that they were behaving reasonably.

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However, what is actually happening is that people are being refused the day after they arrive in the UK—and, in some cases, on the day on which they arrive in the country—because instead of claiming at the port of entry, they made their way to Croydon to make a claim.
The regulations are being applied in a totally unreasonable way. By losing the case now we have created a far worse problem. It must be dealt with. I am unsure how we are going to extricate ourselves from this; that depends on what the Court of Appeal decides. However, we have certainly created a problem, and it is of the Home Office's making because it has applied the regulations not in the way that we were told that it would, but differently.
This discussion has illustrated that the debate about asylum support is based on the premise of deterrence—that being tough through legislation will deter people from coming here and applying for asylum.
The Prime Minister said that he wants to see a 50 per cent. cut in the number of applications by September. That target is ludicrous. It is something over which we have no control. We should be able to control the rate at which we make decisions. We should be able to control the rate at which we remove those whose applications have been rejected. We should be able to control the rate at which we deal with applications, but controlling the rate at which applications are made is a completely different matter.
The approach taken by Governments of both parties over the past 10 years, before and after 1997, has been based on the premise that we can deter applications through legislation. My hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) is absolutely right to say that if we want to deter fraudulent applications, we must look at the mechanisms, not the legislation. Decisions must be taken quickly, and they must be enforced.
Mr. Mark Francois: To pursue the hon. Gentleman's argument that mechanisms are important, does he not accept that one of the great failures of the system is that, because people know that the appeals process can take up to two years and that most appeals are likely to fail, they can effectively disappear? There is no real deterrent because when the time comes to deport those people, they have flown the nest.
Mr. Gerrard: There is no doubt that people can disappear, but they could do so whatever system we had in place if they were determined enough. Time and again, people turn up in my constituency surgeries five years after I first saw them—they have not disappeared—because nothing has been done to deal with their applications. That is the real problem, and it could be dealt with far more effectively than we are doing through the recent legislation. Even the legislation brought in by the right hon. Member for Hitchin and Harpenden was a failure; it was in force until 1999, and applications went up significantly during that period.
I suggest that hon. Members look at the pattern of the figures from the past 10 years. If they were put on a graph and plotted against each piece of legislation that was supposed to make it more difficult to apply, we may
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see a temporary drop before the figures go up again. The pattern of figures can be related much more closely to external events such as those in Afghanistan or Kosovo than to any legislation.
Mr. Deputy Speaker: Order. Perhaps I should remind the House that it is customary in the 90-minute Adjournment debates to commence the first of the three winding-up speeches 30 minutes before the termination of the debate. I hope that hon. Members will take account of that. However, if we start the first of the winding-up speeches before 10.30 am—in other words, before the 30-minute limit—I hope that the three Front-Bench spokesmen will take account of that and take no more than one third each of the remaining time.
10.13 am
Mr. Andrew Mitchell: I rise with the appropriate level of trepidation to make my maiden speech in this Chamber. I am particularly pleased to support the matter raised this morning by my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley).
I strongly support the case put by my right hon. Friend. I am relatively familiar with it, having been a junior member of his ministerial team when the events that he described took place at the end of that Government's term of office. Because there has been some debate about precisely what those events were, I took the opportunity to consult the excellent reference and readers' services section of our Library in order to determine the precise chronology. I received a letter from the Library, which stated:

"The Social Security (Persons From Abroad) Miscellaneous Amendments Regulations SI 1996/30 came into force on 5 February 1996. The Regulations were announced in a ministerial statement on 11 January 1996 and later debated on 23 January 1996.

The Regulations were challenged in the Court of Appeal and on 21 June 1996 judged to be ultra vires. Following on from this judgment, a ministerial statement was made on 26 June 1996 to inform the House of the Government's intention to reinstate this policy through primary legislation. Lords amendments were made to the Asylum and Immigration Bill 1995–96, debated in the Commons on 15 July 1996 and the policy was reinstated by the Asylum and Immigration Act 1996."

Those are the facts of the matter, and my point, which echoes the comments of my right hon. Friend the Member for Hitchin and Harpenden, is that the subsequent progress in policy suggests that the Government have cynically manipulated and toyed with asylum seekers and refugees. They should therefore apologise on the Floor of the House for the cynical way in which they have handled policy.
It is important that there are principles of responsible opposition. The hon. Member for Birmingham, Selly Oak (Lynne Jones) is attending the debate, and she and I were on the radio earlier this morning, telling our constituents in the midlands about today's debate on Iraq. She supported the amendment to today's motion, while I supported the Prime Minister, and the Opposition will support him in very large measure later today. We will do so because he is right, and that is how the Opposition should behave on all policies—they should be responsible. On the firemen's strike, for example, we have supported the Deputy Prime Minister

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when we thought that he was right. I make those points because I think that it is wrong for the Opposition simply to oppose Government policy willy-nilly or to take cynical advantage of it if they think that it is right. My charge, however, is that the Prime Minister and others have cynically sought to exploit asylum policy and genuine refugees in their handling of policy.
In the interests of greater accuracy, I obtained a copy of early-day motion 264, which was tabled on 11 January 1996. It prayed against the Social Security (Persons From Abroad) Miscellaneous Amendments Regulations 1996, which I quoted earlier. The essence of those regulations has now been integrated into Government policy, even though early-day motion 264 prayed against such a policy—it was the exact reverse. The six signatures on that early-day motion included those of the present Minister for Policing, Crime Reduction and Community Safety and the right hon. Member for Manchester, Withington (Mr. Bradley). They also included that of the right hon. Member for Islington, South and Finsbury (Mr. Smith), who was formerly the shadow Secretary of State for Social Security. That is particularly hurtful, given that he is my Member of Parliament when I am in London. Indeed, he also represented my right hon. Friend the Member for Hitchin and Harpenden when he lived in Islington. The next signature was that of the Under-Secretary of State for Work and Pensions, the hon. Member for Croydon, North (Malcolm Wicks), who is here today. The final two signatures were those of the Deputy Prime Minister and the Prime Minister. They are the guilty six, who cynically prayed against and attacked the policy of the Conservative Government, which included my right hon. Friend. However, they have now been forced to admit that it was correct. They were wrong, and my right hon. Friend was right.
However, it does not stop there. On Second Reading—I took hon. Members through the chronology a moment ago—the now Foreign Secretary, no less, said:

"How typical of the Government"—

that of which my right hon. Friend was a Cabinet member—

"that, instead of seeking to cut delays, they cut people's benefit."—[Official Report, 11 December 1995; Vol. 268, c. 720.]

The right hon. Member for Islington, South and Finsbury was shadow Secretary of State for Social Security at the time and subsequently became a Secretary of State. He spoke about the inhumanity and injustice of our policy, saying that it was "contrary to common humanity". Those were the words that he used to condemn a policy that he and his party have now been forced to admit was correct. Such was the level of obloquy and condemnation as regards my right hon. Friend's policy that he met the Archbishop of Canterbury to explain the position—a policy that the Prime Minister copied when he went off to see the Holy Father last weekend.
The end of that chronology—which I can see has the Minister's rapt attention—ended on 23 January 1996, when my right hon. Friend the Member for Hitchin and Harpenden, in splendid form, took the House through the matters in question. He demolished all the arguments that the then Opposition presented and said much the same as he has said today, showing that he is
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consistent on this matter. He rose to speak at 10.25 pm—not a time of day at which the House now sits, much to my regret. My right hon. Friend was rewarded with what was then an enormous majority of 15–279 to 264 votes in support of his case, which he has made again today.
I have described in such detail the chronology of what happened because I want to demonstrate that, in contrast to the Conservative party, which in opposition takes, as I said earlier, a responsible view about the issues of the day, the Labour party in opposition was completely irresponsible. I believe that that fact should be exposed. As my right hon. Friend said, the figures for asylum applications, which were rising in 1995–96, fell as a result of his action. As a result of this Government's action, they have rocketed.
Ms Buck: The asylum statistics for the period in question show that the number of claims fell between 1995 and 1996 from 43,000 to 29,000. The dramatic fall occurred before the introduction of the Conservative Government's policies. If the benefits relationship is so tightly connected with asylum applications, as he and his hon. Friends claim, can the hon. Gentleman explain how asylum applications increased fourfold between 1989 and 1990, and halved after 1991, when there were no changes to entitlement to benefit?
Mr. Mitchell: I have looked carefully at the figures, and the graph shows that when it was known that the proposals of my right hon. Friend the Member for Hitchin and Harpenden were being brought to Parliament—and when they were discussed and implemented—there was a fall in the number of people applying. The level then rocketed. The figures are something like 30,000 for 1996, as the hon. Lady said, and, in 2000, nearly three times that. If she considers carefully, she will see a direct correlation between the disincentives to abuse the system that the Government of which I was a member introduced and the effect on the figures of a lack of disincentive.
If the Labour party had stuck with integrity to our policy, instead of seeking narrow political advantage by opposing it as I have described, three significant—and, I hope the House will agree, desirable—events would have taken place. First, thousands of bogus asylum seekers would have been deterred from coming to this country. That is the evidence of the figures; it is the evidence that my right hon. Friend the Member for Hitchin and Harpenden gave at the time; it is the evidence that anyone seriously studying these matters today would accept. In addition, the public stigmatisation of asylum seekers—something rather bravely alluded to by the hon. Member for Walthamstow (Mr. Gerrard)—would be much less
today if the system had had greater integrity.
The second desirable effect would have been that genuine asylum seekers would have been advantaged, because the system would not have been cluttered up by those who were not genuine. That would have made possible a system that would more accurately and speedily have given a fair and proper deal to the genuine asylum seekers who have always been welcome in this country.
Ms Buck: The hon. Gentleman claims that the Conservative Government's policy on benefits was

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effective and should have been adhered to, but what is his comment on their policy on administration of asylum claims? The backlog of unprocessed claims soared throughout the 1990s.
Mr. Mitchell: The hon. Lady is correct on that point, but it cannot be right to make the matter worse by increasing the number of those in the system who are so clearly bogus. The truth about the advantage that the original Conservative Government proposals gave to genuine asylum seekers is that, over the four months during which the policy was in place, there was a 20 per cent. fall in the number of applicants.
Thirdly, the cost to the taxpayer is so much greater because of the cynical manipulation of that important policy area by the Labour party. When the proposals were introduced by my right hon. Friend the Member for Hitchin and Harpenden, his Department estimated that they would save £300 million per year. I know that the Labour party does not worry much about the cost to the taxpayer—it sprays taxpayers' money around without reforming public services—but the cost to the taxpayer of that one act of cynicism and hypocrisy was about £300 million per year. I hope that the Minister, with whom I sparred when our positions were reversed in the 1992–97 Parliament, will have the integrity to come not to Westminster Hall but to the Floor of the House and give a wholehearted apology.
Mr. Deputy Speaker: Order. I ought to clarify a matter of detail. This is the Floor of the House. Its standing is equal to that of the other Chamber.
Mr. Mitchell: I am grateful for your correction, Mr. Deputy Speaker. I want to make it clear that an apology now will be entirely acceptable. However, the Government, who have had to eat their words on the matter, should apologise to the House and to the taxpayer for what has happened. As my right hon. Friend the Member for Hitchin and Harpenden said, not one of those in the Labour party who oppose Government policy prayed against the order when it was brought before the House. That is astonishing. That, too, could be incorporated into the Minister's apology when he makes it to the House.
Ms Buck: I thank the hon. Gentleman for giving way yet again. I repeat the point made by my hon. Friend the Member for Walthamstow. When the measure was being introduced in the House, the clear indication was that it was to be applied to individuals who had been in this country for some time—three months was mentioned—under student or other visas and who then made applications, which they had to justify. No indication was given to me or to my hon. Friend that the measure was intended to catch those who had been in the country for only a few hours before making their application.
Mr. Mitchell: The hon. Lady is making a fist of defending the position and the policy of her party. However, I hope that she will have the integrity to accept that there has been a 180 degree turnaround on the matter. My central point is that an opposition party
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that cynically, against the interests of public policy, sought narrow political advantage against the Government of the day has now to eat its words and propose a policy that is almost identical to that introduced by my right hon. Friend the Member for Hitchin and Harpenden.
Mr. Heald: Does my hon. Friend recall the Home Secretary saying, last February, that asylum seekers

"should lodge their claim as soon as they arrive if they expect support from the Government"?

That does not sound like three months, does it?
Mr. Mitchell: It certainly does not. My hon. Friend is absolutely right. What a contrast with the words of today's Foreign Secretary, who has inveighed against the very things that the Home Secretary now supports. There should be radical change in the way in which the policy on asylum seekers and refugees is implemented. The proposals of the shadow Home Secretary merit wide attention across the parties. I hope that on this occasion the Labour Government will not indulge in narrow party political advantage, but will look seriously at the proposals and will endorse them just as they have been forced to endorse the proposals of my right hon. Friend the Member for Hitchin and Harpenden, which are the subject of the debate.
10.29 am
Simon Hughes: I am conscious of your guidance, Mr. Deputy Speaker, so I will speak for 10 minutes on the subject, which I am happy to debate. I have never resisted this debate and it is perfectly proper to raise the issues. The right hon. Member for Hitchin and Harpenden (Mr. Lilley) has been consistent in his general view on the subject as a Minister and in opposition, but I do not understand—I say this respectfully—how his political expressions on such issues are reconciled with the faith that he and I share, which teaches much about looking after the stranger at the gates. The great faiths of the world judge humanity not only by how we treat out own, but by how we treat others, and Christianity is among those.
I want to make some points about the general background, which the right hon. Gentleman painted in. First, as other colleagues have said, we live in a world in which it is nonsensical to imagine that we can manage the number of people who apply for asylum in Europe in general or in the UK in particular. That is a consequence of wars, rumours of wars and many other things. I note in passing that a small number of the world's asylum seekers come to Europe and the other rich bits of the world. Most go to the much poorer parts, such as Pakistan and the central African countries. That is why the Government's target is almost incredible, although targets for other things would be much more understandable.
Secondly, I put to the right hon. Gentleman the question of how people should be expected to make a claim, as two rights are involved: that to claim asylum and that to be granted it. By definition, one cannot have the second until one has the first. His answer would be valid if everybody knew what was the system and if the system worked, but the truth of the matter, as shown by all the evidence, including Home Office research, is that

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most people do not know that the system can allow a person—possibly with no visa, passport or papers—to travel to Britain and then make an application. The world is not like that. As the right hon. Gentleman knows, people often come with no visa, papers or passport, through facilitators or on their own. In fact, we increasingly check people outside the UK—on the other side of the channel, for example—so that they cannot even get here in many cases. The Government have always failed to address the question of how we can properly allow people to put their claims lawfully.
The right hon. Gentleman asked me whether I thought that we should therefore allow people to make claims in embassies and high commissions around the world. I have argued that, rather than cause people to cross the world, it might be sensible to start a programme under the auspices of the UN High Commissioner for Refugees whereby people could put their case at the British, American, French or any other embassy in the country nearest to them if they felt that that would be safest. That would require an improvement in local administration, but it would be a way to allow cases to be dealt with much nearer to where they came from. Of course, there are management and administrative issues—I understand that.
Mr. Lilley: The hon. Gentleman is breathtakingly frank. He would make it possible for anybody who can get out of their country to go to the local British embassy and ask to come here. Does he propose any limit on the numbers, such as my right hon. Friend the Member for West Dorset (Mr. Letwin) proposes, or does he propose that the Geneva convention should remain in force and that an unlimited number should thereby be enabled to come to this country?
Simon Hughes: I apologise if I have not sent the right hon. Gentleman a copy of the booklet that I wrote last year, which I have given to the Prime Minister, the Home Secretary and other Ministers. I shall send him a copy. I do not propose that we have a quota system. We cannot fix an upper limit, which is the proposal of the right hon. Member for West Dorset. That proposal seems incredible, because numbers are not determined by anything that we can manage. I have proposed that there should be responsibility sharing.
Although, technically, the processing of the application of someone who arrives and puts their case to a European mission or to a country in the European Union would be taken by that country, over five or 10 years we should share the numbers across the EU, so that we will not be playing the nonsense game of passing the human parcel, which we are playing at the moment. We put up our barriers so that more people go to France, and the French put up their barriers so that more people come back here. We need to share responsibility, and all EU members need to take their fair and even share. That, surely, could be negotiated. To the Government's credit, they are now thinking about those things, but they have not yet begun to implement them.
Thirdly, there are all sorts of answers to the "Italian question"—that is, "Why don't so many people go to Italy?"—apart from that given by the hon. Member for Walthamstow (Mr. Gerrard), who made the point that many people may be there who might not have been
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legally recognised. One reason is language. Many of those who seek asylum have fled civil war in former British colonies such as Sierra Leone, where English is the main language. English is, after all, one of the three main world languages. People also come to Britain because of our reputation for human rights and decency. That is surely a good thing, which the World Service, the Government and the British Council seek to propagate, and to which many in Iraq and Afghanistan, as well as other places, respond.
All those things mean that we should respond positively and reasonably and decently. Britain is the world's fourth most economically successful country, and for 300 years it has believed through its law that people should not be left destitute. We must also continue to uphold the principles of the welfare state.
Mr. Gerrard: I have had the chance to look at the figures for Italy, and it is striking that between 1997 and 1999 the number of asylum seekers rose eighteenfold. Although it has since dropped, the rate in 2001 was still four times that of 1997. That illustrates the point that playing the numbers game is extremely unhelpful.
Simon Hughes: I agree with the hon. Gentleman. It is naïve beyond belief to think that there is a direct link between the changes in the law and the number of asylum seekers.
This new law was first introduced in the House of Lords to much criticism. Lord Filkin was asked about problems that might arise on the as-soon-as-reasonably practicable test for applications and on the lack of an appeal review, even though the Labour party briefing at the time said that there would be an appeal review. He ignored those questions.
As the right hon. Member for Hitchin and Harpenden said, we had a quarter of an hour of debate on the matter in the Commons. That was entirely unsatisfactory. Worse, the guidelines were published only on 7 January—the day before the measure came into force—and those who had to interpret them had one day to do so. The guidelines were extremely general and nondescript. They depicted some refusal scenarios, but only in the most general way, and the interpretation was very loose.
I also agree that the position of the Labour Government is exactly contrary to that of the Labour party in opposition. Indeed, the Labour Government have now gone further, because the Home Secretary did not suggest an interpretation that if there was no application on the day, an applicant would be turned down. That was not what he said and there was no indication that that was expected. Something entirely different has happened.
I recommend that people read the very good judgment of Mr. Justice Collins, who has also been president of the Immigration Appeal Tribunal. He is not a maverick judge, nor a party political judge. He is well-respected, competent and knowledgeable, and he quoted many others in a very clear statement of the law. I hope that all who read the report of this debate also read what the judge said. They need only look at two of the examples among the six cases to see the nonsense of the current interpretation, which, mercifully, the courts have decided is wrong. I refer to the first and sixth cases.

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The first concerns a 26-year-old man who left Iran, where he was persecuted for converting to Christianity. He sought help from a solicitor, but the day after he arrived he was turned down. The second is that of a 20-year-old Iraqi Kurd who arrived in a lorry on 8 January. On the same day, he walked for three hours, with no money and no English, and was told to go to the Home Office in Croydon. He too was turned down. The Home Office interpretation was absolutely scandalous—it goes against the common decency that this country is supposed to stand for.
The Home Secretary's mistake was then to suggest, after the judgment had been made, that the law should not be interpreted by the judges, even though the Human Rights Act and this law have been strictly interpreted by a judge who said that that is what Parliament intended. There is a famous maxim that no matter how high we are, the law should be always above us. Happily, these Ministers, like all others, must act within the law.
My party opposed these proposals, and continues to do so. We sincerely hope that the courts continue to uphold the fact that they are being wrongly interpreted. I believe that we will be vindicated and that the Home Secretary will seek to change the proposals at his peril. I hope that Parliament and the courts will find any such change unacceptable, improper and against all traditions of the decent British response to refugees that I hope, and hoped, a Labour Government would uphold.
10.40 am
Mr. Oliver Heald: I say to the hon. Member for Southwark, North and Bermondsey (Simon Hughes) that we shall have to see what the Court of Appeal makes of that.
I congratulate my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) on securing a debate on this important subject. Over time, he has, in a sense, been vindicated. I was a member of his team between 1995 and 1997, as was my hon. Friend the Member for Sutton Coldfield (Mr. Mitchell). As my hon. Friend said, we both remember how those who are now members of the Government attacked proposals to remove benefits from in-country asylum seekers. It was a vicious attack, but the truth is that when they came to power they were unable to follow sensible asylum policies for some years because of the vitriol that had been poured on my right hon. Friend. The fact is that from the time that the announcement was made in 1995 until the Conservative Government left office, the number of asylum seekers fell dramatically from 30,000 a year to 16,000 a year.
Asylum seekers have cost this country dear financially, and it has also caused a great deal of misery to many asylum seekers that the Government have followed a weak approach. The result of that has been a substantial increase in the amount of money that the country spends on asylum support. The numbers have also increased. Many of those people are simply not genuinely claiming asylum. They may, as my right hon. Friend said, be decent people seeking a better life, but they are not asylum seekers within the law as it stands.
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We heard an interesting speech from the hon. Member for Southwark, North and Bermondsey, whose approach to these matters has always been one of open house. He believes that ways should be found for people who want to come to this country from abroad to be able to do so, and to do so legally. That would be an open invitation, and goodness knows what the numbers would be if the policies that he has always advocated were pursued.
I agree with the hon. Member for Walthamstow (Mr. Gerrard) about one thing: one problem over the years has been how long decisions on asylum cases take. We need speedier decision making, but the changes in the law that the Government have made with the Human Rights Act and so on are not likely to lead to that. In fact, in almost every asylum case that I have ever read, the courts have said that there should be even more inquiries and an even more laborious, long-winded process for cases to be determined. If he disagrees, I am happy to take an intervention.
Mr. Gerrard: I have certainly not held back from speaking up when I thought that the Home Office was making a mess of things, but the rate of decision making is improving considerably, with new applications especially being dealt with much more quickly.
Mr. Heald: We can all say amen to that, and if speedier decisions are being made, that is a good thing, but the fact is, as the hon. Gentleman said, it is still a slow process. I am sure that he is right: if the process were speedier and if people were removed when their cases failed, a better deterrent would be in place.
I should mention the Prime Minister. We have heard about the Government's shuttlecock approach to policy in the area, and three years ago he said:

"From April 2000, the new system will be in place, with new rules on benefit and new holding centres being opened up, so that claims can be processed quickly and we shall be able to get the numbers back down again."—[Official Report, 2 February 2000; Vol. 343, c. 1035.]

Well, it did not work out like that, because since then the direct cost of asylum support has increased from £375 million to £1.094 billion in the most recent year for which figures are available. One has to ask whether the Government have got anything right in that area.
The Prime Minister is claiming that he will halve the numbers this year, but, as the hon. Member for Walthamstow said, not many of us believe that that will happen. All kinds of claims have been made during recent years. When the voucher scheme was introduced, it was claimed that it was vital and that it would save money—it certainly did not. It was also said that if cash benefits were reinstated those would cost £500 million a year more and that there would be a huge pull factor generating thousands of additional claims. What have the Government done, two years later? They have reinstated cash benefits.
Ms Buck: That is self-defeating logic. The introduction of the voucher scheme, the National Asylum Support Service and the dispersal programme should, following the logic of the hon. Gentleman's own party, have resulted in a reduced pull factor, but they simply did not. That confirms the argument that my hon. Friend the Member for Walthamstow and I are

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making, which is that the entitlement to support is largely irrelevant in the bigger picture. Many other factors are in play, ranging from the world situation to labour markets, English and other languages, and the administrative workings of the immigration and nationality directorate. Those are far more important in addressing asylum seeker numbers.
Mr. Heald: We obviously do not agree on those matters. The international examples that I could go through if I had another 10 minutes would prove that the hon. Lady is wrong.
On asylum support and the benefits system, the written answer that I received from the Minister for Citizenship and Immigration shows that when NASS began work in April 2000, there was no investigation service that could consider issues of benefit or asylum support fraud. It took NASS 13 months to introduce an operational unit. One thing that we know about any sizeable benefits budget is that there will always be people who try to abuse the system, and the hon. Member for Walthamstow has acknowledged that there are always cases of fraud. How negligent it was of the Government to leave NASS with no protection for 13 months.
Will the Minister give us any reason why that important budget was significantly underprotected for more than a year? Why is there no record of the total asylum support fraud discovered by NASS? Why does it not know how much money it has uncovered as being taken fraudulently from the system? It knows how many cases there are, but not how much money is involved. Why is there no estimate of the total asylum support fraud perpetrated since NASS was established?
My right hon. Friend the Member for Hitchin and Harpenden introduced systematic reviews of benefit fraud when he was at the Department of Social Security. That was an important measure in establishing how much fraud was taking place. Why has nothing similar been done in NASS? We know that it has investigated 4,600 cases, of which 1,400 ended in termination of support, which is why I cannot understand this answer from the Minister:

"The National Asylum Support Service (NASS) does not keep a central record of the level of fraud in individual cases." —[Official Report, 10 February 2003; Vol. 399, c. 539W.]

Why on earth not?
The benefits fraud hotline, which was introduced by my right hon. Friend—he and I launched it outside Richmond house—was a successful way of tackling fraud. I know that this Minister is concerned about that issue, but when I asked the Minister for Citizenship and Immigration what measures there are for passing information from the hotline to NASS for investigation, she said:

"There are no formal arrangements for referring calls to the Benefit Fraud Hotline and the Targeting Fraud Website to NASS."—[Official Report, 27 January 2003; Vol. 398, c. 707W.]

Why on earth not? Why did this Minister say, in answer to my question on the subject, that such allegations are passed directly to the immigration service and NASS?
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If I had longer, I would go on, but I shall come to my final point. In respect of benefit fraud, there has been much profiteering on the part of landlords. The hon. Member for Liverpool, Riverside (Mrs. Ellman) has posed a series of questions in the House on the housing provided to asylum seekers and the people who provide it. What protection is there against landlord fraud in the system?
10.50 am
The Parliamentary Under-Secretary of State for Work and Pensions(Malcolm Wicks): I, too, very much welcome this important debate, which was initiated by the right hon. Member for Hitchin and Harpenden (Mr. Lilley), who is, of course, a former Secretary of State for Social Security. I agree with his opening remarks: these are matters of growing public concern in this country, throughout Europe and, indeed, further afield, so it is important that politicians representing the great democratic parties of the country lead the debate in the right direction, rather than shirking it. We may disagree about that direction, but we need to face the issues.
We must confront the racists and lead the debate in an important direction. That is a point that the right hon. Gentleman makes, and has made elsewhere. Also, we should face up to the difficult issues for our communities and the tough decisions that must be made. There is nothing more destructive to our democracy than people, perhaps for well-meaning reasons, attacking Members of Parliament from both sides of the House who raise legitimate issues, and throwing at them the charge of being racist. There is nothing more loathsome. If there is talk—even if it is misguided—in the pubs, on the streets, on the estates and in the communities about an issue, and the only place not talking about it is Parliament, our democracy is in trouble. That opens the gateway to the British National party, and perhaps other fascist parties. It is important that we engage in the issues without fear or favour.
We are all agreed that for many years—indeed, centuries—this country has opened its arms to people seeking refuge, many of whom were fleeing terror regimes. Many of them have been of enormous benefit to our economy and our country. We also agree that if asylum seekers face destitution, it is right that we should provide them with some financial support.
I regularly see asylum seekers in my constituency office and will continue to do so. Indeed, I last saw one on Friday. During the debate, I thought of a constituent I met a couple of years ago. Her story, which I believed entirely, was that she was picked up by soldiers in Uganda because she was associated with an opposition political movement. In the back of a lorry, she was systematically gang raped by many of the soldiers. She was able to flee her country and came to Britain, only to discover from her doctor that she was HIV-positive. A significant number of people are at that end of the continuum.

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There are others, however, such as another constituent who told the immigration authorities many years ago that she was coming here for a couple of weeks of Christmas shopping. After a couple of years, when the immigration authorities were chasing her, she started studying. When the authorities chased her further, she announced that she was applying for asylum. I am not naive about the range, across the continuum, of those who apply for asylum.
Mr. Lilley: I am grateful for the admirably balanced way in which the Minister approaches such issues and the recognition that we should neither suppress debate on them nor pander to those who hold negative views about asylum seekers.
Will the Minister comment on the announcement by the Minister for Transport, who represents Warley and who will see only people who are on the electoral register, but not asylum seekers, at his surgery? Does the Minister think that such a statement panders to the animosity felt by some people towards asylum seekers? That animosity would be better targeted at those who created the situation, not the asylum seekers themselves.
Malcolm Wicks: I do not advise colleagues on either side of the House on how they should run their constituency offices. I have my own approach to such matters. Given that my constituency is Croydon, North and bearing in mind the ethnicity there and the fact that a significant number of asylum seekers are associated with Croydon for obvious reasons, I give them what advice I can.
As soon as someone is given exceptional leave to remain or is accepted by the Home Office as a genuine refugee, he becomes entitled to the same social security benefits as anyone else. That is a long-standing principle of the benefit system. There has been confusion and loose terminology in relation to refugees because, when someone becomes a refugee, he is a successful asylum seeker. In a way, the issue is simple. Such people then become entitled to social security benefits. That is why I am here, as a Minister at the Department for Work and Pensions, rather than a Home Office Minister. Understandably, however, the debate has ranged more widely than that subject.
I hope that the right hon. Member for Hitchin and Harpenden will forgive me if I do not debate the Lilley legacy and Conservative chronology. The Conservative party is going through one of those stages when it is terribly interested in itself, but such a view is not always
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widely held. Before I come to refugees, I wish to refer to the improvements that we have made to the asylum system.
Mr. Heald: I hope that the Minister tackles the problem of fraud in the system and how that system is protected. The budget of £1.1 billion is substantial, and legitimate questions have been posed.
Malcolm Wicks: Those are reasonable questions that I shall draw to the attention of my Home Office colleagues. We are determined to bear down on fraud across the piece. Our Immigration and Asylum Act 1999 created the Home Office-administered National Asylum Support Service, which, since April 2000, has, when required, provided assistance and accommodation to all new asylum seekers. That is a separate system for asylum seekers. It should not be confused with that for those who are granted asylum and who are then dealt with by my Department in respect of social security benefits.
Measures introduced by the previous Government meant that asylum seekers who had made an application while in the country or who were appealing against a negative decision were denied benefits and were, in some cases, suffering real hardship. We ensured that there would be a safety net for such people to allow them to receive the support that they needed. We also recognised that better targeted support for asylum seekers was not enough on its own. We needed to deal with the growing backlog of people waiting for an asylum decision.
Although there is no scope to discuss the numbers now, a range of factors are involved. Benefits are important, but the international reputation of our country, language, the presence of different ethnic communities, the efficiency or inefficiency of immigration services at given points in time and the fact that Britain is the head of the Commonwealth are all significant in terms of employment opportunity. We are getting on top of the problem. The removal rate, although lower than we had hoped, has increased to about 12,000 people per month. In many ways, the immigration service is improving. We are on target in respect of 2002–03, and 65 per cent. of claims should receive an initial decision within two months. Those who were given the status of genuine refugees are allowed social security benefits in the usual way.
I shall write to hon. Members if I have missed any points, but the subject is obviously complex ethnically and politically in terms of policy, and particularly complex in respect of administration and delivery. We need to achieve the right balance, as I believe we are doing, between granting genuine asylum to those fleeing outrageous and wretched regimes throughout the world, of which there are too many, and ensuring that there is proper control against abuse.

Area Based Initiatives (Cornwall and Scilly)
11 am
Andrew George: I am delighted to have secured a debate on this important subject. I know that the Minister has a deep knowledge of it because she has been involved with her Department's work addressing the complexity of the area-based initiatives that come down from the Government. It is hard to imagine that the subject will be the stuff of tabloid headlines, although I argue that it is of deep concern to many people throughout the country. However, the terminology and the complexity of the subject make it impenetrable to many for whom it is important.
As the subject is unlikely to attract gladiatorial debate and argument, I hope that the Minister and I will be able to generate more light than heat in our debate. Given the Government's efforts and the work of the regional coordination unit—and before that, the performance and innovation unit—on area-based initiatives, I suspect that the Minister and I might be pursuing a similar agenda; I certainly hope so. I hope that she does not think that she can bat away my worries as ingratitude because I, and the people of Cornwall and the Isles of Scilly, are grateful to the Government for recognising the social exclusion that exists in the communities—in other words, poverty and deprivation. Those worries are being addressed in several ways and I am grateful for the effort, focus, priority and finance that have been seen. I am also grateful to the partnership of the communities, those who are deprived, the Government, and MPs in securing objective 1 status a few years ago.
When defining area-based initiatives, I shall include the objective 1 programme because it is relevant and knits together with many of the programmes that we shall discuss. Although there have been entertaining attempts to rewrite history and claim credit for achieving objective I status, a partnership did that. The people themselves championed the campaign for the designation, statisticians recognised the distinctiveness of Cornwall, which achieved statistical separation, and the Government campaigned successfully in Europe to drive home the advantage so that we got the designation. The Minister and I may share success, but we also share an interest in getting things right.
What do we mean by an area-based initiative? I know that the Minister knows but, for the record, I shall use a definition from a Government document. It is a measure

"to tackle social exclusion and deliver improved services in the most disadvantaged areas."

That quote comes from the regional co-ordination unit's "Review of Area Based Initiatives", which was published in October 2002. For example, among the many initiatives in Cornwall are: objective 1 integrated area plans, single regeneration budgets, neighbourhood renewal programmes, health action zones, healthy town initiatives, healthy living initiatives, market town initiatives, vital villages, sure start, Cornwall action team for jobs, the neighbourhood nursery scheme, the partnership development fund, the skills development fund, the rural key fund, the rural renaissance initiative, the community champions fund, community chest, the community empowerment fund and the safer communities initiative. Simply by listing the initiatives
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and their titles, I make the point that I believe both the Minister and I understand. In the regional co-ordination unit report of October last year, Cornwall was cited as an example of where the plethora of initiatives was creating problems. The situation was not created by God, as if it were something natural. It is unnatural; it is manmade, so we can do something about it. The report identified more than 100 partnerships operating in Cornwall. All those are run at the same level by professional bodies.
It is my estimate that, taking all the partnerships together and including objective 1, we are looking at a budget of about £650 million to be spent in Cornwall over the next five years. That includes match funding, which inevitably has to be matched with other money in many of those programmes.
The primary point that I wish to make—I sent a note to the Minister's office to make clear my questions—is that although I am grateful for the funding, as many people are, the system that has been created has resulted in confusion and bewildering bureaucracy. Far from generating initiative, it has created initiative fatigue, strategy fatigue, vision fatigue, mission fatigue and fatigue within communities. There is a barely disguised intolerance of the confusing array of jargon and bureaucracy, which people find almost impossible to penetrate. I think that the Minister will have some sympathy with that point.
What action have the Government taken? I appreciate that they have identified the problem. The study in 1999 by their performance and innovation unit resulted in the report "Reaching Out—the role of central government at regional and local level", which was published in February 2000. It resulted in further work by the regional co-ordination unit and its report "Review of Area Based Initiatives", published in October last year. In that report, the unit accepts the problems of partnership overload, increased bureaucracy and the lack of integration of many of the schemes. There are many problems, not least the number and complexity of area-based initiatives in areas such as Cornwall. The different time scales and requirements of each of those do not dovetail well.
So far, where there have been partnerships, the response of the Government has been to set up local strategic partnerships. We now have partnerships for partnerships and that local strategic partnership has to produce a strategy, so that is a strategy of strategies. We now have super-partnerships and super-strategies, creating another layer of bureaucracy on top of the existing layer. We have the problem of duplication. Each partnership tends to create its own bureaucracy. Many of the organisations that I am talking about have facilitators and their own strategy and administrative procedures. all of which add to the web of bureaucracy that people have to face.
There is also the issue of perverse outcomes, such as different interpretations of state aid rules by, for example, the neighbourhood renewal fund and the single regeneration budget. Many of those people in local government who were consulted before the debate say that the interpretation of state aid rules on projects that are coming forward are not always consistent across all the programmes. Another example of a

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perverse outcome is when two Government initiatives result in competition for the same funds and, in effect, suppress one potential outcome.
I shall give an example of a market town in Cornwall. I have to be careful about this. The private sector body funded under the neighbourhood nursery scheme through the Department for Education and Skills is competing with sure start, funded by the Department of Health. Both are trying to set up pre-school provision in the area, competing for the same public funds. Because the public funds are limited, only one of them will be successful. That is an example of two bureaucracies being established, which compete to attain the same objective. The outcome is perverse, resources are wasted and there is a duplication of effort. That is happening on manifold occasions throughout Cornwall in many of the initiatives that I have mentioned.
There is also inefficiency. The regional co-ordination unit report states that the audit bill of Kerrier district council has quadrupled in five years as a result of the work done by that council to prop up its commitment to the bureaucracies and partnerships with which it finds itself engaged. The same professionals turn up to different committees under different titles and frantically run around keeping all the balls in the air to maintain their involvement in the partnerships in each of the initiatives.
Under community regeneration in objective 1, the Cornwall Voluntary Sector Forum, Cornwall rural community council and the diocesan Board for Social Responsibility in Truro produced a report identifying that the £4 million for community regeneration under objective 1 is being spent largely on bureaucracy establishing the integrated area programmes and producing the strategies, but very little is being achieved on the ground. One response from Richard Bayley, the Plymouth director of the Government office for the south-west, questions the bulk of the money used for regeneration in Cornwall going into bureaucracy and strategy. Some of the money goes into what is euphemistically called capacity building.
The most useful capacity building that can be undertaken, however, is to teach local communities and give them the knowledge to negotiate the systems created by the Government. It is assumed that poverty is caused by the incapacity of the people and communities rather than geography and economic circumstances beyond their control. In fact, the capacity building that is required is the building of the knowledge and confidence to become cynical of the whole process in order to extract money from the system. Many community organisations find that the best way forward is cynically to manipulate the system because there is no other way for them to obtain finance from the system to allow community groups to prosper. There are many reasons for concern about the way in which area-based initiatives operate, but I do not have time to go into detail about the other impacts.
In discussing social exclusion, we are talking about poverty. The poverty industry is now one of the most prosperous in Cornwall. I am sure that, to an extent, targets have been met and the poor are benefiting, but a tremendous bureaucracy has been established through which the money and effort must be driven in order for
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the poor in Cornwall to benefit significantly. As a result, there is a great deal of initiative fatigue and barely disguised intolerance on the part of those involved.
I have asked the Minister several questions in advance of today's debate. For example, what estimate has been made of the amount and proportion of available funds for Government-agency-sponsored area-based initiatives that has been spent on productive purposes to deliver goods on the ground? How much has been employed for non-productive, preparative, administrative, team-training capacity-building activities? Has the Minister's Department estimated the impact of such a high number of area-based initiatives on Cornwall and the productivity of those initiatives? Are there more effective ways to reduce the non-productive costs of running those schemes? By what measures do the Government estimate the success of ABIs in satisfying their own targets and the targets of local authorities? When will the Government stop adding to initiatives and mainstream the successes? Are local strategic partnerships here to stay, or are they another short-term experiment? If so, what does that tell local authorities about Government attitudes?
In conclusion, if we got rid of the middle person and took the bureaucracy out of the system, we would be able to distribute some £650 million across, let us say, 10 per cent of the population, and give each poor family in Cornwall about £10,000 a year. If we gave it to them in vouchers to buy child care, security or better housing they would spend that money in an effective way. Rather than going through processes that are about greater control, perhaps the Government need to let go.
Cornwall county council has recently been given an excellent billing by the Government for the way in which it runs its services. If it is so excellent, and the Government are in favour of devolution, perhaps it is time that the Government gave Cornwall county council and other local authorities the opportunity and freedom to run these programmes themselves.
11.16 am
The Minister for Social Exclusion and Deputy Minister for Women (Mrs. Barbara Roche): I appreciate the way in which the hon. Member for St. Ives (Andrew George) has introduced and conducted this debate. He is quite right: we are speaking about serious and important issues. He and I have had long discussions about Cornwall and objective 1 during the process of negotiation.
I want to speak about the policy thrust behind the area-based initiatives, and about how these initiatives are working on the ground. I hope to give the hon. Gentleman some comfort that we are making progress in eliminating bureaucracy and amalgamating initiatives where we can. I agree that we do not want to have cumbersome bureaucracy standing in the way of delivery.
The policy thrust in delivering area-based initiatives is to narrow the gap between deprived neighbourhoods and the rest of the country, so that within 10 to 20 years no one should be seriously disadvantaged by where they live. It is unacceptable that those living in our poorest communities so often have the worst schools and public services. Our aim is to deliver economic prosperity, safe communities, high quality education, decent housing and better health to the poorest parts of the country.

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Area-based initiatives have a key role to play in reaching that aim. They are important for trying out new ideas and giving scope for innovation. Across the country, the Government are investing around £2 billion over 10 years in the 39 new deal for communities areas; some £1.9 billion over five years through the neighbourhood renewal fund in the 88 most deprived areas; and some £500 million in 522 sure start programmes.
Cornwall and the Isles of Scilly include some of the United Kingdom's most deprived neighbourhoods. Earnings in Cornwall are 33 per cent below the national average. Coping with the impact of economic changes on the traditional industries of fishing, agriculture and mining has been a painful experience. Overall unemployment in Cornwall has come down to around the national level but remains persistently high in some areas. There has been a hard-fought campaign in Cornwall to bring those areas to attention at national and European level.
As the hon. Member for St. Ives amplified, Cornwall has almost the full range of United Kingdom Government area-based initiatives, as well as some very significant European funding: that is because of the great difficulties that communities in Cornwall face.
Objective 1 is bringing in £308 million of European money to raise the economic prosperity of the area. That is also levering in other public and private sector funds. That is achieving a considerable amount: it is supporting projects delivering broadband, which is important for Cornwall's regeneration; it is providing venture capital to business, which is vital because we need to stimulate the growth of small and medium-sized enterprises in Cornwall; it is also supporting the additional activities of such marvellous ventures as the Eden project, which is having a big impact on the local community; and it is expanding Dairy Crest's creamery in the area. All of those things are very important.
The hon. Gentleman mentioned bureaucracy. I am sure that he agrees that there must be a robust process for project appraisal, because significant sums of public money are at stake. However, we try to ensure that that process matches the size and nature of the projects. I assure him that I will keep a vigilant eye on that. If we are dealing with a comparatively small sum of money, we must ensure that the due diligence that we have put in place is not excessive. Several projects that are under way provide funding for small-scale activities: they have been specifically designed to make access to funds as simple as possible for community bodies, small and medium enterprises and farming and fishing businesses.
Andrew George: The Minister rightly points out that due diligence is required, and that there must be a robust audit of how public funds are spent and whether they are spent properly. However, given the plethora of sizes and scales of operations and the numbers of initiatives, does she not accept that it would be far better to devolve the responsibility for that task to one organisation that is accountable to the local community than to have the current manifold arrangements?
Mrs. Roche: I have some sympathy with the sentiments that lie behind that point, and I will address it as I develop my arguments.
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The neighbourhood renewal fund brings an extra £5.5 million to the districts of Penwith and Kerrier. The fund aims to improve core public services and narrow the gap between deprived neighbourhoods and the rest. A new NRF-supported minor injuries unit at the Camborne Redruth community hospital will save residents of Cornwall's largest built-up area the 30-mile round trip to Truro. That is a good example of how things are made to work on the ground. The community contribution to that project was particularly impressive.
The hon. Gentleman mentioned the mainstreaming of services. The health action zone aims to improve local healthcare services. I will come on to how we have mainstreamed some of the principles that lay behind health action zones.
The Camborne/Pool/Redruth success zone is raising the aspirations and employability of young people from three to 19 years of age who live in the former mining area. Its projects include a hi-tech classroom of the future and work-based, accredited, key-skill qualifications. I am sure that the hon. Gentleman agrees that those are key examples of what is happening on the ground.
The hon. Gentleman mentioned sure starts. There are six sure starts in Cornwall, including two in his constituency. They aim to give children the best possible start in life and some of the things that they are doing, such as establishing fathers' groups and child minding networks, are key to ensuring that delivery goes where it is most needed—to the local community. Many more activities are going on.
Let me deal with the important points about complexity raised by the hon. Gentleman. He was right to say that we need to consider the difficulty, raised in the report of the performance and innovation unit, of there sometimes being a plethora of initiatives and too much bureaucracy. We have done so; indeed, we have been quite radical. I led a review of our area-based initiatives, and I recognise that there are too many funding streams and sometimes a lack of integration in Whitehall. We realise that we need also to mainstream many initiatives. A good idea that has been exploited in an area-based initiative should be transferred to mainstream services. There is too much red tape, with each programme having its own rules and its own monitoring and evaluation requirements, which makes it difficult for local people to access funding.
The regional co-ordination unit looked at 40 initiatives in eight reviews. I announced the results in October 2002. That led to a significant reduction in the number of separate funding channels. We have cut bureaucracy, and we are trying to champion change from the bottom up. The Government office is now developing single local management centres to work up proposals for the better co-ordination of area-based initiatives locally, and to identify the changes required at Government level to help ABIs focus on delivery.
The hon. Gentleman was right to talk about the county council. We want to include councils in the process and to give them more freedom and flexibility.
Andrew George: I appreciate the attempt to bring these initiatives together in the Government office. I welcome the fact that they are being brought together, and the involvement of the county council and other

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councils is also welcome. However, does the Minister accept that it would be far more acceptable to local people if that responsibility was devolved to a democratically accountable local body like the county council rather than being held out of Cornwall in either the regional development agency or the Government office for the south-west? With the best will in the world, those bodies are less approachable and further from the people who are supposed to benefit from the schemes.
Mrs. Roche: But that is exactly what we have done with the establishment of the local strategic partnerships, which are here to stay. We have given them direct control over the neighbourhood renewal funding. That is a real partnership between community groups, the local statutory bodies that deliver the services and the local authority. We are keen to develop more local flexibility.
Much good work is already going on in Cornwall. The west Cornwall local strategic partnership has begun work on bringing together the ABIs in the Penwith and Kerrier districts—exactly what the hon. Gentleman seeks. The Government office's objective 1 team and the regional development agency are working on joint application forms and the joint appraisal of projects. Work is under way better to link the objective 1 integrated area plan teams with other initiatives. A great deal is going on. We also want to see a strengthened role for local strategic partnerships in directing the initiatives and funds towards deprived areas, and much more mainstreaming of good practice. I assure the hon. Gentleman that we shall be keeping a close eye on that, as the Government office seeks to develop those ideas further with all our partners in Cornwall.
Local strategic partnerships in Cornwall as elsewhere are taking a key role in promoting the effectiveness of area-based initiatives. There are now some 326 established LSPs in England. It is still early, but it is clear that they are starting to become effective in coordinating neighbourhood renewal. The thrust of local strategic partnerships was to cut the plethora of separate partnerships; they were doing important and worthy things but it was leading to partnership overload. Experience shows that they are having some success.
The Government remain committed to reducing the gap between deprived areas and the rest. We are confident that the area-based initiatives will lead to progress and to the renewal of our communities. I assure the hon. Gentleman that we will also reduce bureaucracy and red tape by bringing those initiatives together, and that we shall seek to ensure that they are delivering on the ground to the communities that need them most.
11.29 am
Sitting suspended until Two o'clock.

Small Businesses
2 pm
Mr. Iain Luke: I am glad to have been successful in the ballot for precious moments in Westminster Hall, as I have sought this debate for some time. I wish to review the critical role played by the small business sector in the economic performance of the United Kingdom. I hope that we will have a wide-ranging debate and I look forward to contributions from hon. Members who represent different parts of the UK. Given his track record in office, I am sure that the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths), will listen intently to the debate and take up the points that are raised.
My constituency in Scotland has had a poor track record in small business start-ups. Despite the fact that we work within the United Kingdom economy, more than one issue differentiates small businesses in the UK context—and, indeed, in the English and Welsh context—and the Scottish small business sector. I shall explore those issues in the debate. The United Kingdom Government have a responsibility to take action to ensure that structural inhibitions are tackled and smoothed out, so that we gain our objective of prosperity for all.
We are holding our discussion at a time when the global economy is beset by uncertainty and worries about recession. That is all the more reason why we must do all we can to foster enterprise and innovation, and to ensure that the heartening rate of small business start-ups is maintained and improved. It is worth making the point that, in the face of global economic problems, the UK has performed better than most of the industrial world. Although gross domestic product shows significant falls, it remains positive compared with our European and G7 partners.
It is true that the Scottish economy has suffered particularly badly from the global downturn. The primary impact has been on the electronic communications industry. It has also affected the small business sector, which has a fine track record of exporting to and tapping into markets throughout the globe, outwith and within the European Union. The knock-on effect of the economic downturn in markets that were initially seen as good for Scotland, has had an impact on the growth of its small businesses.
Scotland has suffered great shrinkage in its manufacturing capacity. It has a lower growth rate than that of the United Kingdom as a whole. The debate now taking place in the main Chamber emphasises the uncertain international situation. Such a problem means an even bigger squeeze on share prices, markets and the confidence of markets throughout the world. But despite the uncertainty and flux, the nature of the macro-economic situation in the United Kingdom and in Scotland is good. Indeed, only yesterday in Dundee, an article in The Courier about the latest Scottish economic report, which is published by the Scottish Executive, stated that growth would occur in the Scottish economy in 2003. Moreover, growth is expected to be higher this year than previously, which is good news for Scotland. That also shows that the economy throughout the United Kingdom seems to be picking up.

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Let us consider macro-economic aspects, such as low inflation, low unemployment, low interest rates, record numbers of people in work, and especially improvements in the rate of small business start-ups, which are evident from the figures issued by the Treasury and the Department of Trade and Industry last November. All those things hold out the promise of a strong economic recovery in the coming years. Figures recently issued by Barclays showed that more than 91,000 new small businesses commenced trading in the first three quarters of 2002; that is an increase of 14 per cent.
Mr. Henry Bellingham: Were there 91,000 start-ups in the UK as a whole, or only in Scotland? Does the hon. Gentleman know the figure for Scotland?
Mr. Luke: The figures apply to the whole of the UK. I do not have the figures for Scotland, but I hope to have them in future to provide evidence of differentials in growth.
One of the best ways of fulfilling the hopes that I have raised of an economic recovery is to ensure that the small business sector is fostered. It is important to remember that the small business sector comprises the vast bulk of the British economy: it encompasses 90 per cent. of the 3.7 million business operations in the UK. It is necessary to highlight the importance of the small business sector and its contribution to the creation of wealth, employment and business activity in the UK. Although it is usually bigger businesses such as British Airways and BAE Systems that receive media attention and attract glamour, these businesses—only 7,000 of which employ more than 250 people—form the tip of an iceberg.
Given the nature of business growth, many larger businesses are now becoming much more footloose. Many are wholly or partly owned by concerns and shareholders outside the UK; as a consequence, they are much more prone to relocation outside the UK economy and to radical downsizing in times of economic difficulty. To draw from local experience, over the past year Levi Strauss & Co. has left the constituency of my hon. Friend the Member for Dundee, West (Mr. Ross), and ABB Power T&D Ltd has closed its premises in my constituency, Dundee, East.
The typical British business is a small business that employs 10 or fewer employees. Many are family businesses, and most are sole traders. They are firmly located within the context of the British business environment, and the continued robust health of small businesses is an essential component of the UK's better economic performance at a time of global and European downturn. Despite the disadvantages of an overvalued pound and the UK's continuing exile from the eurozone, a survey conducted last year by the Federation of Small Businesses showed that 22 per cent. of small businesses continued to trade strongly with European Union countries.
Despite that positive evidence, the sector continues to experience serious problems that inhibit better performance. They were clearly identified in last year's survey by the Federation of Small Businesses: lower costs and overseas competition have an impact on how
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businesses operate in this economy; there was a big problem with access to finance; and the ability to employ staff was circumvented by the costs that had to be borne. Access to business advice, transport costs and access to education and training for staff also scored highly as problems in recent surveys. Those problems were identified as of great concern to small businesses in the UK.
Given the growing importance of our trade with the European market, which will soon have a population of almost 340 million, one major factor in the continued well being of the sector is our early entry into the eurozone. Many small business men and women will join me in welcoming the announcement in June of the progress that is being made towards satisfying the five economic tests, which is scheduled to be announced by the Chancellor. I hope that soon afterwards we will have an early and successful referendum and an early and unimpeded entry to the eurozone. That will give certainty to the UK's trading position and remove the extra cost of the artificially strong pound values that burden the UK.
Funding in general is a specific problem. The ability to access funds to promote growth is a worry north and south of the border. The Government should be doing more to address the real concern on both sides of the border about the ability to achieve business growth.
Mr. Andrew Love: Does my hon. Friend accept that the formation of new businesses is relatively secure in the United Kingdom economy and that the problem lies with taking small businesses with fewer than 10 employees and growing them into medium-sized and larger businesses? Surely that is the main area that we ought to be looking at.
Mr. Luke: I take my hon. Friend's point. I agree with him in the main, although there is a factor in the Scottish context that inhibits the growth of small businesses; I shall talk about it later. Throughout the UK, to grow from a small company with less than 10 employees to a larger company with between 49 and 250 employees is a big leap, and further finance is needed to ensure that the gap is overcome. I thank my hon. Friend for allowing me to make that point in response to his intervention.
The Government have done a lot to remove the red tape and the bureaucracy about which many complain. I am sure that the hon. Member for North-West Norfolk (Mr. Bellingham) will make the point that there is too much bureaucracy. The Government have done great things on removing red tape, on taxation, and on statutory requirements for thousands of businesses. Progress has been made in those areas, but there is a need for more. I am sure that the Minister and others in their discussions with the Federation of Small Businesses will continue to focus on those prime areas of concern.
As a new Member of Parliament with a special interest in such matters, I have visited many small businesses in my constituency and, whenever possible, I have taken the opportunity to engage in dialogue with proprietors, directors or sole traders. They continue to refer to the burden of bureaucracy that hampers their growth and business operations.
Only this week, when people knew that I would be making a contribution to the debate, I had a phone call from a small sole trader in Dundee, who said that, in the

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past, he had been successful in obtaining contracts for small jobs for Government Departments in and about Dundee, but because of European procurement requirements, he was removed from the tendering contract and lost out to a company that had a base in Dundee, but was at the larger end of the small and medium-sized enterprise range and had consequently relocated outside the city. Therefore, the work that is being carried out in the Government Departments in the city is provided by a company located outside the city boundaries—indeed, at some distance from the city. That small business man feels greatly aggrieved. When we look at procurement policies and the way in which Government Departments contract out work, we should at least make some leeway for local small business operators.
Another major area of concern is transport costs and transport infrastructure, which is vital to all the peripheral parts of the UK and which is clearly linked to successful business start-ups and continued profitability. My own area, the north-east of Scotland, is seriously hampered by the lack of modern, high-speed road and rail links down the east coast. The Minister, who represents a seat in Edinburgh, will be only too aware of the poor road links between our part of the country and the rest of the UK—the A1 is very poor. He will also be aware of the concern expressed by hon. Members who represent Edinburgh about the reprioritising of railway investment in the east coast main line through the latest Strategic Rail Authority investment review, which puts back any investment, particularly north of Edinburgh, into the very distant future—perhaps the next millennium, if things go the way that they have in the past. I hope that the Minister will take that up, because it is a cause of concern to many small businesses in Scotland.
I referred earlier to the general underperformance of the Scottish economy when viewed against overall UK economic performance. The "Lifting the Barriers to Growth in UK Small Businesses" survey conducted last year by the Federation of Small Businesses showed a vibrant, ambitious small-business sector flourishing in Scotland. Nevertheless, the survey also showed the clear distinction between the UK-wide business environment and that in Scotland.
Scottish small businesses are showing a much more youthful profile than ever before, and the Scottish small business sector can boast the highest proportion of wholly female-owned small businesses in the UK. However, on the downside, the number of small business start-ups is lower than the UK average. Business owners in Scotland are more likely to have bought a going concern or inherited a business than those in the rest of the UK. On the point made by my hon. Friend the Member for Edmonton (Mr Love), that means that there are not as many start-ups in Scotland as in the rest of the UK. That must be addressed.
Business turnover is lower in Scotland than elsewhere in the UK, and the number of employees per business is also lower. That is a consequence of Scotland's businesses being subject to more cost constraints in their business activities. Scotland remains the area of the UK in which small businesses find the burdens of transport costs, fuel and road tax most onerous. Some 62 per cent.
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of those surveyed last year expressed dissatisfaction with Scotland's road infrastructure and its links to UK and European markets.
The use of technology in Scotland's small business sector is comparable with that in the rest of the UK, but access to ISDN and broadband is considerably more limited. Despite the technological differences, there is a clear desire for involvement in new ventures to improve marketing, increase research and development, and break into overseas markets. The ability to achieve those goals and to improve the ability to compete is severely hampered by the divergence I mentioned between the business environments in Scotland and in the UK overall. Poor access to broadband particularly affects my area: access is very bad there, even for Scotland. However, much of the country enjoys unlimited access to broadband.
A great percentage of small businesses have not been able to achieve and sustain real growth because of a lack of access to investment capital, and we must address that as soon as possible. Earlier, I referred to high transport costs resulting from not only fuel prices, but geographical location. Because of the smaller nature of Scottish small businesses, they feel a relatively greater impact on overall costs and eventual turnover from taxes in general, and environmental levies in particular. All that affects the ability of Scottish small businesses to invest in long-term growth and viability.
I freely admit that the remedies and responsibilities for those problems fall not only to this Parliament but to Holyrood. To be fair, considerable progress has been made on such matters, with the Westminster Government cutting and slashing taxes in last year's Budget to ensure that small businesses enjoy more advantages. The Scottish Executive played their part, too, falling in line with the Department of Trade and Industry's new manufacturing and innovative strategy, and announcing new resources to boost joint academic and industrial ventures. I hope that that will increase new start-ups in, for example, life sciences and medical biotechnology, especially in areas such as Dundee. Dundee has a good track record of creating new small companies involved at the sharp end of technology, especially computer-game technology.
Much remains to be done. We must constantly review how we handle the thorny issues of economic growth, both north and south of the border.
Mr. Gareth Thomas: I apologise to my hon. Friend for missing the first couple of minutes of his contribution. Does he share my hope that the Minister will also address the difficulties that small businesses face when trying to access affordable insurance cover? The cost of insurance cover, if businesses can get it, has multiplied by five for some businesses.
Mr. Luke: I am happy to respond to that because small businesses in my area have brought that issue to my attention. The growth of the cost of insurance cover during the past few years has been unbelievable. Given the insurance industry's problems, that must be tackled. Larger companies have easier access to insurance because they have a larger financial base than small businesses. Small businesses might not grow or might go into liquidation because they are unable to get such cover, so my hon. Friend's point is well made.

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I was talking about the need to examine the way in which we manage our policy, and I referred to two specific aspects. The first is the role of enterprise companies and development agencies north and south of the border. If there are problems of divergence between the Scottish and UK growth figures, we must examine ways in which enterprise companies—in this case, the national company Scottish Enterprise—deal with that. We must continue to review their roles and what happens in England where there are development agencies.
Mr. Love: My hon. Friend mentioned the low growth rates of Scottish small businesses compared with that of small businesses in the rest of the United Kingdom. Scottish Enterprise picked up on that issue, set up a special project and invested substantial resources to assist the formation of small businesses in Scotland. As I understand it—the Minister might comment on this—that has not yet produced the additional formation that one would expect. Does my hon. Friend know any reasons why there is such difficulty in forming small businesses in Scotland?
Mr. Luke: I know about that from my constituency experience. I appreciate the national strategy that Scottish Enterprise has put in place, but I do not believe that the strategies employed by enterprise companies in the locale exert real pressure at the grass roots and the coal face for the implementation of the policy. There is no discussion about strategies required for local areas. There is a need to examine not only the national operation of Scottish Enterprise and the development agencies south of the border, but the way in which money channelled through national or regional agencies by Government is to get down to the grass roots. Scottish Enterprise Tayside, the local enterprise company in Tayside, has lost its way on many such issues and it should be more focused. The Government should ensure that it is refocused.
Although the fact that the structure of the companies does not allow for political input might be a good thing, it removes the ability of politicians in Westminster and the Scottish Parliament to give a political and economic focus. We are involved with the trends and we know what is happening in the national economy. That would assist local enterprise companies to devise their strategies accordingly.
Mr. Kerry Pollard: My hon. Friend the Member for Edmonton (Mr. Love) said that small businesses are not doing well not only in Scotland, but in several regions of England. Apropos of that, the eastern region is doing really well. There is a culture in the region of getting up and at 'em and a culture of small businesses. However, large businesses have been the norm in other areas of the country, and it is difficult to achieve a culture change from one to another.
Mr. Luke: I happily accept that I am speaking from a Scottish perspective. I examined the figures issued last year by the Treasury and the Department of Trade and Industry, and there are obviously divergences throughout the United Kingdom. Much of that happens for the same reasons as in Scotland: there are peripheral areas served by poor infrastructure and they are affected
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by the way in which their development agencies work. Although I am speaking from a Scottish perspective, the national Government must do more to refocus the priorities that it sets.
I made these very points in the debate on the Scottish economy in the Scottish Grand Committee last week. Given that Scotland has a separate Parliament, there may be a need to create a cross-border consultative body based on the Irish model, where Ministers meet on a regular basis to discuss the structural problems that affect Scotland's contribution to the UK economy. There could even be a quarterly meeting of Scottish MPs and MSPs to review not only the work of that ministerial body, but also the work of the bodies in Scotland that are charged with creating economic growth and prosperity.
That would give a focus to the work in Scotland and tie it in constitutionally more closely with the workings of the UK Government. In making this suggestion, I reject the arguments put by the Scottish National party. I do not see anyone from the SNP here today, so I do not know what interest they have in the Scottish economy. They did not perform well last week: their concept of financial autonomy—for them a back door for independence—does not hold water. The argument put by the hon. Member for Banff and Buchan (Mr. Salmond)—who is not here today—in the pages of business section of The Scotsman yesterday is a recipe for the break-up of a successful economic arrangement that would mean job losses and the loss of work and prosperity in Scotland. I am sorry that there are no SNP Members here to put their case on that point.
Mr. Gareth Thomas: My hon. Friend's contribution has focused on the whole range of general issues that affect small businesses and the climate within which they operate. Will he acknowledge that Scotland has a proud tradition of community-owned small businesses? There is a range of specific issues that affect such businesses, relating to the nature of the legislation and the way in which that legislation has fallen behind company law.
Mr. Luke: Given my previous experience in local government and economic development, and as one who was very much involved in the fostering of small community businesses, I am happy to argue their case and praise their activity, but north of the border they have lost their way—I am not sure about the situation in England. I agree that we need to refocus their structure and address the way in which they can channel funds and prosper.
Credit unions have been a big success in providing funding and bringing corporate co-operative action together. There is a need to look at that sector, because it is a good and useful vehicle for creating small business ventures that are collectively owned. There is a need to consider different models outwith the normal models, such as sole traders or small partnerships, by creating community-based organisations. That is something that I know the Government are keen to do, and in Scotland, there has been an emphasis on that in the past.
I am glad that we have had time to stage this important debate. It reminds us that we should never forget or belittle the contribution that small businesses make to the economic life of this country. Without

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doubt, they are the wellspring and the fountain of regeneration in the British economy. We must make sure that new companies appear, grow, become larger employers and provide prosperity, services and employment throughout the British economy. The massive multinationals often steal much of the economic limelight, but without the solid base of the small business sector, the British economy would be built on weak foundations.
I know that the Minister has done a great deal in this area and I look forward to hearing what more the Government can do to sustain and encourage small businesses. Earlier this week the Secretary of State for Scotland had meetings in Scotland to discuss the role that the Government could play, and I hope that those discussions with small businesses and business in general will pay dividends. The Government have made tremendous efforts to promote growth in the future and set the scene for the eagerly awaited economic upturn.
There will, no doubt, be criticism of the Government and of some of their policies, as well as claims that they have not done enough to foster small businesses, but the figures show that there has been considerable growth, and in that light, the charges appear unfounded. Hopefully, the Government will make the case—I am sure that the Minister will—that small businesses in the UK benefit from the least-regulated regime in Europe. I hope that we can do more to reduce that regulation.
As we are discussing issues relating to the Scottish economy as well as the UK economy, I am sorry that no SNP Member is present. I am sure that their leader is in the House, although I would have thought that he would have ensured that there was a representative in this Chamber to speak on behalf of his party in this debate.
I hope that the Government will take note of what is said in this debate, and that they will examine the infrastructure and structural problems in the Scottish economy in relation to the UK economy. The Federation of Small Businesses has been active in putting the case for small businesses. Only yesterday, in the business section of The Scotsman, John Downie poured scorn on the manufacturing plans in the Scottish manufacturing steering group report. At the end of the day, the Federation of Small Businesses makes a positive contribution to the work of the Government, by ensuring that they do what they can to ensure that small businesses are fostered. It is essential that we do all that we can to ensure that that growth continues.
Several hon. Members rose—
Mr. Deputy Speaker (Mr. Frank Cook): Order. I see hon. Members rising who have not notified me of their intention to speak. In 90-minute Adjournment debates, it is customary to commence the first of the three winding-up speeches no later than 30 minutes before conclusion, which means that there are now 29 minutes for open debate. I ask those hon. Members who are seeking to contribute to bear that in mind, not only in their personal contributions, but in interventions that they make or accept. We must start the first of the three winding-up speeches by 3 o'clock.
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Ms Meg Munn: I congratulate my hon. Friend the Member for Dundee, East (Mr. Luke) on securing this debate. I am pleased to have the opportunity to take part, because I also have an interest in small businesses in the north of England, although obviously my hon. Friend is from a bit further north. I shall focus on the importance of small businesses to strong regional economies and, in doing so, I will identify particular ways of doing business. There are some business organisations in my part of the world that could be employed in other parts of Britain. I shall also focus briefly on women entrepreneurs.
A couple of weeks ago, the regional development agency, Yorkshire Forward, launched its 10-year regional economic strategy and focused on the skills that will be needed for the region to progress over the next 10 years. It also identified the need for more small businesses and greater growth. I am especially pleased that in Sheffield, as well as the usual business support that the Government have introduced, for example, through the Small Business Service business links programme, we have agencies that offer support to businesses to help them become established, to grow and succeed.
Sheffield chamber of commerce is one of the most successful in the country. I attended an event last week when it took over responsibility for the Sheffield enterprise agency, which takes referrals from the Small Business Service to help people to launch their businesses. The most interesting speech of the evening—even more interesting than my own—was from a young woman who had been in the beauty business for only eight weeks. She was clearly very experienced in her area of work. She had worked for major companies such as Yves Saint Laurent or Yves Rocher—Yves somebody-or-other, anyway—and had managed the training for people throughout the UK, but she decided that she wanted to have a better work-life balance. She wanted to use her skills to set up her own beauty treatment business from home, and she had been enabled to do that with the support of the Sheffield enterprise agency.
Sheffield chamber of commerce also has responsibility for the south Yorkshire international trade centre, which works with businesses to see how they can take advantage of the opportunities to export to the EU and more widely. That scheme is recognised as successful. Those involved with the trade centre enjoyed Prince Andrew's visit last month, during which he learned about the work that is being done there.
We are not only interested in businesses created from one model. In Sheffield, we have a long-established cooperative development agency, and I am especially pleased that more than 10 per cent. of the Labour cooperative MPs have taken an interest in the debate and are present today. That shows how important mutuals and social enterprise are to the economy. It is pleasing to know that work is being done to put into action the Department of Trade and Industry's clear aim of more support for social enterprises. I welcome the proposals for a more supportive legislative environment, and I welcome the fact that in future each business link must plan to support social enterprises. I would be pleased to hear from the Minister about that area of work when he has the time to respond.

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There are some excellent examples in my constitutency. Heeley city farm is not just part of the city farm movement; it has expanded to provide training through the new deal, it has a garden centre and café?and it has just been awarded money to develop a large community composting scheme. Next to that we have Heeley development trust, which is a community-owned organisation that manages community resources. That provides a particularly interesting model, because it tries to do what the Government want such organisations to do. It aims to own buildings and rent them out, so that it can move from being grant-funded to being self sufficient. Sheffield Rebuild is also a good example of social enterprise, and it is one of the fastest growing businesses in Sheffield. It trains young people entering the construction industry, and it supplies building services to social housing providers in Sheffield. It recently won a special social enterprise award in the inner city 100 awards.
Small businesses struggle, and I have visited some in my constituency. The owner of Ponsford's furniture store told me that one of his real problems was how to deal with the range of issues involved in running a small business without a large supporting personnel department and particular expertise. For that reason, I welcome the red tape busting roadshow initiative led by the Yorkshire and Humber chamber of commerce, which travels throughout Yorkshire giving advice to small businesses, such as telling them where they can go when they have a problem. The reality for many small businesses is that certain problems do not arise every day: they may come across some issues only every now and then. By offering small businesses signposts to the organisations that can help them, they may become less isolated and more confident in dealing with the range of regulations.
One arguments says that we should have less regulation, but I will talk later about women in business and about the benefits that they have received from various changes that the Government have introduced. We must recognise that such changes are often beneficial to the business community and to the economy, and that it is important to enable small businesses to deal with the relevant issues.
Hon. Members may know that I asked a question last week about the DTI's work on developing help for women entrepreneurs. I was able to use that to highlight the fact that a survey undertaken by Global Entrepreneurship Monitor 2002, which is a worldwide survey of entrepreneurial activity, showed that in Yorkshire and Humberside women are leading men. I received some good press coverage about the Yorkshire lasses—a term that I do not take offence at.
Although women are ahead of men in Yorkshire and Humberside, the level of entrepreneurial activity is still low compared with the eastern region, which my hon. Friend the Member for St. Albans (Mr. Pollard) mentioned. Overall, men in the UK are twice as likely to set up a business as women. If women were setting up small businesses at the same rate as men, there would be 100,000 new businesses a year.
What can be done? A range of things can be done. When I first went to the Sheffield business club I was surprised to see the number of women there. Many of them, like the young woman I mentioned earlier, had been working for somebody else, but had decided that
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they had the skills and ability to work on their own. They were getting support from other people through the Sheffield small business initiatives and advice on where to get help. Those women were feeling their way through, and, as the young woman said last week, starting to feel more confident in realising and living their dreams. There are some wonderful examples of successful businesses. The Minister was complimentary about Diva, which is a female-run, public relations company in Sheffield that recently won three awards. The women there have told me that they now need help to move on to the next stage. That is an area that my hon. Friend the Member for Edmonton (Mr. Love) mentioned earlier. The Small Business Service is to provide support for fast-growing businesses.
Other aspects of Government policy also help women, such as improved child care resources. Indeed, many women are going into the business sector of child care. There is the increased financial support for families, such as the child tax credit, and higher child benefit, which enables women to afford child care and gives them the space to set up their businesses. There is also the Government's strategy for more flexible working, which means that parents are better able to combine their working lives with their family responsibilities. I do not believe that that causes problems for business, contrary to what some might say. When businesses can adapt to that strategy and positively embrace it, they keep their staff and do not have the expensive problem of recruiting additional people.
I know that many other hon. Members want to contribute to the debate, so I shall conclude. We want more small businesses to grow and to be provided with more support. Some of the organisations that operate in my constituency could be replicated elsewhere to support people going into business. We want to encourage a range of support, especially child care, to enable women to go forward and take up opportunities.
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Mr. Gareth Thomas: I, too, congratulate my hon. Friend the Member for Dundee, East (Mr. Luke) on securing the debate and on the way in which he made his case. He was absolutely right to praise the campaigning work of the Federation of Small Businesses, and in his comments about the Scottish National party. However, he might also have expressed surprise at how few members of the main Opposition party could be bothered to be here for such an important debate.
I want to focus on three issues, two of which have come up in the interventions that I have made on my hon. Friend. The third and perhaps parochial point concerned west London. I represent a seat in west London. The west London economy provides two and a half times as many jobs as the City of London, but the issues facing the area receive significantly less column inches than the City of London. Recent research by Business Link for London has highlighted a range of issues. If we could sort those out, west London's economic performance could be even stronger than it is at the moment in the small business area.
Many small businesses feed off large, flagship developments. In west London we shall benefit from the modernisation of Wembley stadium, the new terminal 5

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programme at Heathrow and the White City development. Those flagship developments have brought transport capacity in the west London area into stark relief. One issue that I urge the Minister to take back to the Department and to continue to promote in discussions with colleagues in the Ministry for Transport is the importance of Crossrail for the west London economy. I also urge the Minister gently to promote the need for more investment in trams and intermediate forms of travel in the west London economy. The Croydon tram link has proved, beyond wildest expectations, the benefits of investment in intermediate forms of transport for the south London economy. Frankly, we want the benefits in west London as well. The 140 bus route from my constituency to Heathrow would be an ideal route for such investment.
I want the Minister to tackle the difficulties facing small businesses over insurance cover. Compulsory employer's liability cover and public liability insurance are two particular aspects of insurance cover that I had in mind. An AXA survey published in December suggested that some 210,000 small and medium-sized businesses have no employer's liability cover at all. The construction sector has been especially badly hit by the rising cost of premiums for insurance cover. Given that such cover is a legal requirement, many businesses face the choice of either trading illegally, closing down the business or trying to pass on the cost of the increased premiums. For many businesses, all those choices are difficult and may result in a move away from reputable companies to those less keen on sticking to legislation.
The Government have recognised the considerable difficulties over insurance cover. In last year's pre-Budget report, the Chancellor of the Exchequer announced a review that would be conducted by the Department for Work and Pensions. The Office of Fair Trading is also studying the market for liability insurance cover. How is that work progressing? If the Minister could give us some details on that, several firms in the construction, repair and modernisation sector in my constituency that are currently faced with that most pressing problem would have more confidence.
My hon. Friend the Member for Sheffield, Heeley (Ms Munn) referred to the not-for-profit small business sector. The Minister will be aware of the strategy set out in the report published last year "Private Action: Public Benefit". The strategy aims to review the issues facing the not-for-profit sector, recognising that the legal forms available to such businesses are certainly not appropriate as they stand. The report made a series of recommendations on the need to modernise the law on industrial and provident society legislation beyond the legislative reform already initiated by my hon. Friend the Member for South Derbyshire (Mr. Todd) in his private Member's Bill. The report also recognised the need to bring into law much more quickly than at present the industrial and provident society rules and regulations in comparison with company law where appropriate.
I hope that the Minister will be able to shed some further light on regional development agencies and whether they are being encouraged more fully to recognise the potential of social enterprises. I look forward to his response.
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Mr. Kerry Pollard: I congratulate my hon. Friend the Member for Dundee, East (Mr. Luke) on securing the debate. I also congratulate the Minister on his proactive approach to small businesses. He and his team have a high and increasing reputation for all their efforts in the small and medium-sized enterprises sector. There is no doubt that the SME sector in the United Kingdom has helped our economy through the global slowdown. Without that, we would be in a much worse situation. The SME sector as a whole must congratulate itself on achieving that.
In the UK, it takes one day to set up a small business; in Europe, it takes many weeks. That is how we view small businesses here and how we ought to encourage them to set up and react. Recently, an Act was passed here that enabled a small business to fail, get up, dust itself off and start all over again. That is more good news, delivered by this Labour Government.
There are of course problems for the small business sector. A small business man will say, "All I want is for Government to get off my back; I want no rules, no regulation, no forms. I will pay some tax when I feel like it. I want to be left to run my business as I want." That is not the real world, no matter how much some would like it to be. I know that the Minister is doing his level best to apply a light touch. There are problems with factoring, which is a major issue for small businesses, and with the high and increasing costs of insurance. My hon. Friend the Member for Edmonton (Mr. Love) referred to that. Costs rose by as much as 50 per cent. and sometimes 60 per cent. year on year; that is a huge burden for small businesses to carry.
I draw to hon. Members' attention the example of a small, very successful business in my constituency. It is called Hocking NDT; NDT stands for non-destructive testing. It is a small firm that specialises in testing aircraft parts, and it is vital that it does its work properly. Two of its employees decided that they could put the technology to use on rail track. At present, people test the track by walking along it at a speed of about 1.8 mph. The two employees designed a device that can be attached to the front of a train to go at 65 mph, doing exactly the same job. That is revolutionary. Two employees of a family concern did that in their own time. The device has now been patented.
That is an example of the entrepreneurial skills that we have in this country in abundance. We must encourage those skills to ensure that small businesses flourish. That will help our economy by providing jobs and tax revenue. It is the way forward. I am sure that the Minister will come up with solutions to some of the problems that hon. Members outlined. I will shut up now to let others speak.
Several hon. Members rose—
Mr. Deputy Speaker: Order. I call first Mr. Love and ask him to speak briefly.
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Mr. Andrew Love: Thank you, Mr. Deputy Speaker. I had not intended to speak, so you are right to ask me to be brief. First, I echo the comments of

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every hon. Member this afternoon on the contribution of the small business sector to the British economy. When speaking of the economy, we always think of the largest companies such as British Airways and British Petroleum, and of course they make a major contribution. However, small businesses are major and growing employers and wealth creators in our economy.
I wish to raise with the Minister a point that I made earlier in an intervention: our problem in the United Kingdom does not seem to relate directly to the formation of small businesses, although there are regional variations. Our economy seems to have a relatively buoyant formation of small businesses. Where our economy does not seem to be operating as effectively as it should is in developing those small businesses into medium and large businesses. Germany has a very large middle business sector that is a major contributor to its economy. We must return to that issue time and again to make the most of business formation and business growth to help the economy and to provide employment.
Every hon. Member touched on regulation. However, if we leave behind the sterile debate that often goes on in Westminster we shall find that we need balanced, reasonable regulation for small businesses. Regulation should not be a burden on them; it should help them to achieve their functions more effectively. In my capacity as secretary of the all-party small business group, I have listened to numerous debates about the concerns of business, both here and in my constituency, and I accept that we should reduce regulation. However, whenever we discuss which regulation should not be applied it becomes difficult to find anyone who can suggest what to do. Whichever regulation is suggested—whether it concerns minimum wages, working families or health and safety—people of every political hue claim that important safeguards and regulations must remain for the sake of both employees and employers. We must get away from sterile debate and accept that regulation is here to stay. We shall never get rid of it, but we need to find a balance by keeping the right regulation and getting rid of that which is not appropriate.
One of the main ways in which we can find that balance is to have a change of culture at Westminster. All the pressures in Parliament are for more and more regulation. We need to create pressures that will reduce regulation. I shall not list all the factors that go towards increasing legislation, but I shall touch on one that has helped to reduce it. I pay tribute to the Conservative Government—I do not often do that, so the hon. Member for North-West Norfolk (Mr. Bellingham) should listen carefully—for the formation of the Deregulation Sub-Committee. That produced a number of measures that have reduced regulation. However, the real impetus to start the process came from the Labour Government when they transformed the Deregulation Sub-Committee into what is now the Select Committee on Deregulation and Regulatory Reform. The speed of deregulation has accelerated greatly in the last couple of years. That is a first step along the road.
We need to take other steps; I suggest two in particular. First, Government Departments should have placed upon them a duty to report on how they have deregulated as well as regulated, so that the public and Parliament can know what is happening. Secondly, the Deregulation and Regulatory Reform Committee
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has a co-ordinating role to fulfil. It should look across Government Departments to see what is done by each of them in order to reduce regulation and, if necessary, to scrutinise departmental activity and call to account Ministers whose Departments are not performing that function. If we add those measures together, we shall have a significant impetus towards deregulation. We shall then have a sensible way forward: at the same time as we create regulation, we shall also reduce it where it has become redundant. That would satisfy the small business community and would play a major part in allowing it to grow and to contribute even more to the economy.
Mr. Deputy Speaker: I call Mr. Lazarowicz to speak very briefly.
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Mr. Mark Lazarowicz: I congratulate my hon. Friend the Member for Dundee, East (Mr. Luke) on securing the debate and I apologise to you, Mr. Deputy Speaker, and other hon. Members for having missed part of it. In two minutes, I shall make two brief points.
First, I suggest to the Minister that it is always important to consider not just the good things that he and his Department are doing to promote small business. Like many hon. Members, I am impressed by the way in which the Government have simplified the regulatory framework. However, they should also look at the effects on small businesses of other policies. Businesses in my constituency have raised with me the effect of the current investigation by the Office of Fair Trading into pharmacies. Lindsay and Gilmour, which has its head office in my constituency, runs some 10 community pharmacies in different parts of Scotland. The company is worried that its ability to run those outlets as small businesses might be affected by the review of pharmacy provision. I am not in favour of a protectionist approach to small businesses, but we must consider how they are affected by wider policies.
Finally, the Federation of Small Businesses has commented on what it sees as the unfair burden on the self-employed, as opposed to incorporated businesses. The Government have done much to encourage the sole trader, but there is a strong case for shifting the balance further to ensure that the self-employed enjoy some of the advantages of incorporated businesses when they start up. Let us not forget that many small businesses are not necessarily the fruit of a carefully thought-through business plan or a strategy for business development. Often, they start as someone's hobby or spare-time activity, which then expands into a business. Many such businesses fail, but many others succeed, and we should do what we can to encourage them.
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Brian Cotter: I congratulate the hon. Member for Dundee, East (Mr. Luke) on securing the debate. He made many interesting points, and I particularly welcome his remarks on the euro, because it is important to highlight the problems in terms of manufacturing companies' productivity. I also echo the hon. Gentleman's concern about broadband. Work is going on, but many rural areas are still not connected, and I hope that the Minister will give the point serious consideration.

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The hon. Member for Sheffield, Heeley (Ms Munn) made some key points about women in business. She also highlighted the fact that the Government and others had introduced many initiatives—about 180 of various sorts—to help groups in the business community, such as women. I urge the Minister to recognise the need to pull together and examine those initiatives so that they can be made more generally effective. At present, as the hon. Lady said in relation to Sheffield, they are very effective only in certain areas.
Yesterday, I met a member of the Afro-Caribbean business community, and we talked about its problems. There is also the issue of young people. I hope that the Minister will take all those issues on board.
At this stage, I should declare an interest. I am the director of a small manufacturing company, which obviously means that I am very interested in and welcome the debate.
As hon. Members have made clear, small businesses are an important factor in this country's economic thrust. They make up a large proportion of businesses, employing people and generating jobs and money. They are also community based and recycle money into the local area, which is important in terms of keeping areas going. The same is not true of the big supermarkets, whose money goes to a central pot and, for all I know, offshore. Another important aspect of small businesses is that they provide diversity and choice in local areas, and cater for local needs and interests.
My hon. Friend the Member for Bath (Mr. Foster) particularly wanted me to refer to an organisation called Computer Village, in Bath. It recently received an award for excellence as a computer retailer. Given that it comes up against big companies, that is a tribute to the way in which small businesses effectively deliver services.
I come from a manufacturing background, and I pay tribute to a manufacturing company in my constituency called Nickel-Electro, which has 60 employees. I recently visited it, and its innovativeness shows that small firms are often more ambitious and interesting. They can drive things forward because they are more contained and can take decisions quickly, in a way that big businesses often cannot. I congratulate those two companies.
Many hon. Members mentioned red tape, and we need to raise the issue frequently. I say that particularly because the payroll costs of small businesses are something like £288 per employee; a big company would pay only a fiver. The business rate is also disproportionately weighted against small companies. I urge the Government to consider those points—the payroll and bureaucracy costs and the business rates for small business being so large.
A report was recently published on regulatory impact assessments. I have served on several Standing Committees, and I have often urged the Government to consider doing regulatory impact assessments for Bills. Ministers consistently say that they are doing so, but I consistently see them not doing it well enough. I urge the Government to consider what happens in the Netherlands, where a separate organisation has the job of making an impact assessment and examining the
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ways in which, for example, small businesses might be hit by legislation. That would be better than the blanket statement that a Bill would cost £350 million—or whatever figure it might be.
Other hon. Members have mentioned the Small Business Service. Liberal Democrat Members welcomed that initiative, but I am a little disappointed. The initial concept was that the service should provide a robust, strong voice for small businesses; it would be independent of the Department of Trade and Industry and would say what needed to be said. It is not fulfilling that purpose terribly well, because it is not sufficiently independent. The head of the service should by now be a household name—someone who is known for fighting on behalf of small businesses, someone who would cause the Minister to quake in his shoes a little, someone who is ready to hammer him into the deck. That seems not to be happening, and I hope that something will be done to address that particular problem.
The Government took a long time to respond to the Cruickshank report, but small businesses still express concern about the banks, about interest payments and about the difficulty of switching from one bank to another. I hope that the Minister will refer also to that.
The hon. Member for Harrow, West (Mr. Thomas) and others referred to insurance matters. I see the chairman of the all-party small business group. the hon. Member for St. Albans (Mr. Pollard), nodding his head—he, too, referred to them. I urge those hon. Members who have not yet done so to put their names to my early-day motion on that matter. I am glad to say that the Government listened. Two reports were organised, one from the Department for Work and Pensions and one from the Office of Fair Trading. I think that the DWP report will be published shortly. I hope that both reports will be addressed quickly by the Government because the problems need to be tackled urgently.
I know of companies whose premiums have increased by 600 per cent. and more. For one company in my constituency, the cost of insurance went up from £9,000 to £48,000 in one hit. The Minister will agree, I am sure. that that is not tenable, and I hope that the Government will address the issue. I have met many representatives of the insurance industry as well as of business. I try, as we all should, to work alongside them, but we want openness and clarity on the subject. I think that the Small Business Service should have been fighting harder on that front, helping those companies whose premiums have been unfairly raised simply because they operate a certain category of business. Within those categories, some are more risk-prone than others. Risk management is an issue that could be covered.
I am glad to see that the problem suffered by newsagents has been addressed after the report of the Office of Fair Trading. There are many problems for small businesses and I am worried, in particular, about local pharmacies. They are so important to the local community, but they are currently at risk. I hope that the Minister will address such a serious issue. I thank the hon. Member for Dundee, East for calling the debate.
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Mr. Henry Bellingham: I begin by declaring an interest that is specified in the Register of Members' Interests. I congratulate the hon. Member

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for Dundee, East (Mr. Luke) on introducing such an excellent debate. Many local examples have been cited of exactly how vital the small firms sector is to the economy. The hon. Gentleman rightly spoke about the need to foster innovation and entrepreneurship, and put such matters in the wider Scottish economic context.
The hon. Gentleman was right to chastise SNP Members for not turning up here today. Time and again, they have gone on about how they are the friends of small businesses, yet they do not bother to attend such an important debate. The hon. Member for Harrow, West (Mr. Thomas) said that I am the only member of the official Opposition who is present. I must point out that, when we debated the Industrial Development (Financial Assistance) Bill on Monday, only one Labour Back Bencher was present. Many other things are going on today. There is an important debate in the main Chamber, so it is good news that so many people have turned up here.
The hon. Member for Sheffield, Heeley (Ms Munn) made the good point that the burdens, particularly the overall impact of red tape, fall disproportionately on small firms because they do not have the resources or the personnel to deal with them. She also flagged up sign posting. Will the Minister explain the progress of the Department of Trade and Industry's business support review? There are many schemes to support small businesses, but they are often faced with a plethora of schemes and the situation becomes confusing. The hon. Lady was right to flag up female entrepreneurs. We all want more women in business.
The hon. Member for Harrow, West referred to employer and public liability. That was also picked up by the hon. Member for Weston-super-Mare (Brian Cotter). The Minister will note that exchanges were made on such matters during Department of Trade and Industry questions. In fact, I have referred to two horror stories of companies whose premiums have rocketed sky high. The hon. Member for Harrow, West asked about the reports of the Department for Work and Pensions and the Office of Fair Trading. Many firms cannot wait any longer. As the hon. Gentleman said, a few are trading illegally now and many others need respite quickly.
The hon. Member for Edmonton (Mr. Love) made the interesting point that not enough small businesses move from small firm status to the middle size—mittelstand—status. That is a fair observation. I do not know whether research has been done on such matters. Obviously, in Germany many more smaller firms can move on. That is perhaps because there is not the tradition in Germany of small businesses trying immediately to go public. Many companies have come on to the A market, but it would be interesting to see how many of them started as small companies and how many of the equivalent companies in Germany decided to remain privately owned, middle-sized businesses.
The hon. Gentleman was right to talk about the regulatory impact assessment regime. He referred to the need to widen the Deregulation and Regulatory Reform Committee, so that we have deregulation reports from Whitehall. That is an extremely sensible suggestion. I wish to put another idea to the Minister. The Government could build on the small firms loan guarantee scheme. I know that the Government and the Confederation of British Industry are keen on such an
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initiative. The scheme has been a huge success. The Minister will be aware that since it started in 1981, more than 80,000 loans have been guaranteed. The value of those loans is now well over £3 billion. The average size of a loan is about £37,000. The scheme plugs an important funding gap for small businesses.
I hope that, when the Department of Trade and Industry considers the business support measures and puts in place a review of them, it will think about expanding the scheme. I notice that that will be in the submissions of many trade associations and small business organisations to the Chancellor for his Budget. After all, when such firms succeed—and most of them do—the money gets paid back. The Government only guarantee the loan. I ask the Minister to consider carefully whether the small firms loan guarantee scheme could be extended to various other categories. Why, for example, does it not cover banking, finance and associated services, or education?
The hon. Member for Sheffield, Heeley mentioned getting more women entrepreneurs involved in small businesses. Many women want to become involved in small businesses on the education support services front, yet they cannot qualify for the small firms loan guarantee scheme if their business is in any way connected with education. That is a ridiculous anomaly. The same is true of businesses affiliated to medical, health and veterinary services; they cannot get a Government-backed loan. Motor vehicle repair and servicing are very important in some of our constituencies, where there are many young people who want to go into that kind of business, but retail and transport are also excluded.
We could make the scheme a little more flexible overall. I shall give the example of a company that did not get a loan. It was a business that needed funding to cope with increased orders. It was excluded from securing a £250,000 loan because, despite having been in existence for two years, its parent had gone into receivership, and the management team had bought the company from the receiver and traded with the same staff, premises, customers and order book. The Small Business Service interpreted the change in ownership as a cessation of business.
I hope that the Minister will take from this debate the strong points made by many hon. Members. Obviously, there are some things that the Government cannot do, but there are others that they can, and some of them do not cost any more money. I would have thought that extending and reinforcing the success of the small firms loan guarantee scheme would be a good way of telling the small business sector that the Government want to do all they can to help them.
The Liberal Democrat spokesman mentioned the burdens of red tape. Does the Minister agree with David Frost, the Director General of the British Chambers of Commerce, who said the other day that the community burden of red tape has now reached over £20 billion, excluding the £10.2 billion cost of the minimum wage, which my party firmly supports? Mr. Frost went on to say:

"Red tape is strangling British productivity and it is threatening to combine with other blocks on business to create critical mass that will destroy jobs through a dramatic loss of competitiveness."

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That has become a great worry. I hope that the Minister will comment on what David Frost said, because some of those burdens are home-grown and are being gold-plated. Some have come out of Europe, and the Government have no control over them. However, 60 per cent. of the burdens came from the UK.
The Liberal Democrat spokesman mentioned the report commissioned by the British Chambers of Commerce by Tim Ambler of the London business school and Francis Chittenden of Manchester business school. They considered 200 regulatory impact assessments. According to their report, only 11 per cent. of impact assessments even considered the possibility that there might be an alternative to legislation. Some 60 per cent. of the 200 assessments examined said that the consultation with the stakeholders was very poor indeed. An example that they gave—and this might be something that the hon. Member for Sheffield, Heeley supports—was the Government's policy on the right to demand flexible contracts. The cost of that to business is some £296 million a year. The benefit to businesses will also be substantial, but no alternative was proposed and there was no proper consultation on it. Does the Minister agree with David Frost's conclusion from the study?
The Minister will know that storm clouds are brewing on the horizon. The CBI's last report was very gloomy, and today's figures show that manufacturing and investment are at their lowest level since records began. That is not good news. I know that the Minister recognises that, because he has great energy and enthusiasm and a great weight falls on his shoulders. The new jobs that must replicate those lost to manufacturing must come from the small firms sector, and we look to the Minister to respond to those important points.
Mr. Deputy Speaker: Order. The hon. Gentleman rightly drew attention to his interests in the Register of Members' Interests, which is as it should be. However, that is not much help to hon. Members who are participating in the debate if they cannot refer to the register. I shall make representations to arrange for copies of the register and "Dod's Parliamentary Companion" to be made available on each side of the rostrum, so that hon. Members in the Chamber will have full information available.
3.20 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): I am proud to be the Minister with responsibility for small businesses. I am proud to have a great team at the Department of Trade and Industry, and I am proud of the Small Business Service and many business links.
I am proud of the role that small businesses play in ensuring that we have the fastest growing economy in the G7 and the fourth largest economy in the world. I am proud of the quality of the contributions of my hon. Friends, and of their commitment to small businesses in not only their towns and communities, but throughout the United Kingdom. None of my colleagues are more committed than my hon. Friend the Member for
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Dundee, East (Mr. Luke), who articulately voiced many of the issues that affect and interest small businesses. I congratulate him on his contribution.
Small businesses play a major part in our economy. The Federation of Small Businesses, the British Chambers of Commerce, the Institute of Directors, the Forum of Private Business and the Confederation of British Industry's small and medium-sized enterprises council play an invaluable role in advising me and, I am sure, the Opposition and colleagues about what is good for small businesses. Perhaps the fact that we have taken their advice is one of the reasons why 1.7 million small businesses have started in the past five years, and why their survival rates are the highest for a decade.
There are issues in Scotland—nowhere more than in Dundee—that my hon. Friend the Member for Dundee, East rightly highlighted. I am delighted by recent developments in Dundee that have made it one of the top biocentres in the UK and, therefore, in Europe. The University of Dundee has done tremendous work on spin-out companies, and several will be world showcase companies. I talked today to lain Gray, the Minister for Enterprise, Transport and Lifelong Learning in the Scottish Executive, about the valuable role played by Dundee, and he told me about recent examples, including two today, that will take the expenditure on spin-out companies from the university to £30 million. One such company, Calico Jack, received a £40,000 smart award, which is a Government grant to help it to take its technology at the micro-project level toward commercialisation. Another company is CXR Biosciences, which has attracted £4 million
from the private and public sector and is the university's newest spin-out company. I will want to follow the company's progress through my hon. Friend.
None of that would have happened without the commitment of my hon. Friend and others in the Dundee area to putting Dundee on the map and sending the clear message that Dundee is one of the best places in Britain to set up and grow a small business. The small business gateway in Dundee spends £23 million, and receives a contribution from Dundee city council of £115,000. That spending ensures that there is a one-stop shop in Dundee not only for people who are growing a business, which was a vital point made by my hon. Friend, but for people who are starting businesses. That £23 million contribution is very valuable. It complements the work done by business link organisations in England through the Small Business Service, which provided 250,000 businesses with advice and support last year, including 18,000 start-ups. I agree that the focus should not only be on start-ups, but on businesses that are willing and able to grow.
I now turn directly to the key issues that have been raised. Procurement is vitally important. One of the first questions that I asked when I became a Minister at the Department of Trade and Industry was how a small business got the contract to clean the carpet or the windows. The bundling of contracts has been detrimental to small companies. I am pleased that the representations that I made in my first few months as Minister resulted in the Chief Secretary to the Treasury, who has responsibility for these matters, abolishing the requirement to supply three years of accounts. That is a welcome move, although it is only a beginning.

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I recently had a meeting with my right hon. Friend to progress that agenda, and I am confident that the Treasury will work with us on behalf of small businesses to ensure that anachronistic procurement rules are changed so that the public get value for money while, at the same time, small businesses get a fair crack of the whip.
Every hon. Member will know about the problems caused by insurance. I have had several meetings, not only with the stakeholder groups that I mentioned earlier, but with the Association of British Insurers and the British Insurance Brokers' Association. My right hon. Friend the Minister for Work, my hon. Friend the Financial Secretary to the Treasury and I sit in a tripartite committee. I do not apply a blame culture to insurance companies. There are commercial pressures and wrong decisions can be taken. We must work together to do what we can to alleviate the burden. Small businesses must have affordable cover, and we are working hard with the industry to come up with practical solutions.
It is vital to do what we can on regulatory impact assessments. I was in Brussels last Wednesday and I was interested to hear what Nick Clegg, the Liberal Democrat MEP, said about the need to have regulatory impact assessments in Brussels, especially when regulations are amended by the European Parliament that do not appear to have had a proper impact assessment. We have an established RIA procedure, and although there are always grounds for improvement, I gain satisfaction from the fact that our European colleagues and their civil servants come to see what we are doing. We are always open to suggestions for improvement.
The small firms loan guarantee scheme is especially vital. I know that every hon. Member will have constituents who have benefited from it. There was a barrier in 1993 to certain sectors, some of which have been mentioned. I asked for the criteria to be examined and questioned whether what applied a decade ago should still apply. I am pleased that we were able to persuade my right hon. Friend the Chancellor of the Exchequer to make a change that comes into effect on 1 April. The number of sectors eligible will be extended to include retailing, catering, coal, hairdressing, house and estate agents, libraries, museums, cultural activities, motor vehicle repair and servicing, steel and travel agents.
My hon. Friend the Member for Sheffield, Heeley (Ms Munn) eloquently raised a key issue. I have visited several companies in her constituency. She mentioned the role of women entrepreneurs. Only about 33 per cent. of companies in Britain are set up by women entrepreneurs. My hon. Friend highlighted the fact that there would be 100,000 more new businesses if women set them up at the same rate as men. Our extension of the small firms loan guarantee scheme as from 1 April to industries such as catering will bring benefits to women and women entrepreneurs.
I am pleased that we are the fourth biggest economy in the world. I want us to maintain that position. To do that, we must ensure that we embrace the talents of everyone in our society, regardless of race or gender, so that the benefits are enjoyed by everyone in our society and are passed on to our children and grandchildren. I congratulate my hon. Friend on raising this important topic.

Public Accountability (Wales)
3.30 pm
Llew Smith: At the time of the last referendum we were promised that just about everything that was bad in Welsh politics would be confined to the dustbin of history if only we had the good sense to vote for an Assembly. A new Jerusalem was going to be produced in Wales's green and pleasant land. The days in which unelected and unaccountable individuals in quangos made decisions on behalf of communities were to come to an end—so were the days when individual Ministers in the Welsh Office made decisions that were not subject to a vote. Those Ministers, by the way, had been democratically elected, were accountable and could, indeed, be removed.
The quangos were to be the first victim of that new Jerusalem. Indeed, all of the political parties that campaigned for a yes vote in the referendum were committed to the abolition of the quango state in Wales—not just one, two or three quangos, but the lot. In the words that were used at the time, we were going to make a bonfire of the quangos. Sadly, that has not happened. There has been no bonfire. In fact, it has been a damp squib. If anyone has researched the matter, they will find that there are as many quangos in Wales now—and probably more—than there were when Ron Davies first made the commitment in 1995, or by the time that the referendum was held, or since the Assembly was first set up.
It seems that those people and all the political parties in the Assembly have learned to love rule by quangos. At the same time, they knew that the commitment was a cheap publicity stunt. Anyone who had bothered to read the Bill, which became an Act, would know that it contained no powers to allow the Assembly to abolish the most important—the executive—quangos in Wales. However, it is not just a matter of having the executive powers to deal with the quangos. The Assembly has the powers to deal with the non-executive quangos, but its lack of commitment is shown by the fact that it has failed to abolish them. We still have a quango state in Wales. If the bonfire had happened, we could have been subject, for want of a better word, to a more democratic and accountable Wales.
Adam Price: The hon. Gentleman's railing against the dangers of government by unelected appointees would carry considerably more weight if he had supported the proposal for an elected second Chamber in Parliament. He voted against both the 100 per cent. and the 80 per cent. elected options. If patronage is wrong in the case of the Welsh Assembly, why is it right in Westminster?
Llew Smith: I was not defending patronage in this place.
Adam Price: Why did the hon. Gentleman not vote for 80 per cent.?
Llew Smith: The hon. Gentleman posed the question and I assume that he wants to hear the answer that I am attempting to give. I did not vote for patronage in the House. I am totally opposed to a second Chamber that

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is made up of appointed members. If we had such a second Chamber, it would be a quango like those that we are subject to in Wales. A quango is a quango, regardless of whether it is in Westminster or Wales. That is why I voted against that type of second Chamber and in favour of refusing to set up any second Chamber in this community. My position is simple: if the Scottish Parliament does not need a second Chamber, why does Westminster need one?
Adam Price: Why did the hon. Gentleman not vote for 80 per cent.?
Llew Smith: You are not only posing questions, but answering them too—[Interruption.]
Mr. Deputy Speaker (Mr. Frank Cook): Order. The Chair is not posing any questions. A 30-minute Adjournment debate is essentially an opportunity for an hon. or right hon. Member to raise an issue with the Government and get responses from the relevant Ministers. Interventions are allowed, but continuous harassment and barracking are not.
Llew Smith: I welcome interventions. I deliberately made my contribution relatively short to encourage them because several weeks ago I tried to intervene on a debate on the single currency but was refused.
I do not believe that the people and the political parties that made up the yes campaign were serious in their commitment to make a bonfire of the quangos. The Assembly did not get powers to deal with the most important of them—the executive quangos—but it has powers to deal with non-executive quangos. However, there are still more non-executive quangos today than there were when the Assembly was set up. That suggests that the people and political parties that made that commitment were not serious and that it was a public relations stunt.
Several weeks ago, I was at a lobby where that point became relevant. Trade unions in Wales, including Unison, were in Westminster to lobby Members of Parliament because of the transfer of housing stock. They did not come here to complain that powers were being transferred from the Assembly to local authorities: their objection was that pressure was being applied to transfer the power over housing stock from local authorities to the Welsh Assembly. I found that unacceptable, as did just about everyone else who attended that lobby. The Assembly had made a commitment not only to abolish the quangos, but to transfer many of their powers to local authorities, but it was doing the opposite with the housing stock in Wales. It was helping to put pressure on devolved, elected and accountable local authorities to transfer powers over housing stock to new-style quangos that the Welsh Assembly was setting up.
I would have thought that the hon. Member for East Carmarthen and Dinefwr (Adam Price) would have opposed that. However, many politicians who used to be committed to making a bonfire of the quangos—to ending the quango state in Wales—are now rushing to distance themselves from that campaign, which was
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supported by all the political parties that were a part of the yes campaign. They are rushing to divorce or distance themselves from the commitment to make Wales more accountable by making a bonfire of the quangos.
Ron Davies, a previous Secretary of State for Wales who made the original commitment in 1995 to make a bonfire of the quangos, recently stated that it was "just a colourful phrase". Edwina Hart declared:

"I have never favoured bonfires."

Janet Davies, a nationalist Assembly Member, proclaimed:

"We should not have a reflex action to get rid of all Assembly-sponsored public bodies",

by which she obviously means quangos. When the current Secretary of State for Wales responded to a question from my right hon. Friend the Member for Llanelli (Denzil Davies) and I, he merely stated that the Assembly provides for all its agencies to be more accountable. That is somewhat less than the bonfire of the quangos that he and the yes campaign committed themselves to only a few years ago. Not only were we going to get rid of the quango state in Wales, even more ridiculously, the moneys that would be raised from the abolition of the quangos were,

"to pay for a democratically elected and accountable Welsh Assembly".

Only a few hon. Members are here today, but most of them would accept that that was a silly commitment to make. They will also accept that, once again, the commitment has not been delivered.
Some while back, I wrote to the Prime Minister and the Leader of the House, asking whether they had received any correspondence from Rhodri Morgan asking for legislative time for the Government to make a bonfire of the executive quangos—the most important quangos. The answer was no. It seems that just about all the parties have learned to love rule by quangos.
Adam Price: I have sympathy with the drift of the hon. Gentleman's argument about democratic accountability. Can he give some examples of the Assembly-sponsored public bodies that he would like to be abolished? Will he take the Arts Council of Wales within the Assembly, into the Ministry of Culture, Sport and Welsh Language? Does he see that there is some value in some instances in having arms-length bodies with sector-specific objectives?
Llew Smith: I was not the person who made the commitment to make the bonfire of the quangos. I am sure that the hon. Member for East Carmarthen and Dinefwr would accept that. As for the Arts Council of Wales, I would be in favour of abolition. The Minister and I experienced its decision-making a few years ago, when, in total opposition to the feelings of local communities, it tried to close Gwent Theatre in Education, which most people will accept is one of the finest theatres and education companies in the United Kingdom. I am a member of its board—a non-paid member—but most people would accept that that is so. The Arts Council of Wales was taking decisions, supposedly on behalf of the community—a community that it was not a part of, that it did not understand, and that it treated with total contempt. Much to the credit of

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the local community, it made its voice heard and, as a result, the decision was changed. Not much later, the chief executive resigned.
As for other quangos, Education and Learning Wales is nonsense—consider the decision and announcement some days ago on the IT contract, whose costs have gone through the roof. Once again, decisions have been taken by bodies that are not accountable, not elected and cannot be removed. Surely that is wrong. I am not saying that all quangos should be subject to the bonfire. I thought that the original commitment was daft because many scientific committees, which are quangos, but are there to advise Government, would be abolished. Does the hon. Gentleman want that? I suggest not. I certainly do not.
The other aspect of public accountability that had to change was that Ministers in the Welsh Office were making decisions that were not subject to a vote. That system had to go and be replaced by a democratic assembly where democratic decision making would be accountable to the vote. I think that most hon. Members would accept that that has not happened either. I should have thought that having reneged on those promises and made a complete mess of running the Assembly—for which I think all the political parties must share responsibility—they would be more humble.
No. Rhodri Morgan has now set up the Richards committee, which is stuffed with his own appointees, who, as we all know, will arrive at the conclusion that the Assembly must have powers similar to those of the Scottish Parliament and that there must be 80 members instead of six. That will happen because we know Rhodri's position on the matter. Then they wonder why people are not taking any interest in the committee and why people who are opposed to the Assembly and to giving it more powers are not turning up to give evidence.
To be fair to the Welsh National party, it is committed to a separatist Wales although it used coded language to say otherwise; yet most codes are indeed broken. Ieuan Wyn Jones. the leader of the Welsh National party, once proclaimed:

"Labour are clearly unable to win a general election and self government for Wales is the only answer."

Yet Cynog Dafis said:

"Plaid's aspirations remain full self-government … The status that used to be called independence."

The most recent thought of Ieuan Wyn Jones is,

"I think self-government now needs to be redefined. I much prefer to use full national status."

Whatever difference the party may have over words, its commitment is still to be separate from the rest of the United Kingdom: a Wales where the people in England are no longer a part of the decision-making process.
I find it ironic that while the nationalists are unable, and totally opposed, to share decision making with the English, they are quite willing to share it with, and indeed to be ruled by, the European Central Bank, which is not elected or accountable and cannot be removed. It seems as if the nationalists have some sort of love affair with the European central bankers, as long as they are not English.
In terms of accountability, it is wrong to split up the United Kingdom. We can learn from one of my predecessors, Nye Bevan, who always used to say that
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there is no difference between an unemployed worker in south Wales and an unemployed worker in London: there is no difference between a rural worker or a coal miner in north Wales and a rural worker or a coal miner in the north of England. That is why he decided to set up a national health service, not just for Wales, but for the whole of the United Kingdom. We can learn from people like Nye.
In conclusion, public accountability in Wales, not quangos, is increasingly subject to the bonfire. We were not promised that, and it has been a sad day for Wales that this has not happened.
3.47 pm
The Parliamentary Under-Secretary of State for Wales (Mr. Don Touhig): I congratulate my hon. Friend the Member for Blaenau Gwent (Llew Smith) on securing this debate. All of us who serve Wales have at heart the best interests of the people whom we represent. I am in politics because I am determined to do something about my constituents' quality of life, and I am sure that the same is true of my hon. Friend and his constituents. To do that, we must have first-class and effective public services.
I am delighted to be taking part in this debate, which bears directly on the key issues of how we can best deliver quality services to the people of Wales. I know that my hon. Friend shares my aspirations for the people whom we represent. I strongly hold the view that we can best serve our people and deliver services by pushing decision making out from the centre wherever appropriate. We have come a long way since the election of the Government in 1997.
I contrast the journey that we have made since then with the situation that existed before. Decisions were taken at the centre, often in Whitehall, when they could have been taken in the nations and regions of the United Kingdom. I remember the debate about whether my children's secondary school, which took pupils aged 11 to 16, should have a sixth form. The final decision on that proposal was taken not by the school governors, the parents or the LEA but by the then Secretary of State for Wales. I have often mused on such matters. Let us imagine the Cabinet of that time being called together at No. 10, with the Prime Minister calling it to order and saying that the first item on the agenda was that the Secretary of State for Wales was to report on whether West Mon school at Pontypool should have a sixth form.
Things have changed dramatically since 1997. We have a democratically elected Assembly to take decisions about the delivery of public services in Wales; we have a Scottish Parliament; we have an Assembly in Northern Ireland, albeit temporarily suspended at the moment; and we hope to have regional assemblies in England. Prior to the creation of those Assemblies, there existed an unsatisfactory way of running public services in Wales. Only three Welsh Ministers were available to take responsibility for, and decisions on, everything from health to transport and from education to planning. The only way in which the system was made to work was by Ministers delegating their responsibilities and powers to quangos—the theme of my hon. Friend's contribution.
I remember how difficult it was to work with many of those quangos. I have often thought that people seem to have no difficulty in finding Members of Parliament or

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their local councillor when they have a problem; however, let them just try to find out who runs the local general hospital or college of further education. My hon. Friend and I have been comrades in arms in many a battle. One in particular was to uncover considerable mismanagement in our local college of further education, which was run by a quango. My hon. Friend referred to the battle in which we were both engaged concerning the appalling decisions about the Gwynedd theatre made by people in senior positions at the Arts Council of Wales. I well remember the difficulties and our campaign.
To come to the core of my hon. Friend's argument, it is, in the devolved context, for the National Assembly to determine how it will deliver services in Wales, and whether that should be done by the Assembly itself, by local authorities or by Assembly-sponsored public bodies—or quangos. However, we have a role in this place. It is for Parliament to set the primary legislative framework within which the Assembly must operate. It is the job of Members of Parliament at Westminster to debate that and to vote the necessary funding to enable the Assembly to provide the relevant services. Within the broad parameters that we set it is for the Assembly to set priorities, to allocate funding, to ensure that services are working effectively and economically and, to a significant degree, to decide on the mechanisms by which the services can be delivered.
We should be careful to avoid generalisations about Assembly-sponsored public bodies, because some of them may provide the best answer in some contexts—such as science and research, which my hon. Friend mentioned. However, in other cases they may not be the best answer. Something that does not work well in one case may be exactly what is needed in another. What one Assembly-sponsored public body has done well may not be done superbly well by another. I should certainly want the greatest openness and accountability from any organisation that was providing public services. We should not be overly rigid in prejudging the structures that we want in Wales—a point that was, I think, conceded by my hon. Friend.
Llew Smith: I accept the Minister's point about the Assembly now having responsibility for many public services. However, a commitment was given by all the parties that were committed to a yes vote for the Welsh Assembly that when it was established, with its powers over non-executive quangos, it would abolish not one, two, three or four, but the whole lot; it was going to make a bonfire of the quangos. That was not my work. I thought that it was a bit daft at the time. Still, I should like the Minister to respond on the subject of the commitment that was given, and the fact that the Assembly, and all the political parties in the Assembly, reneged on it.
Mr. Touhig: I shall develop that point in a moment. I am aware of the statement that was made at the time. I do not think that we had so much a bonfire of the quangos as a small coal fire. Perhaps I shall demonstrate how that came about as I continue my remarks. For my part, I want the best services for my constituents.
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I recognise that some services can be delivered effectively by Assembly-sponsored public bodies, or quangos.
We should not forget, I think, that there have been significant improvements in the behaviour of quangos since 1997. In that period the Government, in partnership with the Assembly, have done three things. We have reformed the structure of many of the Assembly-sponsored public bodies; we have maintained the rigorous scrutiny of their effectiveness; and we have reformed the system of appointing members.
To deal first with the structural changes, there were 19 executive quangos in 1997; there are now 15. The map has changed with the merger of the Welsh Development Agency, the Development Board for Rural Wales and the Land Authority for Wales. Tai Cymru, the Welsh Health Common Services Authority and Health Promotions in Wales were abolished, and their functions were transferred to the Assembly. The Cardiff Bay development corporation was dissolved, and my hon. Friend will remember that he and I made common cause in campaigning for greater public investment in our valleys when we saw public investment going to Cardiff bay.
Llew Smith: The fact that the Cardiff Bay development corporation has gone has nothing to do with the Welsh Assembly; the development corporation had a set life. Tai Cymru was abolished before the Assembly was established. Does the Minister accept that there has been no reduction at all in the number of quangos in Wales?
Mr. Touhig: No, I do not accept that. As I have pointed out, there has been a reduction. Some of the quangos were abolished before the Assembly was set up, which is why I prefaced my remarks by saying that we, the Government, and the Assembly had taken the steps.
There has been the abolition of the training and enterprise councils and of the Further Education Funding Council for Wales, with the transfer of those functions to the National Council for Education and Training in Wales and the WDA. We now have continuing rigorous scrutiny of quangos, and the Labour-led Assembly is committed to accelerating a review of major sponsored bodies to ensure that they are necessary, effective and efficient, and to the reviews being completed by 2003–04. The objective of those reviews is for Assembly-sponsored public bodies to be retained only where they are the most appropriate, cost-effective means of carrying out functions.
To date, reviews of the WDA, the Countryside Council for Wales, the National Museum and Galleries of Wales, the Welsh Language Board, the National Library of Wales and the Wales Tourist Board have already been completed and discussed in plenary sessions of the Assembly. Plenary debates on completed reviews have resulted in unanimous Assembly support for the retention of those bodies so far reviewed.
Strategic reviews of the royal commission on the ancient and historical monuments of Wales and the executive agency Cadw have been completed, and the findings are being fed into the historic environment review of Wales that the Minister with responsibility for the environment has commissioned. A review of the

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Sports Council for Wales is well under way and a review of Qualifications, Curriculum and Assessment Authority for Wales is planned to start in the spring. That shows that we are continuing to apply rigorous standards to our Welsh quangos.
Another strand of improvement since 1997 has been in the way that members are appointed. All appointments to Assembly-sponsored public bodies in Wales are made in accordance with the Commissioner for Public Appointment's code of practice on ministerial appointments to public bodies. The code is based on the principles of the recommendations of the Committee on Standards in Public Life and the Nolan report. We can contrast that with what existed when the Tories were in government and there were jobs for the boys. We saw that throughout the quango structure in Wales.
Adam Price: Of course, there is another level of public accountability, which is UK-wide public bodies that have a responsibility to Wales, such as the Strategic Rail Authority or the new regulator, the Office of Communication. Does the Minister believe that the National Assembly should have the right to appoint a member for every major public institution that covers Wales?
Mr. Touhig: No, I certainly do not, but for any appointment, my right hon. Friend the Secretary of State for Wales will be in consultation with colleagues in the Assembly when any aspect of Wales's interest is affected, and we shall judge what is appropriate. However, I do not believe that there should be any automatic appointment.
Last year, the then Secretary of State for Wales succinctly summarised the improvements that we have made when he told my hon. Friend the Member for Blaenau Gwent:

"What has happened is that those bodies"

he was referring to Assembly-sponsored public bodies—
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"are now much more locally accountable in Wales than they ever were, and appointments to them are much more open and transparent than they ever were under the previous Administration."—[Official Report, 19 June 2002; Vol. 387, c. 263.]

I fully understand my hon. Friend's dislike and mistrust of Assembly-sponsored public bodies—quangos—and he has good grounds for that. I have had similar experiences. He and I have shared problems in trying to solve such difficulties in the past. However, the Government have done a huge amount to improve, to scrutinise and to reform the Assembly-sponsored public bodies throughout Wales. We have done that to the point at which I am confident that they provide a useful solution—but not the only solution—for delivering services in appropriate circumstances.
We must constantly keep under review that system of delivering public services. It is the intention of the Secretary of State and myself to take part in those reviews and to make appropriate changes where necessary. My colleagues in the Assembly who are responsible for the reviews that are carried out there intend to do exactly the same. I recognise my hon. Friend's strong feelings, but I hope that he will recognise that we have made some progress in trying to make improvements.
Llew Smith: Does the Minister accept that there has still been no bonfire of the quangos, a commitment that was given by all the political parties that campaigned for a yes vote?
Mr. Touhig: I made the point that there has been no bonfire of the quangos but, as I said earlier, we have a small coal fire that is still burning. We must keep the issue under review, but we have made some progress. I intend, with the Secretary of State, to play my part in keeping under review the delivery of public services by quangos.

Health Fit Process (Isle of Wight)
4 pm
Mr. Andrew Turner: Thank you, Mr Deputy Speaker, for allowing me to raise this issue. I am glad to see the Minister in her place.
There are three key questions that I hope that the Minister will be able to answer. First, health fit, which I will explain in more detail later, mentions drivers for change, some of which are practical and some of which are artificial. Do the Government accept that they have responsibility for creating some of those drivers for change and therefore that they have responsibility for the consequences? Secondly, when the Government set so many targets, why are there no targets for access to accident and emergency services? Thirdly, will the Government guarantee the future of emergency surgery facilities to support a consultant-led accident and emergency service together with maternity and paediatric services in my constituency?
The Isle of Wight is situated some two to five miles off the south coast of England, depending on where one crosses. It is difficult to describe the impact of living on a small offshore island to someone who does not share that experience. I will explain it for the Minister's benefit. If, every time she wanted to move from the city of Salford to the city of Manchester, she were only allowed to travel every half an hour, she spent half an hour doing so and there was no transport after 11 o'clock at night or before six o'clock in the morning, she could understand the practicalities faced by my constituents. There are only six ferry connections between the island and the mainland, very few of which run all the time.
The population of the island is 125,000 but it rises to 300,000 during the peak holiday season. It is one of poorest areas in the UK not to receive objective 1 or objective 2 status.
The hospital, which is run by the Isle of Wight Healthcare NHS Trust, is a splendid, albeit small, district general hospital. It was constructed in the late 1980s. A total of £26 million is now being spent on reconstruction because it has been agreed that 125,000 inhabitants in the winter and 300,000 in the summer

"must have an accident and emergency service, and therefore must have the 24-hour cover that supports that accident and emergency service, which has been described by the joint consultants committee of the BMA as acute medicine, acute surgery, trauma and orthopaedics, obstetrics and gynaecology, paediatrics, a full anaesthetic service, ITU, CCU and HDU, pathology and radiology, 24 hours a day, seven days a week, 52 weeks a year. That is a basic minimum without which A and E cannot function effectively or, indeed, safely."—[Official Report, 14 January 2003; Vol. 378, c. 655.]

We fear the loss of those services and, of course, the ambulance service must use coastguard helicopters to transfer patients to the mainland from time to time.
I will give more background. There is an enduring concern in my constituency about the loss of island services to the mainland. We have got used to having a joint police service with Hampshire, although we still hanker to have the island mentioned in the service's name. Since 1997. we have seen the creation of a cross-Solent learning and skills council, and a health authority that was first amalgamated with that in Portsmouth and then re-amalgamated with that covering the rest of Hampshire.
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Those may only provide backroom services, but more recently we have seen the loss of the police control room to Netley and the loss of Customs cover based on the island. There is a natural suspicion among my constituents that such losses will continue. Sadly, the health fit process was launched against that background of suspicion.
The health fit project is run by the Hampshire and Isle of Wight strategic health authority and is part of a national process to reconfigure hospitals in what is called "a rapidly changing environment". The local health community is expected to agree a strategic framework for reconfiguring those services to achieve what the health authority calls

"sustainable, affordable and efficient health services that meet the health care needs of the population."

The principles adduced include the recognition of drivers for change, the involvement of the public, meeting the needs of the human population rather than bricks and mortar and making services effective and safe while sometimes taking calculated and agreed risks. I shall shortly ask whether the risk of not having an accident and emergency department on the island is worth taking.
Three elements are profoundly important. The first is public involvement. I welcome the fact that consultation is not taking place behind closed doors, but the language must be more accessible. Using phrases such as

"based on a series of patient pathway conferences"

is unhelpful. It means precious little to me, though perhaps more to the Minister.
The second element is drivers for change. Some are technological and medical advances, National Institute for Clinical Excellence clinical statements and the demands of the royal colleges. Another identified in the health fit document is to

"manage the pressures on the medical workforce as a result of the European Working Time Directive".

Some drivers are inevitable, some artificial. The Government imposed some—so the Government can take them away. Where they damage services or impose a financial cost that the Government are not prepared to meet, they should be interpreted flexibly.
The first that most islanders knew about the health fit process was on 10 January when the story hit the Isle of Wight County Press. I pay tribute to Suzanne Pert, its health correspondent and a mature and sensible journalist who does not scaremonger. She wrote:

"An explosive report on future health services suggests Islanders would have to go to the mainland for all emergency surgery and trauma services, for some planned operations and even to have babies for a caesarian or forceps delivery."

A document had been produced—ambiguous and full of health jargon—for the community health council meeting on 13 January. I shall summarise its key points. First, it states:

"For in-patient paediatrics at Levels 2 and 3, the working assumption might be that these services should align with the 'comprehensive' acute hospital sites in Southampton, Portsmouth and Basingstoke."

There are presently five, but that is only three. Secondly, it states:

"Whilst the role of the acute hospital will change, there is still a need to define sites where acute trauma (accidents) and acute surgical emergencies will be treated. The likely strategic sites for these services, in terms of population distribution and access, are Southampton, Portsmouth and Basingstoke."

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A third extract states:

"However, the emerging view of the HealthFit event"—

typical of the language used—

"was that greater thought needs to be given to emergency access to the mainland, rather than treating the Solent as a barrier which completely defines the nature of services on the Island."

I understand what the document was getting at and I see the Minister nodding in her place, but it was open to profound misinterpretation—that if emergency services are wanted, one may have to cross the Solent to get them. That was a serious error on the part of those who wrote the document.
Fortuitously, on 14 January I held an Adjournment debate on public services, to which the Under-Secretary of State for Health, the hon. Member for Tottenham (Mr. Lammy), replied. I shall not quote all the relevant columns, but I had read the health fit document by then and pointed out that, if implemented, it would undermine the argument for minimum must-have provision for the population. I told the Under-Secretary that the proposals in the health fit document to remove accident and emergency to the mainland were unacceptable. I hoped that they were to him, too.
I provided the Under-Secretary with an opportunity to deal with that concern, by then widespread on the island. Sadly, he failed to do so. He merely read out a prepared script in columns 660 and 661, which described a process that would continue for a year or more, offering no comfort to residents on the future of accident and emergency, or, indeed, any other services on the island.
It was not surprising that the primary care trust and the health trust under the leadership of David Crawley and Graham Elderfield respectively should meet with their staff to put together the technical, financial and medical case for and against moving the services as described in the document. It is not surprising that the public became increasingly worried, that Councillor Roger Mazillius, the portfolio holder for health, social services and housing on the Isle of Wight council, called a public meeting, or that people wrote to me and telephoned me to ask what they could do. My assiduous local paper and other media including Isle of Wight Radio and the Southampton Daily Echo took a close interest.
On 22 January, the leaders of the three political groups on the Isle of Wight council, the Island First Group, the Conservatives, and Debbie Gardiner for Labour, launched a petition against what health fit called the proposals, but what I was careful subsequently to call the suggestions and ideas. I pay tribute to them, to the townswomen's guild for helping to launch the petition, and to people all over the island who helped to collect signatures for the petition in bars, pubs, shops, cafés, garages and fire stations. To date, I am pleased to say that 53,209 people have signed the petition: more than half the total adult population of my constituency. I have also received a huge number of letters, some of which I have with me.
Before the public meeting on 3 February, Peter Bingham, the chairman of the Hampshire and Isle of Wight strategic health authority, wrote:

"I cannot envisage the closure of accident and emergency services at St. Mary's. The bulk of accident and emergency services will always need to be provided from local facilities."

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It is no reflection on Peter Bingham that islanders subjected that letter to the same kind of textual analysis with which they might examine a snip offered by a used car salesman. They were becoming suspicious because they had already lost their services. Some may have recalled, as I did when I read it, the words of my noble Friend Lord Heseltine, who notoriously "could not envisage" doing something rather damaging to my party. However, that is the kind of analysis to which the letter was subjected.
The statement was examined in detail at the public meeting. Richard Samuel, for the strategic health authority, gave three key assurances: a mini health fit for the island would be held in April; no decisions had been taken; and he repeated the "cannot envisage" statement.
Graham Elderfield, of the health trust, said that we needed to have accident and emergency services on the island, and pointed out that the clinicians had decided two years ago that it was too high a risk to move maternity services from the island. David Crawley, of the primary care trust, said that

"the document doesn't say close A&E, it will be provided on the island."

He also said that

"accident and emergency is an integral part of delivering services on an island."

However, later the same evening he said that

"accident and emergency will remain as it is; the question is the emergency services around it."

Paul Barber, the secretary of the community health council, said that the consensus was entirely the opposite of that indicated in the health fit document, which suggested that there was consensus on the ideas put forward in the document.
Given the promise that I have just quoted from Peter Bingham—a promise that people took seriously—people then began to focus on what was meant by accident and emergency services. Did it mean the accident and emergency service as presently provided, or did it mean an accident and emergency service at St. Mary's, but perhaps without emergency surgery and trauma support—in other words, a minor injuries unit?
My noble Friend the Earl Howe asked that question in another place last Wednesday, but even before he did so people were beginning to suspect that it meant a minor injuries unit. Lord Hunt of Kings Heath declined to give my noble Friend the confirmation that he sought—that emergency surgery would remain on the island.
Not surprisingly, my constituents have smelt a rat. What would be the consequences of the loss of accident and emergency services? It would mean the loss of other services. Without consultant-led accident and emergency services, as the British Medical Association has shown, there is no need for other acute hospital services. It would be impossible to provide maternity services in case an emergency caesarean was needed, as happened in the case of Elaine and Keith Ashdown of Cowes. Mrs. Ashdown had a textbook pregnancy, but needed an emergency caesarean when Daniel was born on 1 July 2002. Minutes later, he was whisked off to the neonatal intensive care unit. Mrs. Ashdown said:

"The one thing that helped my husband and I through what should have been the best day of our lives was the fact that we had family there with us."

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Without consultant-led accident and emergency services, as accident and emergency consultant Peter Beal said, we would turn into a minor injuries unit. We must have complete accident and emergency coverage, and to have that we need all the necessary back-up. Mr. Jules Gwynn, who is a nurse in the unit, said:

"If people are trapped and need assessment, a whole specialised team would go out including a consultant and an anaesthetist. We are all on stand-by 365 days a year … It's part of the job, we don't get paid for that. We do it for the Island, we don't do it for ourselves."

The time and cost of travelling to the mainland is a problem. It costs the parents of a sick child £49.70 to visit him in Basingstoke. It is a return journey of more than five hours from Newport. A lady in East Cowes said she had just time to go to Southampton general hospital between leaving her children at school in the morning and picking them up in the afternoon.
There is pressure on mainland hospitals, with which they are ill equipped to cope. Caroline Dinenage of Portsmouth wrote to me to say:

"I am extremely worried about the impact that changes to the Isle of Wight hospital will have upon Portsmouth hospitals which are already under enormous pressure.

My personal experience was in September of last year when I was under St Mary's hospital Portsmouth for maternity care. I was booked to go in on the morning of Sept. 5th to be induced … The nurses on my ward told me that they were so overwhelmed with women in labour that some midwives were having to attend to two women simultaneously … Unfortunately the maternity/labour wards were so busy all of that day and the next that I had to wait until 9 pm on the following evening before I could be induced (36 hours later) … one of the midwives on my ward took pity on me and stayed late at work to carry out the procedure.

I have to say that the care I received from the staff during my stay was absolutely marvellous—they were all just so kind and good natured despite the pressure they work under. I really can't see how they will be able to cope without some substantial investment and dramatic increase in staff numbers."

That is what will happen if these changes go through.
I wrote to the Minister to say that islanders' concerns and, in some cases, fears will increase unless we get some assurances. Health staff morale will be sharply reduced and recruitment and retention, always difficult, would be imperilled. People would choose not to relocate to the island, and our holiday trade, on which a substantial proportion of our wealth depends, would be hit. Most important of all, however, lives would be put at risk, as was the case with a Dorset mother-to-be who was brought from Weymouth a fortnight ago today because no hospital in the south of England other than St. Mary's had the intensive care cot that her baby needed. Fortunately for her, the ferries were running, but 1,500 times a year ferry services are cancelled and often helicopters cannot fly. Mainlanders, as I am sure the Minister appreciates, can go elsewhere; islanders cannot. That is why a fully equipped hospital is a matter of life and death to the people of the Isle of Wight.
4.17 pm
The Parliamentary Under-Secretary of State for Health (Ms Hazel Blears): Once again, I find myself in the fortunate position of being able to begin by congratulating the hon. Member for the Isle of Wight on
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securing today's debate. I am sure that he will often raise issues of concern to his constituents in Westminster Hall. He is concerned to ensure that there is a high standard of health care on the island, and rightly so. For the record, I reassure him that the Government are absolutely committed to providing high-quality services for people in this country, wherever they may live, and that includes the hon. Gentleman's constituents on the Isle of Wight.
I do not intend to repeat the lengthy catalogue of improvements that my fellow Under-Secretary of State for Health, my hon. Friend the Member for Tottenham (Mr. Lammy) mentioned in the previous debate about changes that have taken place on the Isle of Wight. As the hon. Gentleman is aware, there has been a great deal of extra investment in and improvement to the infrastructure of the NHS and to direct service delivery in his area. However, it is worth repeating a statement that my hon. Friend the Under-Secretary made in the previous debate, as it sets the context for the health fit proposals. He said:

"Health services are never stagnant: they adapt to new opportunities and challenges as they appear. That applied especially when the Government introduced the NHS plan and the "Shifting the Balance of Power" initiative. In accordance with those policies, it is up to strategic health authorities and primary care trusts, with their specific local knowledge and expertise, to plan and develop health services in line with the needs of their local communities."—[Official Report, 14 January 2003; Vol. 397, c. 659.]

It is important that the hon. Member for Isle of Wight, his constituents, the health professionals and all those in his area look at any proposal in the context of that policy. The Government are determined that local people will be involved from the outset in shaping, designing and developing services to meet their needs and those of their families. I urge the hon. Gentleman to have a little faith and courage, and to have confidence in the ability of local people to come up with robust proposals that will meet the health care needs of his constituents.
Let me contrast the health fit process with what happened previously. The hon. Gentleman will know that I was chair of a community health council during the deep, dark Tory years, when consultation seemed to consist of the expiry of a period of time. A 12-week consultation process consisted of the NHS presenting its preferred option as a fait accompli to local people, the 12 weeks passing, and the initial option being adopted. That was entirely unsatisfactory and unworthy of the name public consultation.
The Government have tried to introduce an entirely new system, involving the public and patients from the outset in considering with health professionals the services in their communities—involving questions such as which services should be in the acute sector, how many should be in primary care and how many in intermediate care, and where specialties should be sited—as well as in debating difficult issues in a mature, realistic and reasonable way. If we have confidence in local people, we shall end up with robust, rigorous and sustainable solutions that will work in the longer term.

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We are not merely preparing health policies that will suit us today, but trying to look into the future and to ask how the health service in the 21st century might provide high-quality services for people in the Isle of Wight. I urge the hon. Gentleman, the local press and the local community to involve themselves in the process. I have had a chance to look at the health fit document. It is excellent. The strategic health authority has grappled with a new way of designing proposals.
The hon. Gentleman should look at the back of that document and see the list of people who have already been involved at stage one of the process in trying to draw up some of the options that might be available. They include a range of people from local authorities, the primary care sector, the ambulance service, primary care trusts and the acute services who in the past would never have been engaged in the process. They would not have brought the views of community representatives, their knowledge of the local area, or their information about transport and about the way in which the community works into the health service planning process.
In the bad old days, the NHS would simply have decided in a closed environment what the local people should have. We are turning the system on its head and saying that it is for the local community to determine its priorities and for the health service to try to respond—within the bounds of quality and affordability.
The hon. Gentleman has raised serious questions about the drivers for change that are set out in the document. We must all address work force issues. We need more doctors, nurses, therapists, cleaners and porters—every kind of person working in the health service. This Government, with their massive investment, are enabling that to happen. We must also look at the skills mix. People will have to do different jobs from those that they have done in the past: nurses will have to do many of the things that only doctors have done, and doctors will do things that only consultants have done. Radiotherapy practitioners will have to do things that in the past only radiologists will have done. Getting the skills mix into the system is a key issue and a big driver.
There are pressures to centralise some services, some of which relate to quality, and there is recognition that in areas such as cancer, where surgeons have an opportunity to do a goodly number of operations, outcomes are better. It is now accepted in a number of specialist areas that bringing services together can result in better outcomes. Set against the pressure to centralise is an equal pressure to have services located in local communities wherever possible. If communities are engaged in that discussion, they can accept some of those contradictions and work through which services are better brought together and which are better done at local level. The traditional way of organising those services is not always the best way of meeting the needs.
We have to be imaginative. We have to use new technology. The introduction of telemedicine, teleconferencing and new IT means that we can work in different ways. Primary care services can often be connected through IT to the acute trust. A patient does not always have to go to the hospital to have an appointment: consultants can come out to primary care centres and run their out-patient clinics in the
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community. The health service is changing almost as we speak and faster than we have ever known before because of these drivers in the system.
Another driver is that we have to provide services within the money that is available. The hon. Gentleman must recognise that the investment in the past few years has been pretty significant. There was an increase in investment of 3.5 per cent in 1997–98, nearly 6 per cent. in 1999–00, and 8 per cent. in 2001–2002. There was a further cash increase last year of 9.6 per cent. and another increase of 9.7 per cent is coming.
Those are big numbers. This is the biggest investment that the NHS has ever known. The hon. Gentleman's constituents are seeing the benefits of having a Labour Government who have the courage to increase taxes and are prepared to invest in the NHS. The hon. Gentleman should be aware that this kind of change and transformation cannot take place unless there is an environment of increased investment that enables us to make those changes.
The hon. Gentleman asked about accident and emergency services. The chairman of the strategic health authority said very clearly on the record:

"I cannot envisage the closure of accident and emergency services at St Mary's. The bulk of accident and emergency services will always need to be provided from local facilities, because of the need for urgent access."

I challenge the hon. Gentleman to be more imaginative about what emergency services can look like in the future. They do not have to be designed as they have been for the past 30 or 40 years. With technology, new techniques and many more nurse practitioners, more people can be seen even closer to home than the original A and E services might have provided.
We are at an early stage. There are currently no proposals on the table and there is a long way to go in drawing up the health fit process. To rule out any possibilities at this stage would be undemocratic, not the best form of consultation and unnecessarily restrictive. It would not be fair to the local community. Whatever the hon. Gentleman says about the press not scaremongering, it is not fair to tell the community that they face the prospect of losing all their A and E services in their local hospital. That sort of statement will not encourage them to engage properly in the process or to play their full part in making their contribution to shaping the future health service for the Isle of Wight.
The hon. Gentleman talked about targets for access to A and E. He knows that we have targets about waiting times in A and E. Ninety per cent. of people are seen in A and E at his local hospital within four hours. That service is meeting the target. There is an excellent service on the Isle of Wight. He also talked about providing a consultant-led A and E and maternity service. Clearly those are important matters to local people and ought to be considered as part of that process. I am absolutely sure that they will be.
This strategic health authority has really tried. It has gone out of its way to do things in a different way and to actively engage with local people. It is determined to make that work. It recognises that the old style of operating—simply coming up with the option preferred

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by the professionals—is not the way to have a sustainable, responsive and accessible NHS in the future. The strategic health authority is doing its absolute best to ensure that it involves people.
Some important messages are already emerging from the initial health fit events. People say that there needs to be greater diversity of access, that primary care services should be extended and that more acute care should be taking place in the community. The role of the acute general hospital needs to change. Health services are changing for the future.
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The hon. Gentleman should have some courage. He should have some ambition for his community. Things do not have to be as they are. In the future, they can be much better because of the investment that the Government are putting in and our determination to reform health services so that they operate in the best interests of the people. The hon. Gentleman should have some faith. He should get involved, play his part, and encourage his constituents to do the same.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Four o'clock.