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Commons Chamber

Volume 316: debated on Monday 13 July 1998

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House Of Commons

Monday 13 July 1998

The House met at half-past Two o'clock

Prayers

[MADAM SPEAKER in the Chair]

Oral Answers To Questions

Home Department

The Secretary of State was asked

Prisons (Overcrowding)

1.

When he last visited a prison establishment to discuss overcrowding. [48393]

We visit prisons to see for ourselves what is happening and to talk to staff, prisoners and members of boards of visitors about matters of concern to them. Issues relating to overcrowding and prison population pressures are frequently raised. Since the general election last year, Ministers in my Department, including me, have made 64 visits to prison establishments, of which I have made nine, the most recent being to the Wetherby young offenders institution on 30 April.

Does my right hon. Friend agree that putting non-violent offenders in prison is often neither the most cost-effective option nor the most effective prevention of reoffending? How will the Crime and Disorder Bill inspire public confidence in the belief that punishment in the community is both cost-effective and at least as effective as prison in preventing reoffending?

My hon. Friend is right to point out that community punishments are significantly less expensive than prison—the average cost of imprisonment is about £25,000 a year, whereas the average cost of a probation order is £2,000. Some so-called non-violent offenders have to be incarcerated because they are persistent offenders, but we are determined to improve the effectiveness of non-custodial sentences through, for example, a national roll-out of tagging and our many reforms to the youth justice system that will ensure that much more offending is nipped in the bud.

The Home Secretary was kind enough to visit the floating facility at Portland—I think that it was his first visit as Home Secretary. What is he doing to ensure that proper training and work programmes are carried out on such emergency facilities? What is he doing about the future of temporary facilities? Will the floating facility be rebuilt, or will it remain for more than the three years that were originally intended?

I am happy to meet the hon. Gentleman to discuss the future of HMP Weare if that is convenient. I place on record my thanks for his support for the facility, despite some public opposition, much of which, I understand, has dissolved—people have accepted that the facility is not only good, but has created 200 or 300 extra jobs. We are committed to improving prison regimes. The House may be aware that we are spending £1.5 million on a pilot to ensure that welfare-to-work facilities are available in prisons before offenders leave.

My right hon. Friend will know that there have been too many suicides in prison, particularly in Preston prison. Does he believe that one reason for that is overcrowding? If so, it is essential that we solve that problem as soon as possible.

We are all profoundly concerned about the incidence of suicide in prison, which is significantly higher than in the equivalent age group outside prison. However, the number of suicides among young males is, sadly, rising in the population as a whole. I do not believe that there is evidence that overcrowding—prisoners being held two to a cell—is a cause of suicide. Indeed, many of those who are deemed to be at risk of committing suicide are put with another prisoner in the hope that the risk will be reduced. The Minister responsible for prisons, the Director General of the Prison Service and the whole of the service are taking every possible step to ensure—through counselling, for example—that the risk of suicide is reduced.

Crimes Against The Person

2.

What recent representations he has received on the level of crimes against the person in the United Kingdom. [48394]

Not surprisingly, we regularly receive representations on the level of crimes against the person, often from Members of Parliament in relation to experience in their constituency, but as far as I am aware we have received none from the hon. Gentleman.

Will the Minister join me in congratulating the police and others on their efforts to detect and combat crime and in particular on their support for closed circuit television? If he will, how can it be right that, last year, Labour attacked the Conservative Government for not approving the CCTV bid in Southend, yet this year, when Southend borough council, which consists of the Labour party and its Liberal friends, put in a similar bid, the Labour Government rejected it?

As I said in my first reply, I welcome the hon. Gentleman's new-found interest in the issue. The Government have got on with the task and given the weapons to the police, in partnership with local bodies, to enable them to tackle crime and disorder, including violence against the person. I hope that they will have the hon. Gentleman's support in that.

Will my hon. Friend join me in condemning the horrifying murders of three young children in Northern Ireland, who were done to death for no other reason than sectarianism? Will he take this opportunity to extend the sympathy of the whole House to the parents and the closest relatives of those who were murdered over the weekend? Is it not horrifying that, despite the Good Friday agreement, some people in Northern Ireland still want to use the terrible, murderous methods against innocent people, in this case young children, that were witnessed in the former Yugoslavia and elsewhere? Let us condemn these terrible murders and demonstrate the fact that we are on the side of the overwhelming majority of people in Northern Ireland, who also condemn what has occurred.

Nothing is more effective than the death of children in concentrating people's minds on the horror of violence, wherever it occurs. I certainly share my hon. Friend's view that it should give cause for thought to anyone who wants to continue the atmosphere of conflict. There is nothing in the situation of children of the ages of those who died that can possibly justify what has taken place. Everyone should pause for thought before doing anything that could encourage the continuation of such mindless violence.

I associate myself and my party entirely with what the hon. Member for Walsall, North (Mr. Winnick) and the Minister said, but I want to ask about another specific area of crimes against the person: football hooliganism. Does the Minister agree that, if the world cup competition is to be, staged here, we need to convince everyone that everything possible is being done to eliminate hooliganism? Will the Home Office consider setting up an independent group to investigate what improvements can be made and whether any changes will require legislation?

No one has taken more interest in that topic than my right hon. Friend the Home Secretary. He has had the support of all parties in the House as well as the co-operation of the authorities in France in doing all that we can to tackle the problem and keep to a minimum any contribution that is made by English hooligans to the violence that has so disgraced us over recent months. I know that he intends to consider how to ensure that all possible measures are in place and that he wants to work with the Football Association to find the best way of making the maximum contribution, including through co-operation across the Floor of the House.

Penal System

3.

If he will make a statement on the Government's plans for the penal system. [48395]

Serious, dangerous and persistent offenders should be sent to prison and should be subject to constructive regimes in a secure and well managed environment. Prison may not, however, be the most effective option for less serious offenders. Our priorities are tough punishment in custody and in the community in ways that carry public confidence and reduce offending. We are looking at options for closer and more integrated working between the Prison Service and probation services.

I thank my right hon. Friend for that reply. Does he agree that community punishment needs the confidence of the community?

Does the Home Secretary agree that detection and prosecution of those who commit crimes is of paramount importance, along with deterrence? Can he assure the House that there will be the closest possible co-operation between the police, the Crown Prosecution Service and the courts in tackling crime?

I would like to give that assurance, and to say that over the past 15 months, the Attorney-General, the Lord Chancellor and I have worked hard to bring about closer collaboration between the police, the CPS and the courts and to set up joint planning arrangements. My right hon. and learned Friend the Attorney-General recently published the results of the Glidewell inquiry, which should ensure major reforms in how the CPS relates to the police, including the establishment of coterminous boundaries.

Illegal Immigration (Smuggling)

4.

What steps he is taking to tackle the international crime syndicates currently involved in smuggling illegal immigrants into the United Kingdom. [48396]

The Parliamentary Under-Secretary of State for the Home Department
(Mr. Mike O'Brien)

People trafficking is getting more sophisticated, but so is the Government's response. We have set up the organised immigration crime section at the National Criminal Intelligence Service to tackle the problem. The unit targets the criminal networks involved and is helping in the development of a more proactive, intelligence-led approach to combating the problem. We are also creating better international co-operation with European and transatlantic partners. Several countries face this problem, and we need to work together on it.

I understand that a report from the immigration service highlights the true number of illegal immigrants entering the country and suggests that immigration has accelerated in recent years. Does my hon. Friend agree that it is galling for constituents, who may wait for years for a loved member of their family to join them, to see illegal immigrants arriving and little action being taken? Does he agree that high levels of illegal immigration spawn crime and add to the cycle of exploitation?

I agree with every word my hon. Friend said. Many people, particularly in ethnic minority communities, are outraged at abuse of the asylum system and illegal immigration. We are determined to tackle the people-traffickers who make vast amounts of money from illegal immigration. We will disrupt what they are doing and will prosecute wherever possible. Today, I have published a consultation paper on the appeals system, which we are trying to sort out. Shortly, we shall publish a White Paper showing how we can create a fairer, firmer and faster system of immigration control.

No one should underestimate the Minister's difficulty in trying to make the system more effective. Is he aware that many of those who work in the immigration service are appalled at being unable to cope with the rising tide of illegal immigration and at finding themselves having to let go people whom they know to be illegal immigrants who are never again found? Does he agree that this problem should be a first charge on the Government's time? Will he do all he can to bring order to the current chaos?

I agree that the system that we inherited from the previous Government was a shambles. They did not put in place the resources or facilities necessary to ensure proper immigration control. We want to put them in place. That is why we have had a complete review of how the immigration and asylum system operates. We will publish the outcome soon and deliver what the Government of which the hon. Gentleman was a member never delivered—firm and fair immigration controls.

Restorative Justice

5.

What progress has been made on extending restorative justice to new police areas. [48397]

In recent weeks I have seen work demonstrating the value of restorative justice in Northampton, Gwent and the Thames valley, which has made young offenders face up to the injury they cause others. The reparation order and other measures in the Crime and Disorder Bill, with proposals for reform of the youth court, incorporate restorative justice principles, and will lead to a major extension of restorative justice.

My hon. Friend will no doubt be aware of research from the system operating in the Thames valley that suggests that the reoffending rate among young people with whom it deals is about 3 per cent., compared with 30 per cent. nationally. However, my hon. Friend may not be aware of the anxiety expressed by several officers participating in the scheme that, if untrained officers use this robust method of forcing young people to confront their wrongdoing, it might be damaging and lead to quite frightening results in some areas. In the face of a large expansion of the scheme, what resources will be devoted to ensuring that every police area operates the scheme as excellently as it is being operated in the Thames valley?

I agree with my hon. Friend that training and preparation are necessary. The benefits are obvious both to the victim, who often feels that he or she has been able to confront offenders with their damaging behaviour, and to young offenders, who often do not realise that they are damaging other people through their burglary, theft or car crime. We are offering guidance and support to ensure proper training and preparation locally and partnership and co-operation among a variety of organisations, not just the police.

Refugees

6.

If he will list the proposed changes to the Dublin convention on the treatment of refugees which he has made to the European Union. [48398]

The Parliamentary Under-Secretary of State for the Home Department
(Mr. Mike O'Brien)

On 29 May, member states agreed a series of measures—including a comprehensive programme of action put forward by the British presidency—designed to improve the practical operation of the Dublin convention. Our measures address both the difficulties of establishing responsibility for asylum seekers who are undocumented and the need for better co-operation and liaison between member countries.

While it is laudable that the Government have followed the excellent example of the previous Conservative Administration and extended the Immigration (Carriers' Liability) Act 1987 to international train operators who run services through the channel tunnel, why have Her Majesty's Government not been able to prevail on the French—France is a signatory to the Schengen convention—to make the channel tunnel carriers' liability order apply to SNCF train services? The Belgians comply, so why not the French?

Some legal defects in the treaty make it difficult to extend. However, we have had discussions with the French—and received much co-operation from the French Government as a result of the intervention of my right hon. Friend the Home Secretary—to ensure that we reduce the number of refugees who enter the country from Paris. It is correct to say that there are practical difficulties, but we are receiving the co-operation of the French in seeking to resolve them.

The Minister chose to refer to the Government's review of asylum and immigration appeals in his answer to my hon. Friend the Member for Mid-Sussex (Mr. Soames). Can he tell us a little about the background to that review? Do the Government acknowledge the problem caused by the increased number of such cases? Does not the Government's proposed single right of appeal amount to an extension of the principle behind the so-called white list cases, which Labour opposed in opposition? Will the Minister say specifically whether, in initiating the review, the Government are paving the way for some form of general amnesty for asylum seekers?

The white list has little or nothing to do with the Dublin convention or the other issues that we have discussed. We have made it perfectly clear that we do not intend to have a blanket amnesty; we have given that reassurance on many occasions. However, I draw the hon. Gentleman's attention to the previous Government's actions in 1993, when more than 50 per cent. of exceptional leave to remain cases were granted the right to stay in a one-off process. It ill becomes the hon. Gentleman to start talking about amnesties now.

Does my hon. Friend accept that there are 10,000 outstanding cases that predate the Asylum and Immigration Appeals Act 1993? We inherited that problem, the Dublin convention and the difficulties of dealing with undocumented asylum seekers. Will my hon. Friend assure the House that he will see what he can do to deal with that backlog, so that those who have waited for years may finally receive a fair decision on their cases?

My hon. Friend is right; the Dublin convention and the pre-1993 backlog are another fine mess that the Conservatives left the country in. We will clean it up as fast as we can, but the Tories left us quite a mess.

Minimum Sentences (Burglary)

8.

When resources will be available to implement mandatory minimum sentences for burglars convicted of a third offence as set out in section 4 of the Crime (Sentences) Act 1997. [48402]

On the time scale set down by the Conservatives in government, when they passed this legislation with our support.

I thank the Minister for that answer. Will he confirm that the average sentence for someone convicted of a seventh burglary is less than 20 months? Does he find that acceptable? If not, will he say why he and the Government continue to oppose mandatory minimum sentences, given that the courts refuse to use the powers at their disposal to impose long enough sentences on repeat burglars?

As usual, the hon. Gentleman constructs something to criticise while disregarding accuracy. The Government have not opposed mandatory minimum sentences; we have introduced two. He should ask why no date for implementation was set by the Conservative Government.

Is not this point a bit rich coming from the Conservative party when burglary increased by more than 120 per cent. in the 18 years after 1979? It is a cardinal principle of our system that people should be subjected only to penalties that are commensurate with the circumstances of the crime, taking into account the victim's circumstances and the impact on the victim's family, for example. Should not we move away from that principle only where there are compelling circumstances, such as protection of the public?

Yes, my hon. Friend is right. It is also a bit rich for Conservative Members to squander money that they did not provide for in their period in office, with all the irresponsibility that they seem to have adopted since the general election.

Parliamentary Elections

9.

What assessment his Department has made of the benefits of the present system of elections to the House. [48403]

In the debate on the European Parliamentary Elections Bill, and more recently in the opposition day debate on 2 June initiated by the right hon. Member for Devizes (Mr. Ancram), I spelled out, among other things, the benefits of the present system. The independent commission on the voting system has been established to find the most suitable alternative to the current system. The characteristics of the present system are well known to all hon. Members, many of whom spoke eloquently about them in the 2 June debate. In view of that, it would be an impertinence for my Department to provide the House with a separate assessment.

Does the Home Secretary agree that at least half of hon. Members favour retaining the present system of election to this House, that the system is both proportionate and representative, and that it is unfair that the commission under the auspices of Lord Jenkins of Hillhead does not properly represent the views of those in favour of retaining the first-past-the-post system?

I cannot speak for the exact number of right hon. and hon. Members on either side of the House who support the current system, but it is certainly quite substantial. Given his support for first past the post, the hon. Gentleman makes a grave error in asserting that the first past the post should be put to the independent commission of inquiry. We have sought an independent inquiry into the alternatives. There will be a referendum in due course whereby the British people, as they should, will themselves have the right to decide between the present system and a very specific alternative.

Is my right hon. Friend aware that many of us would have far more confidence in that suggestion if it were clear that the first-past-the-post system were to be part of any referendum? I have to tell him that some of us might feel far happier if the work on the alternative system were not in the hands of someone who has always demonstrated his inability to do anything correct at any time.

I give my hon. Friend the assurance she seeks: that first past the post will be one of the clear choices on any ballot paper in a referendum on voting systems.

Is it not the case that, without the assistance of the Home Office, it is fairly easy to obtain the details of how often the present electoral system has produced results that are wildly at variance with the votes cast? As that is not one of the primary objectives of an electoral system, is it not sensible of the Government to establish a commission to determine what alternative can be put up against the present system in a referendum? Can the Home Secretary understand why some hon. Members appear to be so worried by the possibility that the British people will be able to decide whether they prefer the present system or a proportional one?

Home Office records also record the full-hearted support of the Liberal party for first past the post until 1923—when it slipped from being the second party with a prospect of power to a minority party.

Is my right hon. Friend aware that there are barely a dozen Opposition Members who have the support of more than 50 per cent. of those who voted in their constituency on 1 May last year? A far higher proportion of Labour Members have the support of 50 per cent. of their electorate. Will my right hon. Friend assure the House that the commission will consider not only proportional representation, but other systems such as the alternative vote?

The Jenkins commission's terms of reference have been widely drawn so that it can, if it wishes, consider the alternative vote. It became clear in the debate on 2 June that there is widespread feeling on both sides of the House that if the issue of proportionality is to be properly examined, we should look not only at proportionality between votes cast and seats obtained, but at proportionality between votes cast, seats gained and power secured.

As one of those Members of Parliament with more than 50 per cent. of the vote, let me ask the Home Secretary whether it is becoming clear that more and more sensible people now support retaining the constituency system and first past the post? Liberal opposition only underlines my point. The right hon. Gentleman has to answer why the Jenkins commission was not asked to evaluate and to put the evidence on all electoral systems, including the present one, but was asked simply to try to find alternatives to the present system. Would it not have been much better to have an evaluation of all the systems, including the present one, which we know the right hon. Gentleman supports?

—and we will again. However, from his position of strong support for first past the post, the right hon. Gentleman is making a grave error in suggesting that first past the post ought to go to the commission. We want—I should have thought that it would also be in his interests—the electorate to be offered a clear choice between the present system of first past the post and an alternative that will be drawn from the recommendations of the Jenkins commission. That seems to me to be the best way of—at long last—securing legitimacy either for the current system or for an alternative. All of us, whatever our point of view, ought to have confidence in the British people's ability to make the final choice.

Is my right hon. Friend aware that, when Lord Jenkins met Members of Parliament from all parties two weeks ago, both supporters and opponents of electoral reform united in agreeing the importance of a programme of public information in the run-up to a referendum? Whatever system Lord Jenkins and his colleagues come up with will require a programme of clear public information so that voters can make an informed choice in the referendum. What plans does the Home Office have to ensure that such a public information programme is organised?

I accept that there will be a need for a public information programme, but already the word of our debates on the various alternatives that are on offer for European elections has travelled so far and so fast that in the centre of Blackburn I am frequently assailed about the divisors laid down under the d'Hondt and Sainte-Lague systems.

Prisons (Drug Use)

10.

If he will make a statement on the number of prisoners taking drugs. [48404]

The Parliamentary Under-Secretary of State for the Home Department
(Mr. George Howarth)

Although mandatory drug testing cannot be a complete measure of the prevalence of drug misuse in prisons, it gives the best estimate of the number of prisoners using illegal drugs. In 1997–98, 20.8 per cent. of random samples tested positive for drugs.

Does the Minister view that as a serious problem, and does he feel that there is a need for more than random sampling? What measures, if any, do the Government have to address the problem?

I am sure that the hon. Gentleman will be pleased to hear that at Ford open prison, which is in his constituency, the figure decreased from 17 per cent. in 1996–97 to 10 per cent. in 1997–98, which reflects a great improvement.

In April, the Prison Service issued a new strategy document, "Tackling Drug Misuse in Prisons", which advocates a new strategy in three areas: first, reducing the supply of drugs into prisons; secondly, reducing the demand for drugs and rehabilitating drug misusers; and thirdly, reducing the potential for damage to health. Drug misuse is a serious problem, which is why we conducted a review that led to the new strategy. I assure the hon. Gentleman that we take the problem very seriously and will continue to work hard to deal with it.

My hon. Friend will be aware, because he is my near neighbour, of the drug problem in north-west prisons. Will he join me in congratulating the officers and nurses at HMP Risley in my constituency on their work in setting up a detox unit in the prison which has finally received funding from the Prison Service? Does he agree that such initiatives are the way to tackle drugs in prisons and drug-related crime because they ensure that prisoners who enter prison addicted to drugs have at least some chance of being drug-free when they leave?

I congratulate the prison staff at Risley on their work. It is important that we understand that the problem is declining. In 1996–97, 24.4 per cent. of mandatory drug tests were positive. That figure fell to 20.8 per cent. in 1997–98. Prisons take a number of different approaches, including detox, and all of them have a part to play. We are determined that, over time, any reasonable approach should be tested and, where appropriate, applied in the prison system.

Nevertheless, does the Minister agree that we face a massive drugs problem in prisons? What extra measures is he taking to detect drug users and drug pushers in prisons? Above all, what is he doing to implement the chief inspector of prisons' proposals to prevent drugs getting into prisons in the first place?

There are a number of measures. One of the ways of detecting drugs going into prisons is increased use of sniffer dogs. That programme is being developed. There are also good examples of strong warnings being issued to visitors to prisons. Several measures are being taken across the Prison Service, but we are not being complacent. The right hon. Gentleman shakes his head without having heard the answer. We recognise that the bulk of drugs that come into prisons are brought in by visitors. The police and the Prison Service work closely together to intercept such visitors and serious action is taken against them. We are doing a great deal, but more can be done and we shall take whatever action is necessary.

Electronic Tagging

11.

What assessment he has made of the pilot tagging schemes. [48405]

Research into the first two years of the pilot schemes of curfew orders enforced by electronic monitoring under the Criminal Justice Act 1991 has been published as a Home Office research study. The study indicates that the technology works—which is just as well—and that over 80 per cent. of orders were successfully completed. Further, more detailed research is being undertaken.

While I note my right hon. Friend's reply, does he agree that, as the scheme is developed and the proper supervision and safeguards are put in place, we should welcome it as an alternative to prison? At what age can a person be electronically tagged?

I am grateful for my hon. Friend's welcome for the measure. It is certainly an appropriate alternative to prison for some offenders, not least because of the cost, which is less than £2,000 per order, compared with some £25,000 a year for a period of imprisonment. My hon. Friend asked at what age a person can be electronically tagged. We are piloting the use of electronic monitoring tags for 10 to 15-year-olds and, so far, 10 orders have been issued in respect of juveniles.

I was struck by the Home Secretary's comment that 80 per cent. of cases were deemed to be successful. Can he explain what happened in the other 20 per cent. of cases, so that the House might know what went wrong?

They were unsuccessful. Since the hon. Lady asks, of 973 sentences that were completed, 163 were revoked. If an offender breaks the conditions of the electronic monitoring, he or she is taken back to court and, typically, will be sent to prison.

Arrested Suspects (Drug Use)

12.

What proportion of people arrested by the police are addicted to heroin and other opiates. [48406]

The Parliamentary Under-Secretary of State for the Home Department
(Mr. George Howarth)

The information that my hon. Friend seeks is not centrally available. However, a recent Home Office study on drug misuse by samples of people arrested in five cities showed that 18 per cent. tested positive for opiates; 11 per cent. admitted dependency on heroin; and a further six per cent. admitted dependency on methadone.

Those are alarming figures, despite the fact that they are not as highly refined as the Minister would like them to be. Will he undertake to oppose the legalisation of heroin and other opiates, not least because that might encourage international profit-seeking pharmaceutical companies to divert production into ever more expensive, highly addictive designer drugs, and those with personality disorders may be pushed into crime in order to afford the ever escalating cost of their fixes?

I agree entirely with my hon. Friend. The only certain result of legalising—or, rather, decriminalising—currently illegal drugs is that more people would use them. My hon. Friend is right to say that the companies that manufacture such drugs would inevitably spend large sums in aggressively marketing them and targeting a younger audience.

My hon. Friend is also right about so-called "designer drugs". I wish to make a simple point with which the whole House will agree: young people should not be deceived into believing that something labelled a designer drug is safe. All the evidence is that the results of individual cases are totally unpredictable. We have seen far too many examples of young people believing that it is safe to take one designer drug or another, sometimes with tragic consequences. No drug is safe. The only safe way to proceed is not to take drugs.

Does the Minister accept that at least 50 per cent. of those who appear in court charged with domestic burglary are drug addicts who burgle to feed their habit? Does not that figure show that it is a critical problem in our criminal justice system, which is why it is important to ensure that firm treatment is available to deal with those people, particularly in prison? Will he couple that with his aim to make prisons drug-free zones?

The hon. Gentleman raised his latter point ingeniously on the back of the question, but it is a fair point. The statistics that he quoted—court figures, showing that about 55 per cent. of those convicted of certain types of offences had committed the offence in circumstances that were drug-related—broadly bear out the Home Office research I mentioned, which shows that about two thirds of arrestees for acquisitive crimes are found to have been involved in drugs.

The links between drugs and, especially, acquisitive crime are now so firm that no one can doubt them. It is important that we act as decisively as possible; that is why, in the Crime and Disorder Bill, we are giving the courts the option of making a drug testing and treatment order. That will not be a soft option, but it will give courts the ability to catch those cases and, in suitable instances, to say to the offender, "You need treatment, but we shall not let you pretend that that is happening when it is not, so there will need to be proper testing to ensure that the treatment is going ahead." That is a good step forward, which has widespread support. I believe that it shows how determined we are to tackle that serious problem.

Fire And Police Service Pensions

14.

What plans he has to change fire and police pension arrangements. [48408]

On 31 March, we published consultation documents on the police and fire service pension schemes. We have invited comments on those consultation documents by the end of July. We shall listen carefully to the comments that we receive, in considering changes to the pension arrangements for new entrants to the police and fire services and to medical retirement procedures.

I thank my hon. Friend for that reply. Does he recall that proposals for closing Shooters Hill fire station, which covers part of my constituency, arose out of difficulties in financing the London fire brigade's pension funds? Will he ensure that, in any future arrangements that are made, pension fund arrangements do not influence the strength or disposition of fire services or police services in any part of London?

My hon. Friend makes a serious point, and I can understand the difficulty that confronts people when local decisions have an impact on the local community. However, there is no magic wand for dealing with the burden of pensions. It would cost about £30 billion to provide a fully funded pension scheme for the police and the fire service, and I suspect that hon. Members on both sides of the House would have other priorities for such sums of money.

There are vast variations in the extent to which ill health retirement pensions act as a drain on the resources of both the police and the fire service. That problem will not go away; it requires good management of the available resources and careful consideration of the options set out in our consultation papers.

Does the Minister agree with the Police Federation and the Fire Brigades Union that it would be unacceptable for two police officers or firefighters, together killed or seriously injured in the line of duty, to have different entitlements to injury benefit, or for the widow and family of one to be paid less pension and other benefits than the family of the other? Notwithstanding the need to review the police and fire service pension schemes, that view is common to both sides of the House, and there is cross-party agreement, especially on the need to eliminate abuse in the area of ill health, which the Minister mentioned.

Does the Minister agree that the dangers faced every day by policemen and firefighters demand and deserve special consideration? The public would find it very difficult to understand it if, when such a tragedy occurred, the widow or family of one had less benefit entitlement than the other. Will he please bear that in mind in his review?

I shall certainly bear in mind the points that the hon. Gentleman makes when we consider the outcome of the review. I believe that all hon. Members would accept that police officers and firefighters place themselves in danger in order to protect the public; that is why their schemes are more generous than other pension schemes. I make the point gently, however, that, after the Sheehy report was published, it was the Conservative party that started the differentials between people serving together in different areas. Those differentials are among the difficult issues that must be tackled. If changes are desirable, they cannot be made for those already serving. Consequently, if one were to accept the logic of what the hon. Gentleman says, one might be trapped in a situation where no changes were ever made.

Does my hon. Friend agree that, in areas such as North Yorkshire, where both the police authority and the fire authority have particular problems of sparsity because of the large geographical area and the limited manpower available to them, special consideration must be given to the management problems that those authorities face, to which my hon. Friend referred earlier?

The impact on individual forces is set out and considered in the formula that applies to police forces and the fire service. Sparsity is identified as a major complication by police forces and fire services covering rural areas. That is why I have commissioned research into the impact of sparsity, to see whether that can be evaluated. We may have more to say when we see the outcome of that research.

Community Safety Audits

15.

What assessment he has made of the community safety audits undertaken to date by local authorities. [48409]

The extent to which that work is already under way varies significantly around the country, and we have not so far made any formal assessment, although the results of local authority association surveys have been published and are a useful guide. We are aware of many examples of good practice around the country. The Crime and Disorder Bill will ensure that the benefits of an audit-based approach to tackling local crime problems are available to communities throughout the country.

I draw my hon. Friend's attention to the fact that much work on audit and other aspects has already been done by local authorities, including my own in Basildon, without any support or encouragement from the previous Government. The support, encouragement and legislation from this Government have been widely welcomed. Will my hon. Friend ensure that the work already undertaken is used as an example of best practice by local authorities that are just getting off the starting blocks?

Indeed, we want to build on the good work that has been done in various parts of the country. I am happy to join my hon. Friend in paying tribute to the work done in her area, Basildon. I should also mention the geographic information system developed by the safer Merseyside partnership and Salford's community safety profiles scheme. The point of our legislation is to support local authorities in such work. My hon. Friend is right to say that the previous Government set their face against requiring local authorities to undertake those responsibilities.

Tote

17.

If he will make a statement on his policy in relation to the future of the Tote. [48411]

The Parliamentary Under-Secretary of State for the Home Department
(Mr. George Howarth)

A review of the scope for greater private sector involvement in the Tote is already under way. Before any final decisions are arrived at, we will take full account of a recent internal review undertaken by its chairman, as well as the likely commercial impact of any changes on the Tote, the needs of gambling regulation and the health of horse racing.

Before the annual meeting of the Tote tomorrow, and in view of the statements of some privateers and the Treasury, can the Minister explain to the House, first, how the Government will sell something that they arguably do not own; secondly, how he will maintain the integrity of pool betting; and thirdly, how he will ensure that the essential revenue coming from the Tote is maintained, given the parlous state of the horse racing industry?

All the hon. Gentleman's questions fall within the scope of my earlier point that we are concerned about the health of the horse racing industry. My right hon. Friend the Home Secretary will speak at the Tote lunch tomorrow. Perhaps the hon. Gentleman can curb his enthusiasm and wait to hear what my right hon. Friend says. The terms of reference of the review are sufficiently wide to take properly into account the hon. Gentleman's concerns, which we should all share.

Lighter Refill Sales (Young People)

18.

When he expects to reach a conclusion following the consultation on the banning of butane gas lighter refill sales to under 16-year-olds.[48412]

The Parliamentary Under-Secretary of State for the Home Department
(Mr. Mike O'Brien)

Depending on the results of the consultation, which we are currently undertaking, we hope to be able to reach a decision in principle at the end of the summer.

How many young people die as a result of the misuse of butane gas lighter refills? Does my hon. Friend accept that there is widespread support among local authorities, trading standards departments, charities, parents and many others for the banning of the sale of butane gas lighter refills to under 16-year-olds, which would be a positive move by the Government?

The latest figures come from data collected by St. George's Hospital medical school for the Department of Health. They show that 75 deaths in the United Kingdom in 1996 were associated with volatile substance misuse. Gas fuels, usually in the form of gas lighter refills, were involved in 60 per cent. of those deaths. I do not want to prejudge the results of the consultation, but, as my hon. Friend said, there is widespread concern in the country about this issue, and I pay tribute to him for his work in raising and seeking to tackle it.

Would the Minister support a move to introduce voluntary identity cards to enable retailers to judge whether people are aged under 16? Following my local campaign, such cards have the support of North Yorkshire county council.

The Portman group is already putting forward its proposals, and we have broadly accepted them in a certain context. The issue is whether we can extend them to deal with those matters to tackle the sale of such substances in shops.

Metropolitan Police

19.

If he will make a statement on the latest manpower and funding levels of the Metropolitan police. [48413]

The 1998–99 settlement for the Metropolitan police service provides a spending capacity of £1.775 billion, in line with the national average for police authorities in England and Wales. Police strength in the Metropolitan police at May 1998 was 26,585 officers. The Commissioner tells me that it is recruiting and plans to end the financial year with about 26,750 officers and 13,377 civilians.

Although I appreciate the modest increases in the funding and the manpower of the Metropolitan police, does the Home Secretary agree that they are almost being negated because the alarming and increasing amount that is being apportioned to police pensions—a matter which was taken up by the hon. Member for Bexleyheath and Crayford (Mr. Beard)—has to be met? Does he also agree that that alarming increase is affecting the provision of services at the sharp end? I understand absolutely that this is a long-standing problem which certainly cannot be laid at the door of this Government, but will the Minister look to some way, especially in the review and consultation, of disentangling the cost of police pensions from the provision of services at the sharp end of the Metropolitan police?

I accept what the hon. Gentleman says about the impact of the cost of the police pension scheme on police services generally. That point also applies to the fire service. Part of the problem has been the unacceptably high proportion of officers whom chief officers of police have allowed to retire early on grounds that are not acceptable, as the Audit Commission and hon. Members on both sides of the House accept.

The variation is extraordinary: at one end of the scale, only 17 per cent. of officers have been allowed to retire early in Kent constabulary; at the other end, 77 per cent. of officers in Merseyside have been retiring early. That suggests a lack of effective management control of the numbers who are retiring early. We have increased police budgets this year, nationally and also for the Metropolitan police, of 3.7 per cent. We look to chief officers of police to make the same kind of efficiencies as other sectors of the public services, which were subjected to such efficiencies relentlessly—and, in my judgment, quite rightly—by the previous Government.

Will my right hon. Friend, who has referred to the resources given to the Metropolitan police, explain a situation that develops in some of the regions? Is there the same effect on the Metropolitan police as there is in some of the regions? Band D taxes meant that we had a reduction of £6 million for police services in West Yorkshire. Does the same apply right across the board, and does that include the Metropolitan police?

The system by which police authorities set a precept is broadly similar across the country and has, for the current year, as for many previous years, been the subject of capping. Within totals of grant and standard spending assessment, which are set by central Government, each police authority has a fair degree of flexibility about the overall amount that it desires to set and to spend on its police service.

Hooliganism (World Cup)

21.

What further sanctions people convicted of causing trouble at this year's world cup face under British law. [48415]

An Order in Council came into effect on 1 June which allows the courts in England and Wales to impose restriction orders on those convicted of football-related offences in France. We shall examine the circumstances of each conviction to see whether there are lessons to be learnt in respect of restriction orders.

Is it not important that we take every possible step to ensure that the small minority of hooligans who do such damage to the name of football and to the name of England are not allowed ever to get away with it again?

I certainly agree with my hon. Friend, although as a Welshman perhaps I should not say too much about the name of England. It is greatly to be welcomed that agreement was reached with France before the world cup finals, so that the order could come into effect on 1 June. The restriction order power is operable if we have an agreement with the country and an order has been made under the Football Spectators Act 1989.

How many of the people who were arrested in France have been charged with an offence?

None so far, because, so far as I am aware, none have been released. The matter will have to be considered on their return to this country.

Opposition Day

[17TH ALLOTTED DAY]

Manufacturing And Industrial Relations

We now come to the Opposition motion on manufacturing and industrial relations. I have selected the amendment in the name of the Prime Minister.

3.30 pm

I beg to move,

That this House views with alarm the Government's creation of a boom and bust economy in the UK, with industry being badly damaged by high sterling and rising interest rates whilst wage and price inflation accelerates; expresses concern at the growth of industrial unrest in several sectors of the economy; and urges the Government to rethink its approach both to manufacturing and employee relations before more damage is done.
"Business confidence hits five-year low": today's business headline in the Financial Times and other leading newspapers says it all. The Government are creating a them and us economy: a booming economy for the Government, their advisers and their lobbyists; a bust economy for people who dare to make things or try to sell abroad.

The Government proudly tell us that they have been elected to stop the trade cycle. The President of the Board of Trade is as likely to stop the trade cycle as I am to find a regular tube service on the Central line today. The Government stand Canute-like on the edge of a manufacturing recession claiming that the tide of lost jobs and closed factories is not coming in or has nothing to do with them, while the rest of us see the waves that they have generated enveloping British industry in closures and depression.

When we last debated these matters, the President of the Board of Trade told the House that the Government were to establish a competitive and stable exchange rate. She refused to recognise that, with the pound at its present level, it cannot be both. I confess that there has been more stability recently, but stability of the pound at around DM3 means more stability in the level of pain to manufacturers; more stability in the level of pain and difficulty for those seeking to export; and more stability in the terrible loss of jobs and loss of orders that now afflict our manufacturing heartlands.

It has certainly meant more job losses announced in steel, engineering and textiles. It has meant more job losses in the manufacturing heartlands of the north and the midlands. I hope that Labour Members will, for once, speak up about the fears and worries of their constituents. Many Labour Members represent those heartlands.

I hope that the hon. Member for Huddersfield (Mr. Sheerman) will confirm what I have said about the difficulties facing manufacturers in his constituency.

The right hon. Gentleman is right. Labour Members are concerned when times get tougher rather than easier, and they are not as easy as they could be at the moment. I must respond to the right hon. Gentleman's remarks. Between 1979 and 1997, under the previous Administration, 2.6 million jobs were lost in manufacturing. Blame for the basic state of our manufacturing industry should be laid at the door of Thatcher, Major and the Administrations of which the right hon. Gentleman was a part.

The hon. Gentleman should have referred to my right hon. Friend as the right hon. Member for Huntingdon (Mr. Major).

The hon. Gentleman is wrong. The Leader of the Opposition and I have, on several occasions—often at the behest of Labour Members, but sometimes voluntarily—confessed that mistakes were made in the early 1990s when we were in the exchange rate mechanism. Conservative Members regret that: we have been over this matter many times before, and we have apologised to the nation. I am waiting for an apology from Labour Members. Why will they not apologise for supporting that policy? It was the only economic policy of the Conservative Administration that they ever supported, and it was the one that went wrong and did damage.

I congratulate my right hon. Friend on the measured way in which he responded to that fatuous intervention.

Is my right hon. Friend aware that, in my constituency, companies that have done extraordinarily well in the past few years are now under great and increasing pressure? As of the last few weeks, there is a risk of numerous manufacturing redundancies in the south-east. How does that put the remarks of the hon. Member for Huddersfield (Mr. Sheerman) into context?

My hon. Friend is right. There is a threat to manufacturing jobs in all parts of the country, including his constituency and those of other Conservative Members in the south of England, as well as the areas in the north and the midlands to which I have referred.

The hon. Member for Huddersfield began by agreeing that times are difficult, and I was grateful for that. What he and his right hon. and hon. Friends do not appreciate is this. The present Government now purport to be in control. They have been on watch for more than a year, and they have made many changes in economic policy. It is their tax rates that are now determining our economic future; their interest rates, through the Bank of England, that are determining the future of manufacturing; their sterling rate policy, or lack of one, that is doing the damage. I would have accepted, after a month or two of Labour Government, that what Conservatives had done had had more impact than what Labour was doing. Our case today, however, is that it is Labour's policies that are coming home to roost, and Labour's policies that are doing the damage. If Labour had stuck with our policies, fewer factories would have closed.

What would the right hon. Gentleman do to reduce the exchange rate? Would he reduce interest rates? Is that the policy that he would pursue?

I am grateful to the hon. Gentleman for seeking advice from the Opposition in these parlous times for the Government. If he will restrain his impatience, I will set out later in my speech six measures which I think will help a great deal; but I will give him one easy answer to start with. I believe that the Chancellor should promote savings rather than taxing them. If he promoted savings, the Bank would not need to drive interest rates so high. It has driven them so high because it despairs of the low savings rate in this country, and of excess consumption.

May I ask the right hon. Gentleman exactly the same question? Would he reduce interest rates—yes or no?

I am saying that the Opposition would follow policies that would produce lower interest rates, even from a so-called independent Bank of England. I will set out at some length the way in which we think the Government, even now, should do that.

Why does the hon. Gentleman not understand that, if the Government reversed their policies on the taxing of savings, more money would be saved and less would therefore be spent? The Bank would then be less worried about inflation taking off in the shops and the service sector, and would not need to panic about interest rates as it has to now, given the awful policies followed by the present Government.

I read in the papers this morning that the right hon. Gentleman's party was about to embark on an apology tour of the country. I hope that he will be leading those in sackcloth and ashes.

The right hon. Gentleman has blamed the early 1990s. Is he aware that the collapse of profits—not yet jobs—in the steel industry arises directly from the increase in sterling that took place in the last year of Conservative Government? Between May 1996 and May 1997, sterling rose by 70 per cent. against European currencies; since then, it has risen by 9 per cent. The former Chancellor is responsible for the 70 per cent., and we are responsible for the 9 per cent. Will the right hon. Gentleman join me in condemning the former Chancellor as a useless has-been who has nothing more to say on current economics?

The last Chancellor of the Exchequer did a great deal more good to British industry than the present Government have done in their first year.

The hon. Gentleman should check his facts. There is no way that sterling appreciated by 70 per cent. against the European currencies in a single year—our last year in office. That is complete nonsense. What is true is that the level of sterling when we left office was high but just about bearable for those manufacturers; and it is the further turn of the screw over the past year under Labour that has done the real damage and led to all those announcements of further job losses.

I do not know whether the hon. Gentleman will be helpful, but I give way.

I am seeking to be helpful. The Library has given me a list of interest rates over the past 40 years, which clearly show that the previous Chancellor was not the only person responsible for high interest rates and what happened to our country. From 1979 until the most recent terrible recession, Conservative Governments almost without exception were persistently high-interest Governments, who made a competitive disadvantage the bedrock on which our industry had to build. That is the truth. If the right hon. Gentleman wants me to pass the figures to him, he can read them out.

The hon. Gentleman should look at the real interest rate and understand that we inherited very high inflation from the outgoing Labour Government in 1979. Interest rates in nominal terms had to stay high for quite a time to cure that, but, in the 1980s, with much help from the private sector, the Conservative Government rebuilt, for example, the motor industry, which had been gravely damaged in the 1970s by the Labour Government. Now a new Labour Government, after only just over a year in office, are beginning to do the same sort of damage to those industries that they did in the 1970s—back to the past; back to the problems. There have been more job losses in all the crucial industries and in manufacturing heartlands throughout the country.

Meanwhile, where the Government can make a difference—where the Board of Trade could do something to help business—business is left in doubt about the Government's intentions, as the Government prove unable to make up their mind. We need to know: are the Government willing and able to save the pits, or will coal jobs go the way of those many other jobs in exporting industries that are being lost?

We need to know why we were treated to a non-statement on energy, with all the detail left out and left over for a later date. Why have we been drifting without an energy policy for a whole year? Does the President of the Board of Trade plan to announce a proper policy to the House before it rises? [Interruption.] The Minister for Science, Energy and Industry comes in on cue, saying, "Not again." I will go on asking those questions until there is a proper energy policy that we can understand and that the country can either support or criticise.

Does the President of the Board of Trade plan to announce this proper policy before the House rises, or is the intention to leak it to the press during the recess, when we are not able to scrutinise it properly in the House? The right hon. Lady has had over a year to produce a sensible policy and there is still nothing: no detail, no reassurance for coal or for gas, everyone left in the dark. At least the lights are still on, because we have a privatised industry; if Labour was running it, I doubt whether that would be true.

When will the President of the Board of Trade have a policy for the nuclear industry? Has she yet decided how to phase the rundown of Dounreay? Will she tell us if she is satisfied that all the other nuclear facilities that are currently working are safe and have a safe future under her stewardship at the Department of Trade and Industry? How long is she going to hold up gas power station applications? Is she sure that it is legal to do so? When will she realise that, if she wishes to be greener, she has to be friendly to gas?

When will the DTI have a policy for the Post Office? The Royal Mail is being held up by Government delays. The management would like to do some deals with private sector companies throughout the world. The Post Office understands that it is a fast-moving global marketplace and wishes to join in, but, obviously, it cannot do so with a full Treasury guarantee and the current ownership structure. Will the President of the Board of Trade let the Post Office develop as a global corporation doing well for Britain? Is she brave enough to convert the Post Office into a public limited company and introduce private capital?

I wonder whether my right hon. Friend is being somewhat unfair to the President of the Board of Trade. Surely, all those issues are going to be decided by No. 10, the Treasury and the magic circle—and we all know that she is not part of that.

It is true that some lobbyists have put around that slur on the reputation of the President of the Board of Trade, but, for once, I am being fairer to her than my hon. Friend. I am assuming that, in future, she will have some influence on these matters and will at some point use her high office of state to try to do some good for British industry. I confess—my hon. Friend is right—that there is no evidence so far, but I live in hope that she will one day come up with a policy and that that policy may do a little good. Why will we have to wait for a year and a half before the Government can answer simple questions on the future of the Post Office?

I ask the President of the Board of Trade—if she has finished talking to her colleagues on the Treasury Bench—why the Chancellor is lecturing us all on the need to keep wage increases down if we wish to preserve jobs while she is busily legislating to put wages up.

Has the right hon. Lady had any more thoughts about her minimum wage legislation? Does she not understand that our worry about it is primarily that it will lead to all sorts of pay rises for those on rather higher pay who wish to keep their differentials? I have heard no convincing argument from her that that is unlikely to happen. I also find it extraordinary that her Department—in this time of open government, which we know and love so well—is not prepared to give us the figures and forecasts and tell us the truth about how many jobs will be lost and by how much wages will rise as a result of her policy, which is pulling in exactly the opposite direction to that of the Chancellor of the Exchequer.

The right hon. Gentleman is being generous in giving way. As he is dealing with the wages problem, would he care to tell the House how much he is being paid as a consultant by Murray Financial to undermine building societies and mutual insurance firms?

I am a director of that company, which is not out to undermine building societies. Although I do not wish to spend the debate answering for that company rather than dealing with matters of public policy, I am quite happy to declare that I receive from that company a director's fee of £12,000 a year, which is a modest one. The company has no intention of raiding building societies that do not wish to talk to it.

I do wish that Labour Members would get away from trying to cast slurs on those who are pursuing a decent occupation, and would get on with understanding the grave problems that the Government face and the Government's relationships with lobby companies. When we come to the real issues at the bottom of this debate, I doubt whether I will receive from Labour Members any answers as straight and honest as the one that I have just given.

Why is the Chancellor of the Exchequer for ever lecturing us on the need for prudence, only then to announce a rapid expansion of public spending? I wonder whether we will even have to come to the House to hear an announcement, as I am sure that we will read all about it in the newspapers well in advance of the event.

Why is so much of the spending to go on welfare when the Government, when in opposition, said that they would spend less on what they then called "economic failure".

I am grateful to the right hon. Gentleman for giving way before he moves too far away from the question asked by my hon. Friend the Member for Rotherham (Mr. MacShane). The right hon. Gentleman has said that he wants to encourage saving and to keep inflation and interest rates down. Does he not understand that windfalls for the few were one of the main inflationary pressures that led to interest rate rises; that the windfalls were already affecting the economy when the Government came to power; and that he—by joining Murray Financial—will continue them in future?

I am delighted that the hon. Gentleman thinks that Murray will be so successful that—from being such a small company—it will have an impact on the United Kingdom money supply. However, I think that it is better if I speak for the Opposition and not for the company, which he is dragging me into doing.

When will the President of the Board of Trade get around to making some decisions on how the new competition policy is meant to work? Does she not realise that the Competition Bill—her Bill—is weak on monopolies and services of general economic interest? Does she not worry that it is so badly drafted that pubs and brewers, newsagents and publishers, oil companies and filling stations still do not know where they will stand when it comes into effect?

It has been a very wet June, and July has been even wetter. The weather has been cold enough to leave people diving for pullovers rather than swimsuits. England was ejected from the world cup competition amid controversy about the conduct of one of the star players, and with relief that a small band of hooligan supporters would return home early. The cricket team has not done well in the tests. I remember Labour saying that things would be better if it was elected. It has not worked out like that this summer.

I do not blame the Government for the deterioration in the weather or for the sporting disasters—although doubtless they would have claimed credit if things had turned out differently—but I do blame them for changing the business climate for the worse. I do hold them responsible for playing the economy so badly that manufacturing is already in recession. I do hold them responsible for disrupting our hard-won trade union settlement with their half-baked reforms. Let us make no mistake about it—Labour is taking us back to the bad old days and the bad old ways of the 1960s and 1970s.

The Government inherited the best strike record of any country in Europe. Last week, there was a firefighters' strike in Essex, today there is a tube strike, and soon there will be rail strikes. I fear that other public service workers will also go on strike as they watch the private sector wage explosion that the Government have triggered while their own pay falls far behind.

The Government inherited low business taxes. They have already increased them by £25 billion during this Parliament and are planning more tax raids on success and enterprise. It would be helpful to the oil industry if the President of the Board of Trade could tell us something about the Government's intention to raid the oil companies, but I expect that that will be another issue that they will leave until the recess, when Parliament is not here to cross-examine them on another set of tax increases.

The Government inherited low inflation. Wages are now rising at a rate of 5.9 per cent. a year in the private sector, and inflation is well above the outgoing Government's target or the current Government's target. It is not just City bonuses; wage inflation is setting in thanks to Government policies. They inherited a respectable level of savings and they said that the country needed to save more. I agree. That would have been the right response to the gathering momentum in the economy. Instead, according to Red Book figures, the country will save 1 per cent, less of our national income this year—around £8.5 billion less savings—thanks primarily to the taxes that the Government imposed on pension funds and the replacement of personal equity plans and tax-exempt savings accounts with something less generous.

The Government inherited low interest rates. Now, six rate rises later, and with more threatened and likely, things are not nearly so easy for business borrowers. Perhaps the Government foolishly believed one of Labour's five promises: that interest rates would be kept as low as possible. Perhaps the Government will have the gall to say that they honoured their promise, since for them it is not possible to keep rates very low.

The Government inherited a high, but just manageable, level of sterling. They have increased it to a level at which exporting is either impossible or unprofitable for many firms. In place of the success that we were generating, Labour offers strikes, more laws and higher taxes. In place of financial prudence, Labour offers higher public spending.

Does my right hon. Friend agree that the Government are most certainly to be held to account for foolishly giving up for determination by qualified majority voting within the European Union an increasing range of domestic working practices which should properly be the responsibility of elected parliamentarians and the British legislature? Does my right hon. Friend recall that, when challenged on that point by John Humphrys on the BBC programme "On the Record" on 9 November 1997 as to what she would do if the European Commission proceeded with plans for national works councils, the President of the Board of Trade feebly responded, "Well, er, we shall see how things go"? It is not encouraging, is it?

Indeed it is not. The President of the Board of Trade has suddenly discovered two things: first, the proposal is not popular, and, secondly, she may not be able to block it because it may be wanted on the continent. They never explained that to her at No. 10 when they were setting out the joys of the social chapter.

The Wall Street Journal Europe summed it up rather well, in respect of just such a proposal and just such difficulties, when it stated:
"the only thing "new" about New Labour seems to be an old-fashioned failure—European corporatism".
The Government are busily disguising the true cost of their social security and welfare-to-work programmes, embarrassed as they are about the fact that their spending is soaring well above our totals in the interest of paying for what they always used to call economic failure. In the place of common sense to control wage inflation, Labour has decided to give powers to shop stewards and to Brussels, making it more difficult to preserve good labour relations and inflation-free wage increases.

Just to be helpful to the right hon. Gentleman, if things are so bad—[Interruption.]

I was about to give way to the hon. Gentleman, but I wonder whether I should do so now, in view of his impatience.

Before anyone panics at the right hon. Gentleman's tale of decline—if a few people somewhere are still able to listen to the proceedings of the House of Commons—may I refer hon. Members to Mr. Adair Turner's foreword to the July-August edition of CBI News? Mr. Turner represents a large section of British business and is very warm about the Labour Government; he is not ringing any alarm bells. He says:

"The Fairness at Work White Paper finally came out in May. As expected, it was a mixture of good and bad news. It certainly represented a shift towards employee rights, but it was by no means as dramatic as might have been feared, and it leaves intact much of the industrial relations legislation of the 80's".
If even Mr. Adair Turner is not worried about what we are doing, why is the right hon. Gentleman so full of doom and gloom?

The Confederation of British Industry is very worried about the social chapter, as it believes that further damaging policies could emerge about which we could do nothing. The quotation that the hon. Gentleman read said that the only good thing about the Government was that they had not wrecked all the 1980s legislation. Surely the answer is to retain the 1980s legislation and to do something else more profitable for British enterprise and jobs.

Labour is creating an economy fit for lobbyists to thrive in. The refusal of the Department of Trade and Industry to spell out an energy policy has encouraged some to try to write that policy by hiring lobbyists. The uncertainty of the Department of Health about tobacco advertising made the Government prone to changing their mind when the right pressure was applied. As manufacturers suffer, lobbyists thrive.

Does the President of the Board of Trade think that that is a healthy state of affairs? Does modernising the economy mean closing down steelworks and textile mills, so that the only growth is in the behind-closed-doors influence business for former Labour advisers, who are now dining out in style? Are we to rest content with a crony economy in which even the Audit Commission needs a lobby firm to do its research? What has happened to all those old-fashioned values that the Chancellor and the President of the Board of Trade espoused in opposition, to sustain an industrial economy in which firms went from strength to strength by making things and selling them abroad?

I am delighted that at least one old Labour Member remembers those promises. Unfortunately, as he knows, Labour Front Benchers are not delivering on those beliefs; they are failing to live up to those genuine sentiments that some Labour Members hold.

Today, I ask the President of the Board of Trade to promise a new set of rules to govern lobby companies. Will she reassure us that we shall always be able to know who the directors are, who the principal shareholders are, how much the directors are paid and how much income and expenditure the business enjoys? That is not asking too much, as I am sure Labour Members will agree. Surely the public should be able to know such simple things about a business that sets out to lobby the British Government and to influence public policy.

Is my right hon. Friend aware that the Association of Public Policy Consultants—the body that looks after lobbying companies—is strongly in favour of precisely the registration that he describes?

I am grateful to my hon. Friend. What he says makes it much easier for the President of the Board of Trade to throw the weight of her office behind such proposals.

May I give way at the minute of my choosing? I want to develop the argument a little.

Members of Parliament are paid to lobby the Government in the interests of their constituents. Rightly, we are expected to declare our sources of income and any directorships that we may hold. I decided to discover what I could find out about two of the lobby companies that have recently been much in the news.

It has a lot to do with the motion. I am arguing that there are two economies. It seems that the only way in which the manufacturing companies, which are in serious distress, can get their message to the Government is by spending even more money on hiring lobbyists to make their case for them, as the Government are bypassing Parliament and not listening to the many representations that we are making. I wanted to know who owned GPC Market Access. I was told—

Order. In the past five or 10 minutes, the right hon. Gentleman seems to have strayed a long way from the motion to which he should be speaking. I urge him and other hon. Members to speak to the motion and the amendment.

I will, of course, speak to the motion, Madam Speaker, but part of our case is that, to have more successful Government policies for the industrial economy, we need to change our arrangements for lobbying, and, with your consent, I would like to develop that a little further.

I asked who owned GPC Market Access Group Ltd., and I discovered that it is owned by Countrywide Porter Novelli Ltd.—

On a point of order, Madam Speaker. I have examined the motion and the amendment carefully, and I cannot see how what the right hon. Gentleman is saying relates to them. Could you clarify the matter, because it seems to me that he is totally out of order?

I have already made my views known to the right hon. Gentleman. I hope that I have a sense of humour, and I enjoy a little bit of knockabout as much as anybody else in the House, but I think that he should now deal with manufacturing and industrial relations.

As I was saying, Madam Speaker, I believe that we need to know more about how the lobby groups work to see whether they are the right way for manufacturing industry to make its case. I discovered that Diversified Agency Services Ltd. and GPC International Holdings of Ottawa—

On a point of order, Madam Speaker. The right hon. Gentleman is simply ignoring what you are saying.

The right hon. Gentleman will not defy me for much longer. I will give him two more minutes to return to manufacturing and speak to the motion.

I am grateful, Madam Speaker.

I want the House to know that a company such as LLM is 40 per cent. owned by Robert Stevens Holdings, which in turn is owned by trustees in Jersey. Bedell and Cristin Trustees is owned by Premier Circle Ltd. and Second Circle Ltd., which is owned by Premier Circle Ltd. and Third Circle Ltd., which is owned by Premier Circle Ltd. and Second Circle Ltd.

Why does a lobbying company, set up by former Labour advisers to pursue the interests of, say, manufacturing industry, have such a complicated shareholding structure? What is the role of the Jersey trusts? Why are there three Circle companies, and why do any reasonable inquiries about them go round in circles? Why is one of the companies called Premier Circle? Could there be some mistake over the exacting meaning of Premier in this context?

What do the Government think about the use of Jersey trusts and companies to control shares in other companies owned by former Labour advisers? Did not those same advisers help the Chancellor of the Exchequer when, as an Opposition spokesman, he made speeches condemning the use of offshore vehicles? Do the Government believe—

On a point of order, Madam Speaker. In my constituency, there are many manufacturing units in very real trouble. I had hoped that we would be debating that today. Lobby companies are not known for manufacturing a great deal, except rather more heat than light.

Further to that point of order, Madam Speaker. I know that the House has examined the motion carefully, but we should also look at the amendment, which

"welcomes the new culture of partnership…developing within the framework of measures and proposals the Government is taking forward".
That is clearly germane to the partnership that the Government now have with the lobbyists and the cronies.

I accept that that is mentioned, but the debate has been going on for 32 minutes and we have not yet heard about manufacturing. I represent a vast area that is closely interested in manufacturing. My black country towns will be very interested in this debate. I shall see that my manufacturers have a copy of the Hansard report.

I think that I have asked the questions that I wanted to ask about that group of companies, but the Government must answer them, given the width of their amendment and the fact that, like it or not, lobbying is now part of our business culture. Businesses need to be told, fair and square from the Dispatch Box, that the Government intend to go back to the old system: if business has a problem, it lobbies its Member of Parliament, who lobbies the Minister. That is how it should be done. It should not be done through the back door via exotic companies and strange holdings, including Jersey trusts. I hope that the President of the Board of Trade agrees that that is an odd way to behave. The old parliamentary way is the best.

Does the right hon. Gentleman agree that a firm has the third option of hiring an hon. Member from the Tory Front Bench, just as Murray Financial has done in his own case? Nineteen other Tory Front Benchers have extensive outside interests. That is the real sleaze and corruption that worries the people of this country.

Madam Speaker, I hope that the hon. Gentleman will withdraw his disgraceful allegation.

Order. I was distracted, and did not hear all that the hon. Member for Rotherham (Mr. MacShane) said. Would he repeat it precisely so that I can make a judgment?

I said that what worries people outside the House is the record of Conservative hon. Members in government and in opposition being hired by outside firms to represent their interests. That sleaze and corruption—

Order. I have heard enough. The debate should be about policies and principles, not about individuals. The sooner we get on to the policies and principles of manufacturing and industry, the better it will be for the House. The way this debate is turning out is a disgrace.

Labour Members should understand that there is nothing wrong with a Member who is not in the Government holding a directorship that is properly declared, so long as the House is not used to further the interests of the company concerned. If the hon. Member for Rotherham (Mr. MacShane) is suggesting that any of my right hon. and hon. Friends has done otherwise, he should make a proper allegation, giving them the right to reply. I can assure him that it is not so. He is just trying to put up a smokescreen to hide the dreadful business culture that the Government are encouraging or allowing to occur.

I turn now to positive conclusions on what we should do to help manufacturing industry.

On a point of order, Madam Speaker. We are getting to the heart of a principle important to a debating chamber such as Parliament. When someone speaks here, does he or she speak for his or her constituents, or does he or she speak for a particular interest that probably pays more than a parliamentary salary? It is important that—

Order. The right hon. Member for Wokingham (Mr. Redwood) is speaking on behalf of the Opposition. He has just announced that he is getting to the substance of what he has to say.

I want to make six points about how to help industry out of the terrible position it is in while services and other companies are booming.

First, the Government should promote savings, not tax them. They should change their minds on taxing pension funds, and on replacing personal equity plans and tax-exempt special savings accounts with something that is less satisfactory and generous. They should think up new policies to promote savings. It is better to save more than to put manufacturing and exporting into a vice.

Secondly, there is social legislation. We all want people to have decent conditions at work and good health and safety protection. However, does not some of the Government's legislation go too far? It will destroy jobs, and remove opportunities for the young and unskilled people who most desperately need a first step on the ladder. That is not kindness; it is callousness of the first order.

Thirdly, we need stable policies, and statements from the Government of their policies on crucial industries and nationalised companies. We need a policy on financing the tube network, and a resolution of the strikes. We need a policy on energy, so that the gas and coal industries know where they stand. We need a policy on the Post Office, so that it can grow and expand abroad to improve its competitive position there and at home. We need a policy on water competition—we have been waiting for that for a long time—which could generate new jobs and new business. We need a proper policy on competition after a sham of a Bill that is full of holes and errors. The Government have been unwilling to tell companies where they stand.

Fourthly, we need a monetary policy that makes sense. The experiment of handing policy to the Bank of England has led to a monthly debate being leaked and discussed in the newspapers. It is a kind of soap opera, with the Government looking on and saying that it is nothing to do with them. They should take some responsibility for our interest rates. They should at least have the courtesy to back the Bank of England, rather than going occasionally around the back to brief against the Bank.

Fifthly, we need to know the truth about the Government's wish to enter economic and monetary union. Will they confess that all the other countries are going in at their exchange rate mechanism mid-rates? Does the President agree that no separate deal was negotiated for Britain, which must mean that what the Prime Minister brought home for British business was entry at DM2.95, our ERM mid-rate? Will the Government devalue the rate or negotiate a special deal? Will the Government tell business the truth: they let business down on this, as on everything else, and it has the opportunity only to enter EMU at a crippling rate?

Sixthly, will the Government set out proper, fair rules of disclosure for lobbying companies? Will they return to the old system, whereby the House speaks for manufacturing and exporting? The Government have a duty to listen, for a change, to what the House is saying. We do not want a culture whereby one must know someone or pay someone in order to make one's point. People must speak through their Members of Parliament and, above all, the Government must take the House of Commons seriously.

4.9 pm

The President of the Board of Trade and Secretary of State for Trade and Industry
(Mrs. Margaret Beckett)

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof:

"welcomes the measures the Government has taken to build an economy which is healthy and sustainable in the long term, including placing the control of interest rates with the independent Bank of England; notes that over the last 12 months investment has grown by 7 per cent., 14,000 manufacturing jobs have been created and the public finances have been put in order; welcomes the new culture of partnership in industrial relations which is developing within the framework of measures and proposals the Government is taking forward; urges the Government to continue its own productive partnership with both business and employees; and condemns the Opposition for its own record in government of allowing manufacturing to decline within a boom and bust economy of unprecedented proportions and actively and sustainedly destroying partnership and democracy in the workplace."
From the outset, I must say that I fear that I am likely to disappoint the right hon. Member for Wokingham (Mr. Redwood), who asked me a string of questions about a string of issues—about which he has raised questions and made speeches elsewhere—that are not related to the subject of today's debate. Unfortunately for the right hon. Gentleman, I plan to speak about the subject of the debate, which the Opposition called. I got the distinct impression from the right hon. Gentleman's speech that, after he called it, he thought better of it, because he did not say much about the subject.

The motion tabled by the right hon. Gentleman and his hon. Friends creates the impression that they think that this is somehow year zero. They talk about the Government's creating a "boom and bust economy" and about the "growth of industrial unrest". I suspect that the second charge is thrown in just to make up the numbers, so it might be wise to deal with and dispose of it first.

Mention has been made of today's London Underground strike and a couple of other minor industrial disputes, which, of course, we regret very much. However, far from being a signal that the Government's policy is creating unprecedented unrest, tube and rail strikes were not only common under the previous Government but a feature of their last year in office. The denial of investment in rail and underground and the neglect of public transport as a whole eroded morale and trust, and that erosion is part of our inheritance from the previous Government.

We have already taken steps to reverse that investment backlog. In March, the Deputy Prime Minister announced radical and innovative proposals for a public-private partnership for the underground in which it will remain in public ownership but will benefit from the investment so long denied it. The fact that there is still concern about the long-term implications of the programme says more about that inheritance of mistrust and insecurity than it does about any flaws in the policies that the Government are pursuing.

The motion does not refer to the tube strike as such; instead, it expresses
"concern at the growth of industrial unrest in several sectors of the economy".
In roughly the last year before Labour came to office, 1.3 million days were lost through industrial action. In the first full year of this Government, 183,000 days were lost through industrial action. That is seven times lower than the figure for the last year of the previous Government and about 40 times lower than the annual average for the 1980s. That is a record—in fact, it is the lowest figure ever recorded for days lost in industrial action, and the records go back to 1891. I will repeat that in order to avoid doubt: the records date back not to 1991, but to 1891.

Of course, it is perfectly legitimate for the Opposition to comment on and, if they can, make political capital from any industrial relations problems. However, it is a bit damn silly to talk about the growth of industrial unrest in what has been the best year of industrial peace for more than 100 years.

I am grateful to the right hon. Lady for giving way to me, rather than to my hon. Friend the Member for Daventry (Mr. Boswell). If the right hon. Lady has available a wealth of statistics stretching back to 1881, perhaps she would care to enlighten the House regarding the number of days lost through strikes in 1975, 1976, 1977, 1978 and 1979?

There were not as many as in the 1980s. As I have said, none of those issues in any way alters the fact that the Opposition tabled a motion deploring the "growth of industrial unrest" at a time when there is no evidence whatsoever to back up that claim. Indeed, that is typical of the motion as a whole.

I am sure that the right hon. Lady would not seek to mislead the House, but, taking the years that I think were cited—I round the figures—the number of days lost was 6 million in 1975, 3.2 million in 1976, 10.1 million in 1977, 9.4 million in 1978, and 29.4 million in 1979. There is no figure comparable with that in the 1980s except for the 27 million days lost in 1984 with the miners' strike. I do not find her figures sustainable.

It would be superfluous to comment on that. The hon. Gentleman has shot himself in the foot by citing those statistics.

The motion talks of the Government creating a "boom and bust economy". Of course, the Conservatives are the experts. No one has ever been better qualified to talk about boom and bust than they: 18 years in power, unprecedented billions of pounds of windfall profits from the North sea—and they delivered the two biggest post-war recessions, separated by an unsustainable boom.

The motion also talks about the damage to manufacturing from the economic instability that the Opposition claim that we have introduced through
"high sterling and rising interest rates".
Short-term interest rates are below the level at which they were held for the first 13 years of the previous Government's tenure of office.

The right hon. Member for Wokingham admitted, with even more clarity than previously, that the previous Government made mistakes in the 1990s when they entered the exchange rate mechanism. He commented that entry into the ERM was supported by Labour in opposition, although no one ever suggested that we should go in at the rate we did, which was the achievement of the former Prime Minister.

No.

The right hon. Member for Wokingham was careful to say that the Opposition apologised for that, and that only, as if it was the only mistake to which the Conservative party is owning up. Although he chose to concentrate solely on that period, during their tenure of office interest rates reached 17 per cent. in the early 1980s. At one point in that intensely difficult period, manufacturing output had fallen by nearly 20 per cent. In 1981 alone, 650,000 manufacturing jobs were lost. Between 1979 and 1983, a total of 1.25 million manufacturing jobs disappeared. That was in the early 1980s.

In the late 1980s and early 1990s, interest rates reached 15 per cent., manufacturing output fell by more than 5 per cent. and, in 1991 alone, another 400,000 manufacturing jobs were lost. When the Conservatives left office, manufacturing output had increased on average by only 0.5 per cent. in each of their 18 years; so, too, had manufacturing investment.

Not for a second.

Britain had its first ever deficit on trade in manufactures—at least the first since the industrial revolution when manufacturing was invented in this country. As for jobs in manufacturing, my hon. Friend the Member for Huddersfield (Mr. Sheerman) pointed out that, when the Conservatives left office, there were 2.5 million fewer jobs than when they came into office. As for the level of sterling, not only did interest rates under the Conservatives reach levels twice as high as they are today, but sterling was at a higher level against the deutschmark than it is today. That was during the period when the shadow Secretary of State was a Minister at the Department of Trade and Industry.

As we are getting such a wealth of historical information, perhaps the right hon. Lady will comment on average interest and inflation rates under the last Labour Government. If she is unable to, I am certain that my hon. Friend the Member for Daventry (Mr. Boswell) will be happy to enlighten her.

I would not exactly call this history. After all, the Government have been in office for only 15 months. We are talking about the whole period of office during which the Conservative party was in power. As for the levels of interest rates and sterling, under this Government they are not at anything like the levels that they reached under the Conservative party.

The shadow Secretary of State claims that he acknowledges that and that he and his party have said, "Whoops, sorry," although it was not so full an apology that anyone but he can remember it. He says that we should put behind us their catastrophic record as stewards of manufacturing industry. No chance, I am afraid.

There is no doubt that we can dismiss with contempt most Conservatives' pretensions to speak on behalf of British manufacturing, but that does not mean for a second that I do not fully recognise and acknowledge the genuine concern felt and expressed by British manufacturers at what they see as the current erosion of their competitive position and the sharp anxiety that many feel about their order books, their export prospects and—if the worst comes to the worst—the consequences for employment. At every level, the Government are fully aware both of the importance of the contribution that manufacturing makes to our economy and of the pressures that some manufacturers are presently experiencing. I know that manufacturers' concerns are also heard and heeded by many of my right hon. and hon. Friends on the Back Benches.

My right hon. Friend makes a powerful case that the Opposition have had some sort of vision on the road to Damascus and are now supporting manufacturing. Does she, like me, recollect that, either when he was an adviser to Mrs. Thatcher, shortly before being elected to the House, or shortly thereafter, the right hon. Member for Wokingham (Mr. Redwood) appeared on television and, when asked about the balance of trade and manufacturing industry, replied, "It really isn't important; it really, really does not matter," and repeated those comments in respect of the balance of trade?

I am grateful to my hon. Friend, because I had not remembered that interview—at that time, I was not hanging on the right hon. Gentleman's every word as I do today. I can well believe that the remark can be attributed to him, because I am well aware that, at that time, that was the view not only held, but expressed, by the Conservatives.

Can the Secretary of State give me some guidance? If a manufacturing company in the Vale of York wished to approach either her or a fellow Minister, would her door be open to receive a visit from that manufacturer—the Secretary of State for International Development has suggested that such a contact must come directly from a manufacturing company that is worried, perhaps about the minimum wage or about jobs being lost because of the recession—or would she insist that the company went through a lobbying company before being granted access?

Order. I must ask the Secretary of State to respond to the hon. Lady before I call another hon. Member.

I beg your pardon, Madam Speaker. I sought to curtail matters for the convenience of the House. I would say to the hon. Member for Vale of York (Miss McIntosh) that, although I cannot undertake to accept every single invitation and request, my door is very much open to manufacturing industry—indeed, I do not wait for manufacturers to come to me; I go to them.

There is indeed concern in the west midlands about the current state of manufacturing industry and we do not attempt to disguise that. However, is it not right to recall that when, under the previous Government, we twice went into recession, it was the west midlands which bore the brunt? From 1980 to 1982, large parts of the manufacturing areas of the west midlands were absolutely devastated, yet the Tory protest at the time was, to say the least, minimal. There are hardly any lessons to be taken from a party that caused so much damage to so many people in the west midlands, the heartland of manufacturing industry.

My hon. Friend is entirely right. I confess that my attitude toward those Conservatives who, at that time, spoke up on behalf of manufacturing industry is rather different from my attitude toward those who did not.

I do not recall the hon. Gentleman being one of those who spoke up, so, if he will forgive me, I shall get on with my speech.

It is only fair to recall that many people, whether in manufacturing or elsewhere in the economy, recognise that a range of factors contribute to present circumstances. Those factors include the unaddressed inflationary pressures that we inherited from the Conservatives. In the context of the debate, it is important not to forget that, from December 1996, the Bank of England pressed the then Chancellor to raise interest rates and thus ease the inflationary pressures that the Bank saw building up. There is also the Asian crisis, with its inevitable impact on growth and exports; and the anxieties about the run-up to the euro.

All those factors contribute to the pressure on sterling; all those pressures contribute to the circumstances in which manufacturing industry finds itself; but none of them is the "creation", to use the word in the Opposition motion, of the Labour Government. The fact that what is happening to sterling is, in all likelihood, the result of a complex interaction of those factors means that dealing with that problem is not, as so many Opposition Members try to pretend, simply a matter of taking back interest rate control from the Bank of England or, indeed, of lowering interest rates. It is possible that if interest rates were lowered without regard for the consequences for inflation, as some Opposition Members appear to be demanding, we would increase inflationary pressure without necessarily achieving a lower exchange rate.

Might not that be a clear indication that we should not even contemplate entering the euro until we are sure that it is in our interests?

My hon. Friend will be aware that that is the Government's policy. We take the view that it is in Britain's interests to contribute, in so far as we can—as we sought to do during our presidency of the European Union—to a stable development of economic and monetary union and the euro, in case that is one of the factors that are putting pressure on sterling. However, we believe that, if the Government decided to recommend entry, which we would do only if we believed that it was in Britain's national interest, that decision should be put to Parliament and the British people.

Is the right hon. Lady aware of the statement by the president of the Bundesbank, Mr. Tietmeyer, that, within a single European currency,

"it is an illusion to think that states can hold on to their autonomy over direct taxation policies"?
Does the right hon. Lady agree with that statement, which is obviously important because of its implications for manufacturing industry? If she thinks that it might be vindicated, would the cession of sovereignty over direct taxation constitute for her a constitutional bar to Britain entering the European single currency? Yes or no?

It is rather silly to ask such a question and then ask, "Yes or no?" I was not aware of the statement that the hon. Gentleman attributes to the president of the Bundesbank, but if that is the view that he has expressed, I strongly, indeed violently, disagree. What is more, I suspect that the German Government disagree. That is their problem, not ours.

My question is pursuant to that asked by my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), with whom I usually agree about everything in life. Does my right hon. Friend accept that, as we represent Motorola and the paper industry, which are desperate to enter a single currency, there are two views in the party on that subject?

My hon. Friend anticipates me. I was about to say that there are at least two views. I understand that there are particular industries where there is urgent pressure and a great desire for Britain to be an early participant in the euro and that, in other industries, the pressure exists without the same force. I can only repeat to my hon. Friend the Member for Linlithgow (Mr. Dalyell) what I said to my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), which is that the Government believe that the decision should be made by Parliament and the British people, only when it is believed to be in Britain's interests to enter a developing euro.

Does my right hon. Friend agree that, whether or not we ultimately enter the European currency, our motivation for economic policy should be the same? Our need for a stable competitive currency rate and stable low interest and inflation rates will be identical, whether or not we intend ultimately to enter the euro.

My hon. Friend is entirely right—those factors are in the interests of the British economy, and they are policies that the Government seek sustainably to pursue.

Before we embarked on an interesting diversion, I was talking about the possibility of lower interest rates and how they might impinge on sterling. Before I leave that point, it is right to remind the House that two thirds of the increase in sterling against the deutschmark occurred before the general election. That means that it was in no way the responsibility of this Government, and that it took place before interest rates had begun their recent rise, so it calls into question the suggestion that present exchange rates are fuelled solely by interest rate levels. The lesson, under Governments of either party, of politically driven exchange rate interventions is that it can have an effect, but that it is not necessarily or solely the one wanted or imagined.

The right hon. Member for Wokingham said that the problem was the pressure on savings, and talked as though an unprecedented decline in savings was exacerbating the problem. As I am sure he knows, that is nonsense. The savings ratio is running at some 9 per cent., which is near its long-run average and nowhere near the levels to which it fell under the Government of which the right hon. Gentleman was a member in 1988, when savings fell to 6 per cent. That is not relevant to the difficulties that some sections of manufacturing—it is not universal—may be facing.

The Government are not prepared to run risks or play games with the economy. We put control of interest rates in the hands of the Bank of England to signal that. Little could be more damaging to confidence than to reverse that policy, as some Conservative Members appear to demand.

Our extensive consultations with the business community before the election and since have produced a short but heartfelt list of what it feels is needed from the Government. That list is headed by a demand for stability in the management of economic policy, which the business community believes will contribute to economic stability. It also calls for consistency in overall policy making and for investment in skills, transport infrastructure and our science and engineering base. All that was heard, and none of it was heeded, by the Conservative party when in government.

However, in the 15 months during which this Government have been in power, not only the interest rate decision but the decision to set a sound framework for prudent, consistent and long-term reform of public expenditure have laid the basis for the policy stability that the business community seeks. The evidence that that is the right course lies in the fact that long-term interest rates today stand at 5.75 per cent.—the lowest level for 33 years.

I am genuinely puzzled by the fact that Ministers repeatedly point to historically relatively low long-term interest rates as a sign of optimism, because most commentators regard them as a sign of anxiety that we are heading towards a recession. That is why long-term interest rates in Japan are only 2.5 per cent. and why, in the past six weeks, the yield from the long-term bond in America has fallen by 0.5 per cent., reflecting fears that the Asian crisis will have a knock-on effect. Low long-term interest rates are what happens when the markets think that a recession is coming.

I hear what the hon. Gentleman says, but I am not prepared to get into a great debate with him about the indications of low or high long-term interest rates. It is strange for him to complain that low interest rates are not a good sign, given that the motion tabled by the Conservative party complains about the threat to manufacturing as a result of the level of sterling, which, it claims, results from the level of interest rates.

Yes, I know.

As I was saying, the windfall tax, which the Conservative party opposed, has funded the start of the new deal for employment. The legislative changes being pushed through by my right hon. Friend the Secretary of State for Education and Employment and his team should foster not just more investment but higher standards from the nursery years through to higher education, which is the push to quality that Britain needs.

We are on the brink of an announcement about the outcome of the comprehensive spending review—the establishment of a three-year framework within which the Government will begin to deal with the backlog of under-investment and decay not only in education or the transport infrastructure, but in our science and engineering base. In each of those areas, an innovative approach to public-private partnership lays the foundation for modernisation and reform, which should deliver not only increased resources but better value for the investment made.

Earlier today, I announced a step change in science funding, to meet the challenge of a potential step change in scientific discovery and understanding. We believe that the human genome project has the capacity to bring about another giant change, not only in understanding, but in the implications for the quality of life, for our approach to health care and for industrial exploitation, which can flow from using the knowledge that that project will deliver.

Today, we have announced a £1.1 billion package secured over the next three years. There will be a £600 million fund for university laboratories, equipment and infrastructure, funded equally by Government and the Wellcome trust, £400 million in capital and current costs for research councils' new project funding, and a further £100 million from Wellcome towards the cost of a new high-intensity X-ray machine, not only to help keep the United Kingdom at the forefront of human genome research, but to contribute to many other research projects.

I do not suggest for a second that that money will ease the day-to-day problems that confront manufacturing companies in Britain, but it is a hugely important signal that, under the present Government, we shall not neglect that seedcorn investment on which, ultimately, our whole economy—and manufacturing in particular—depends.

Certainly. I hope that the right hon. Gentleman can tell us that a Conservative Government would not seek to abolish such a fund.

Has the Minister some advice for a manufacturer who, today, is looking at the figures and saying to himself, "If sterling and interest rates stay at this level or go higher for the whole of the next six months, I must close my factory, but, if there is relief in sight—if there is to be some improvement—it is worth clinging on"? Would she advise that manufacturer to cling on—or will her Government do absolutely nothing to help him?

Such a manufacturer will find no answer in the issues that the right hon. Gentleman has raised, most of which have no relevance whatever to him or her.

I am slightly sorry that the right hon. Gentleman could not find it in himself to be generous enough to welcome the £1.1 billion package that I have just announced for the science and engineering base. I would not attempt to second-guess the decisions that any manufacturer or industrialist must take over the next few months; all I can say to him is that, in terms of economic policy and supply side investment, the Government are laying the foundations for the type of long-term prosperity that can alone secure our economy and our manufacturing base, the neglect of which was such a feature of the Conservative party's record in office.

Perhaps the right hon. Member for Wokingham (Mr. Redwood) has not welcomed that remarkable new statement—which, alas, there is no one in the Press Gallery to hear—for the following reason. At page 10 of the latest Library research paper on the economy we read that, in 1997, investment in our country, expressed in gross domestic fixed capital formation,

"was still 2.1 per cent. below the peak reached in 1989"—
so the period when the right hon. Gentleman sat in government was the period in which we invested nothing in our economy.

My hon. Friend is entirely right. That was a feature of the Conservative party's entire time in office.

The announcement that I have made today is not the only sign that the Government have given that where we can work in partnership with manufacturing, we shall. Immediately after the general election, we set up the export forum to consider what steps lay within our power as a Government to help and support Britain's exporters, especially small and medium businesses. We reinstated specific support for trade fairs and seminars threatened by the Government who left office last year. Earlier this month, we established the national exporters database. We have introduced the export explorer service, to give small firms first-hand experience of export markets. Later in the year, we shall launch the new sales leads service, which nearly 1,300 companies have already applied to join.

Moreover, directly in manufacturing, in the past 15 months we have pledged £323 million of supportive investment into Britain's aerospace industry—substantially more than the amount that flowed from the previous Government over seven whole years.

We have secured inward investment in pharmaceuticals from Pfizer, with 1,000 more scientific research jobs in Kent, and from Jaguar, Vauxhall, LDV and Honda. In all those cases, investment is bringing more quality and skilled jobs to various parts of the UK. In addition, we have seen investment in jobs in IT, particularly in the east Midlands and Glasgow. All those investments are the fruits of partnership with this Government which look to secure our economy and our employment prospects in the longer term.

I will, but, if my hon. Friend and the House will forgive me, it will be the last time, as I am almost at the end of my remarks.

I am grateful. Will my right hon. Friend look carefully at the Export Credits Guarantee Department? I know that it is a difficult area where, because of past problems with particular countries, some contracts are being lost. I understand the difficulty and the reinsurance problems, but will she undertake over a longer period to examine closely what is happening in ECGD?

We are taking a careful look at the scope of the operations of the Export Credits Guarantee Department. As my hon. Friend knows, it is a high-quality operation which has had great successes. I recognise that there are those who would like it to stretch its wings a little more sometimes, and I shall bear my hon. Friend's remarks in mind.

It is only natural, when people are facing particular difficulties, for them to begin to blame the Government of the day—although not, I hope, for the weather or our sporting record, as the right hon. Member for Wokingham suggested. It is only natural for them to want the Government to do something, even though the specific action for which they call may neither identify nor address the underlying problems that they face.

It is right for a Government to take those concerns seriously and never to ignore or dismiss them, but it is also right for a Government not to take their eye off the fundamental long-term changes that, in the end are the only basis for sustainable and secure economic prosperity. That is what this Government are determined to do.

The petulance and fury displayed by the Conservative Opposition, trying to fire on all cylinders and certainly firing in all directions, adds nothing to the serious analysis or the resolution of Britain's long-term problems. They had the greatest investment opportunity in our long and sometimes glorious history, and they frittered it away buying short-term popularity at the price of continuing long-term decline. We and the House need no lectures from them. What we need is to continue to work to develop a new understanding and a new approach to making Britain more competitive. It is a task from which we will not be deflected, because it is a task in which the future of Britain requires us to succeed.

4.42 pm

I am glad that the Conservative Opposition tabled the motion. It seems that they have finally recognised that creating a boom-bust economic cycle of high interest rates and wage and price inflation is not good for the economy. They are right to point out the damage being done to manufacturing industry by an unvirtuous cycle. However, rather predictably, they have begun to lose their way in addressing the problem.

I am sure the House would agree that the present Government did not cause the situation: they inherited it. However, that is no excuse for not recognising the problems visited on manufacturing industry and for not acting to correct them. Having given the Government some credit, perhaps I am now allowed to chide them a little.

It is clear that the Government are in danger of mismanaging the economic situation that they inherited. They have yet to send a clear message to the international community that they mean business when it comes to creating stability and investing for the long term. When they presented last year's Budget, they had the opportunity to dampen consumer spending through taxation—to damp down the side of the economy that was and is overheating. That would have removed the need for the interest rate rises that have increased the cost burden of debt management right across industry.

The pound, which is proving so attractive to overseas investors because of high interest rates, and whose strength is doing to much to damage the export sector, would be lower and would be pitched at a realistic rate.