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Commons Chamber

Volume 319: debated on Monday 16 November 1998

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House Of Commons

Monday 16 November 1998

The House met at half-past Two o'clock


[MADAM SPEAKER in the Chair]

Oral Answers To Questions

Social Security

The Secretary of State was asked

Disability Living Allowance


How many applications for disability living allowance are currently under review or appeal; what was the corresponding figure 12 months ago; and if he will make a statement. [58366]

Last year at 31 October, there were 70,181 requests for a review of disability living allowance decisions in hand and 36,895 appeals. The corresponding figures for 31 October this year are 57,035 reviews and 36,011 appeals.

I now have several—in fact dozens—of constituents whose cases have been turned down, seemingly for no good reason. One person who is blind has been turned down, and an amputee who has also lost the use of an arm and has terrible vertebra problems has been turned down and deemed fit for work. How does all that square with the platitudes we heard last week about helping the disabled back to work? Is it not absolute nonsense and a disgrace?

It is essential that we get decisions on disability living allowance right in the first instance and that we take action to ensure that decisions remain correct. As a result of the benefit integrity project, we have changed our procedures to ensure that cases can be reviewed, with additional evidence if necessary. We shall continue to improve the process so as to ensure that the right benefit is paid to the right people. As the hon. Gentleman knows, we recently announced that, in due course, we wish to replace the benefit integrity project with a fair and sensitive system for ensuring that DLA cases are correct.

I welcome my hon. Friend's promise of a fairer system, because the current criteria are not so much stringent as appallingly harsh. Can he do something to reduce the waiting time for appeals to be heard? Nothing seems to have changed in that respect, which is deeply unfair to constituents who have burdens enough to shoulder without having to endure a long wait for an appeal hearing.

My hon. Friend makes some important points. The gateways to DLA can be confusing, both to claimants and to those who are adjudicating the claims. That is why we are consulting on the nature of those gateways. I entirely accept that the length of waiting time for appeals is not acceptable. Following the Social Security Act 1998, we are bringing into play new procedures to speed up the system for appeals and we shall work hard to achieve that end.

The Minister mentioned the benefit integrity project. A short while ago, we were told that that project was due to come to an end, which created in the newspapers the impression that the Government wanted to create, which is that it will come to an end in the immediate future. However, the fine text shows that that is not the case, for there is no due date for the end of the benefit integrity project—I dare say that some Labour Members will be rather shocked to hear that. Will the Minister tell us when the benefit integrity project is to come to an end and what is to be put in its place? Can we have a date, please?

It was, of course, the Conservative Government who initiated the benefit integrity project. We are keen to introduce the change as soon as possible, but it is important that we get it right. The benefit integrity project will continue until it is replaced by a new system—one which we shall ensure is both fair and sensitive. My right hon. Friend the Secretary of State made it clear on 28 October 1998 that there would be no return to the situation that existed before April 1997, when nothing was being done to check that people were receiving the right benefit. The characteristics of the new system and when and how it will be introduced will be the subject of future discussions with the disability benefits forum.

Lone Parents


If he will make a statement on progress on the new deal for lone parents. [58367]


What assessment he has made of progress on the new deal for lone parents. [58372]


What progress has been made in helping lone parents to move into work. [58381]


If he will make a statement on the progress of the new deal for lone parents. [58384]

The new deal for lone parents, which became available nationwide on 26 October, for the first time offers all lone parents on income support a personal adviser service to help them to overcome the barriers to employment. Nine out of 10 lone parents who attended an interview agreed to participate in the programme, and more than a quarter of those have moved into work.

Will my right hon. Friend give an assurance that all the key lessons of the pilot schemes for the new deal for lone parents will be learnt and incorporated into the national programme as it unfolds? Will he ignore the whingeing and carping of Conservative Members, who when they were in power, did absolutely nothing for lone parents?

My hon. Friend is right. The new deal in general, and that for lone parents in particular, represents a major cultural change in the actions of the Department for Education and Employment and the Government. It was wrong to leave a growing number of lone parents out of the labour market when many could be substantially better off in work. The working families tax credit, which we shall introduce next year, will ensure that every working family is guaranteed an income for full-time work of at least £190 a week, but the Conservative party wants to scrap that measure.

Does my right hon. Friend agree with me and Gemma, a lone parent adviser in my constituency, that lone parents have enthusiastically embraced the chance to go back to work? Does he agree also that immediate work may not be the only outcome and that lone parents understand that before they can embrace the world of work, training might be necessary, and that is what they are undertaking?

Again, my hon. Friend is right. Although Conservative Members may snigger, nine out of 10 lone parents who came for an interview joined the new deal. Some went into work and others needed to upgrade their qualifications, but the Conservative party would scrap the entire new deal and leave every one of those people high and dry. That is not the right approach for modem labour market conditions.

I am sure that my right hon. Friend will agree that many of the failings of changes in the social security system under the previous Administration resulted from an appallingly bad level of training. Will he assure the House that when the scheme is implemented, proper training systems will be put in place?

Yes. It is very important that advisers are properly trained and skilled because often they are dealing with people who have difficult circumstances at home, perhaps because they do not have support and help to look after young children. It is important also to ensure that everybody realises the benefits that will come from the new deal, not least the fact that the Government's national child care strategy is now being fully rolled out to ensure that people have child care. The working families tax credit, in addition to ensuring that families in full-time work get at least £190 a week, provides significant help towards child care, which can be a major barrier that in the past has prevented lone parents from going into work.

The Secretary of State will know that only 50,000 people have been invited to participate in the scheme, but the Department of Social Security's own research statistics reveal that only 2 per cent. have left income support. Does he agree that the scheme does not work? Will he think again, find a better scheme and tell the House the true cost, based on those who have left income support, of this scheme?

The hon. Gentleman will be aware that the pilot stage of the scheme has just ended and the national scheme was announced at the end of last month. I do not agree with his central premise. This country has a larger proportion of lone parents out of work than any other major European comparator country. The Government have a clear duty to encourage those who want to work to do so and to give them the opportunities that they were denied under the previous Government, which the hon. Gentleman supported. In this day and age the Government cannot stand by and watch an increasing number of people and their children be excluded from mainstream life—we would not be prepared to endorse that approach.

Does the Secretary of State agree that when the Government tell people that they will punish them if they do not do something, that will tend to make them feel that the act is for the Government's benefit, not for theirs? Does he therefore accept that the introduction of compulsion into the new deal will not help him make progress with it?

Of course the new deal does not contain an element of compulsion. We have always made it absolutely clear that for perfectly good reasons no one will compel a lone parent to go into work. The hon. Gentleman may be referring to a different programme—the new single gateway into the benefits system for people of working age. The Government clearly have a duty to do everything that they can to help people to get into work. In turn, everybody who comes into the benefits system should at the very least be prepared to sit down and find out what is on offer.

The history of the past 10 to 15 years shows that if people stay outside the labour market for too long, they tend to stay out indefinitely, and no responsible Government can put up with that. I hope that instead of complaining about matters, the hon. Gentleman and his party whole-heartedly endorse our approach because getting people into work must be the right way to deal with the problems that we have inherited. I am glad that the hon. Gentleman agrees with that.

I agree very much with my right hon. Friend's comments about extending opportunities to those outside the labour market who are coming on to benefit for the first time. Is he in a position to tell us what penalty will apply to those who do not turn up for their interview?

As I told my right hon. Friend when I made my statement a short time ago, we believe that it is right that people who enter the system through the single gateway, when the system is fully operational, should be required to attend an interview as a condition of benefit.

I am most grateful, Madam Speaker. Does the right hon. Gentleman agree with his noble Friend Baroness Hollis who announced that sanctions will be put in place if a lone parent fails to attend the initial interview for the new deal for lone parents? If that is so, can he explain today exactly what form those sanctions will take? For how long will the sanctions apply? Will they apply only to child benefit or will the lone parent lose all benefits to which he or she would otherwise have been entitled?

I apologise to the hon. Lady. I was not clear why she was gesticulating at me a few moments ago. I understand that perhaps her question should have been grouped and, if that is my fault, I apologise.

It should not have been grouped. I expected to reach question No. 17, but it will now be withdrawn because I have called the hon. Lady.

I appreciate that, Madam Speaker. As to the hon. Lady's question, there is no compulsion in the new deal—as I have made clear. We are talking about the single gateway into the benefit system. That programme will be piloted over the next two to three years before it becomes a national scheme. When the single gateway is operational, it will be a condition of receiving benefit that people agree to attend an interview.

Disabled Children


What progress he is making in improving support for disabled children. [58368]

In our consultation document on support for disabled people, we announced two particular proposals that will help the families of disabled children: first, the disability income guarantee, which is based on a new premium and income-related benefits for families with disabled children with the greatest care needs; and, secondly, the extension of the higher rate mobility component of disability living allowance to children aged three and four for whom claims have not been accepted in the past.

While I support and welcome the Government's intention to extend the disability living allowance higher rate mobility component to three and four-year-olds and I support also the Government's commitment to protecting the poorer members of society, can the Minister assure me that those disability groups will be part of a real and proper consultation process so that they will be able to shape the legislation?

I am grateful for my hon. Friend's support, and I can give him the assurance that he seeks. The disability benefits forum met last week and considered in detail the proposals in our consultation document. It will meet again next week and there will be a series of discussions with the disability organisations to which my hon. Friend referred about how to take the proposals forward. The proposals have been widely welcomed. They are a clear example of our resolve to re-focus the benefit system in order to provide additional help for those who need it most.

Family Credit


If he will make a statement on the number of families who are currently eligible for family credit. [58369]

In May 1998, 767,000 families were receiving family credit, which is 72 per cent. of those eligible but 84 per cent. of the maximum take-up if measured by expenditure.

Can the Minister confirm that the programme currently costs about £3.5 billion, which is £1.5 billion less than the projected cost of the working families tax credit that should replace it? On what assumptions on employment is that projection of substantial increased cost based? Is it assumed that there will be a rise in such employment, or simply that the tax credit will reach much further up the income scale?

The working families tax credit, which will replace family credit in October 1999, is more generous. That is why it will cost £5 billion instead of the current cost of family credit. That will mean that it makes work pay for 400,000 more low-paid families.

Does the Minister accept that one of the great strengths of family credit is the fact that it copes well at the time of relationship breakdown, in that, typically, the money is paid to the mother in a couple, and therefore continues when the relationship breaks down? Does she accept that, when family credit is abolished and replaced by a benefit paid, typically, to the father in a couple, that will produce hardship for mothers and children at the time of relationship breakdown?

In fact, couples can choose who the working families tax credit will be paid to. The hon. Gentleman should also know that, in 50 per cent. of such families, the mother is the main breadwinner, so, generally, the benefit will be paid to her anyway. The hon. Gentleman is worrying overmuch about a system that is far more generous than is the existing system to those who are low-paid and want to work.

Does the Minister agree that one of the biggest problems with the current social security system is the fact that it places barriers in the way of people who want to work? Can she confirm that, under existing family credit regulations, people can be worse off if they work more hours, and can she confirm that that distortion will be removed by the working families tax credit? Will she reassure the House that the Government will progressively work, through the social security system, to ensure that such anomalies are ironed out once and for all?

I agree with my hon. Friend; he is exactly right. The working families tax credit has far more generous tapers in income than does family credit—down from 70 per cent. to 55 per cent—so the credit is withdrawn in a more generous way. It is also more generous in that it begins higher up the income scale, at £90 instead of £79 for family credit. It starts to tackle the unemployment traps, the benefit traps and the significant barriers to work that those who are on low pay or who may work part time currently face.

The Minister has failed to answer the question asked by my hon. Friend the Member for Canterbury (Mr. Brazier). Every year, the Government will spend on working families tax credit £1.5 billion more than has been spent on family credit, and in doing so they will make a mess of many of the main features of family credit. The Minister still has not said that the Department of Social Security or the Treasury have figures to show by how much the working families tax credit will increase employment and how much the Government will save in the medium or long term as a result of introducing that tax credit. Will she give us the answer now? What is the saving? How many extra jobs?

The hon. Gentleman is against working families tax credit, and has said that he will abolish it. That will mean a tax increase for 1.5 million hard-working families of up to £17 a week.

The Minister has not answered the question. The question was, what forecast has the Department made? If the Department is saying that it is prepared to spend an extra £1.5 billion a year, it must be predicated on an assumption of a saving elsewhere or more jobs; which is it? Or is the answer, "It may do this or it may not"? We have heard of the green shoots, but now this seems to be a policy of "The Darling Buds of May".

I think that the green shoots of economic policy were spoken of by a Conservative Chancellor, not a Labour Chancellor. [Interruption.] If the hon. Gentleman will be quiet for a minute, I shall answer his question. The working families tax credit removes barriers to work and creates incentives for those who are on low pay to work. It is not intended to create more jobs. It is simply intended to make work pay for those people currently on benefit, who face levels of marginal deduction from benefit of considerably more than 100 per cent.—the legacy of the uncaring Conservative Government.

Disabled People


What proposals he has to improve work opportunities for disabled people. [58370]


What assessment he has made of the willingness of disabled people to move from welfare into work. [58373]

We know that more than 1 million disabled people receiving state benefits want to work. Together with my right hon. Friend the Secretary of State for Education and Employment, we have introduced the new deal for disabled people and proposals for a single gateway. I have also proposed reform of the all-work test. These and other measures will greatly improve opportunities for disabled people.

One of the main problems facing disabled people seeking work is that they fear that they may lose benefits if the job does not work out. Can my right hon. Friend give an assurance that the Government are taking action to make sure that the protection offered by the benefit system is not withdrawn as soon as a disabled person takes the risk and goes into work?

My hon. Friend raises an important point. Disabled people especially may be afraid to change their circumstances because in the past they believed that that would be to their disadvantage. Not only do we have advisers under the new deal who will give advice, but the 12-month linking rule will ensure that someone coming off benefit and going into work will be protected. However, I notice with deep regret that the Conservative party is opposing that rule. The disabled persons tax credit will also provide a guaranteed minimum income, in the same way as the working families tax credit. The Conservatives are against that as well. We are introducing other practical measures that will help to reduce the barriers that face many disabled people going into work. Our objective is to ensure that as many people who are disabled and who want to work can do so.

The Secretary of State will be aware that many Labour Members have campaigned for many years for the right of disabled people to work. Will he confirm the amount of money that will be available under the new deal for people with disabilities, and how many people he expects to be placed in work through it?

My hon. Friend will know that £195 million is being spent on the new deal. The disabled persons tax credit, as I explained earlier, will mean that many disabled people will be substantially better off in work. That will operate together with other practical forms of help, some of which were announced a couple of weeks ago, such as the job introduction scheme, the disability rights commission and the supported employment programme.

Right across the board, we are doing everything that we can to make it easier for people with a disability to get into work and to stay in work. We are also, of course, encouraging employers to do everything that they can to keep people in work, rather than letting them go when a problem arises. The Government are committed to improving the situation that faces disabled people, and it is a matter of deep regret that many of the practical measures that we are introducing are bitterly opposed by the Conservative party.

Everyone will support and encourage schemes for getting disabled people who are able to work back into work. However, like the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), I have encountered in my constituency recently a number of cases of people who have been on disability living allowance for a considerable time, from whom that has been withdrawn under the new criteria, and who have been told that they are fit to go back to work. I interviewed them myself as a layman, and it is obvious to me that they are not fit to go back to work. Will the right hon. Gentleman look at the criteria again and make sure that they are not too harsh?

I shall try to deal with the points that the hon. Gentleman makes. First, disability living allowance is not an out-of-work benefit. It is designed to provide help with extra costs, whether someone is working or not. Secondly, no new criteria have been introduced. The benefit integrity project, which the hon. Gentleman will no doubt recall was introduced in the dying days of the previous Government, resulted in a number of people being excluded from benefit who probably should not have been excluded. That is why I want to replace that scheme with a fairer and better scheme that ensures that we get benefit right first time and avoid the situation that we inherited, where a third of people receiving DLA have no medical evidence to back up that award. The benefits system that we inherited, as the hon. Gentleman should know, left an awful lot to be desired. Our objective is to improve it.

Finally, the hon. Gentleman says that everybody would support measures to help people to get back into work. He had better have a word with those on his Front Bench, who are opposing measures that will come before the House tomorrow to institute the 12-month linking rule, which will be of great advantage to people with disabilities.

Can the Secretary of State tell the House how many jobs he believes will be created from the £195 million under the pilot scheme for the new deal? Has the Department thought beyond that and recognised that billions, not millions, of pounds will be needed to tackle the 1 million disabled people who are able and want to get back to work?

The hon. Gentleman misses the point. The new deal is not a job creation programme of the sort that we have seen in the past. Its object is to ensure that people are equipped and have the skills to get work. Many disabled people face additional barriers that others do not face. The point of the new deal and the other measures that we are introducing is to ensure that the disadvantages that have been visited upon disabled people are removed. I should have thought that he would do better supporting that proposition, rather than carping at its objectives.

Given that people with very serious physical disabilities and learning difficulties are enabled to find employment through supportive employment projects, will my right hon. Friend comment on the fact that there are not enough places and resources for such projects and, therefore, resources are spent on social security for people with disabilities who want to be in work? Is there scope for usefully transferring resources from my right hon. Friend's Department to the Department of Education and Employment so that we can have sensible social policy in this area?

My hon. Friend will know that both I and my right hon. Friend the Secretary of State for Education and Employment are constantly examining ways in which we can ensure that people are in work and not on benefit. Our objective is to ensure that the bills that we have to meet because people are out of work who could be in work are reduced. We have taken considerable steps so far and we shall have further announcements to make. The supportive employment programme is primarily a matter for my right hon. Friend the Secretary of State for Education and Employment rather than for my Department.

The Secretary of State failed to answer the questions asked by the hon. Members for Bradford, North (Mr. Rooney) and for Winchester (Mr. Oaten). I suggest that they might care to read Hansard, where they will find that although the Government keep quoting that 1 million disabled people want to get into work, the figures for the projects that have been initiated by the Government suggest that the number of disabled people being helped into work by these projects is fewer than 20,000. Meanwhile the Government are changing the rules for incapacity benefit for those out of work because of their disability.

Will the Secretary of State confirm that in a full year 170,000 disabled people who now would qualify for incapacity benefit will, as a result of the Government's changes, be denied that benefit? Is this not just a callous attempt to redefine people off benefit to cover up the fact that the Government have failed to deliver real welfare reform?

I shall deal with the two points that the hon. Lady makes. First, on incapacity benefit, she must know that during the past 18 years when the Conservative party was in power it cynically used the incapacity benefit system to get people off the official unemployment figures and move them into statistics which received less attention.

The previous Government systematically went about trying to undermine the system that had been in place to ensure that help was there for people who were in work and became disabled. Incapacity benefit was never intended as an early retirement scheme, which is what the previous Government intended for it. If welfare reform means anything it must mean modernising the benefit system to ensure that benefits go to those who are entitled to them and to those for whom they were intended. That certainly did not happen under the previous Government.

Secondly, the hon. Lady asks about the working families tax credit and the new deal. The Conservative party is against both measures. It is against any measures that are designed to help people who have been excluded from the labour market. I remind the hon. Lady that at present there are about 200,000 vacancies notified in job centres and that some disabled people could go into them. The object of our reforms is to ensure that some of these vacancies can be filled by those who have disabilities. Unfortunately all these measures are opposed by the Conservative party.

Housing Benefit


What proposals he has for the future of housing benefit. [58371]

We are taking forward a wide-ranging review of housing benefit in consultation with local authorities and other interested parties. This review will aim to simplify and improve both the benefit itself and the way in which it is delivered. In addition, my right hon. Friend the Chancellor has announced an improvement to the extended payments scheme to make the transition into work easier for housing benefit claimants who are unemployed.

What is the Government's estimate of the cost to the taxpayer of landlord fraud perpetrated on the housing benefit system? Can my hon. Friend tell us how many landlords have been successfully prosecuted for such fraud?

The Government's estimates of the extent of landlord fraud range from £100 million to £150 million. Unfortunately, we do not collect figures for fraud prosecutions by type, so I cannot answer my hon. Friend's second inquiry.

Following the revelations of the right hon. Member for Birkenhead (Mr. Field), is it not an open secret that when decisions are eventually taken on this matter—or, more likely, when the Government definitively run away from them—as with all the other decisions on which we are waiting for them to pronounce, such as welfare reform and pensions, they are determined not by the Department of Social Security but by the Treasury and the No. 10 policy unit? Will the right hon. Gentleman answer a simple and, for him, fundamental question: if the Benefits Agency and, in the case of housing benefit, local authorities, have the job of handing out the money, and if policy decisions in Whitehall are taken by the Treasury or No. 10, what is the point of having a DSS at all?

First, I should like to point out that I am an hon. Lady, not an hon. Gentleman—in case the hon. Gentleman did not know.

The simplification project that we are carrying out with local authorities is seriously intended to make housing benefit simpler to administer and easier to understand. Delays and complexities in housing benefit are major barriers that prevent people from entering work, and we are determined to tackle them.

Child Support Agency


How many outstanding cases are presently with the Child Support Agency waiting to be closed where the child concerned is of employable age.[58374]

A parent with care is required to notify the Child Support Agency if a child stops receiving full-time education. Because those changes are recorded only when the assessment is reviewed, it is not possible to say how many cases are waiting to be closed.

I was always struck by the promptness and efficiency of the family allowance system, because the week my children left school and ceased to be dependent, my family allowance stopped. Why cannot the Child Support Agency be as efficient when dependants for whom people pay out of their earnings reach independence? People often find themselves paying deductions from earnings orders for six months or more after that threshold. Is that not another symptom of the gross inefficiency of the CSA, which has come to epitomise the muddle and incompetence of the former Administration that set it up?

I have considerable sympathy with my hon. Friend's point. Believe it or not, as part of the Tory legacy that we inherited, the child benefit computer system cannot talk to the child support computer system and identify when the children whom it was set up to support have reached a certain age. We are doing all that we can to remedy that, and will be in a position to identify that fact manually by next year. As part of the ACCORD computer procurement project announced recently, we hope to put that right permanently.

Neither the previous question nor the answer were fair. Unlike family allowance, child support does not finish when a child reaches employable age. An absent parent has always provided support while a child is in full-time education or training, which is why child support will always be a much more complex benefit. There will always be circumstances in which teenagers will go on to full-time education or training, and they should be supported by the absent parent if he or she is in a position to support them.

Child support is bound to be more complex than child benefit, but the system should not have been as complex as the Conservative Government made it when they introduced it. The hon. Gentleman is right to say that child support does not automatically stop at the age of 16. However, there remains the issue of whether, once education is finished, whatever the child's age, child support is still payable. If those computer systems could talk to each other, at least a prompt would be given so that members of the CSA could check with the parent with care to see whether those circumstances had changed. At present, the parent with care has to notify the CSA to get changes made. Inevitably, that takes time and some people forget to do it.


What action his Department has taken to improve the support for children provided by the benefits system. [58375]

We have increased the premium for children under 11 on income-related benefits from this November and we are also increasing child benefit by a record amount from April next year.

I thank my right hon. Friend for that reply. I represent a constituency containing some of the most deprived wards of north Cheshire, which have a high proportion of lone parents. In one ward, nearly a quarter of children are in lone-parent families. Can he assure the House that they, too, will share in any increases in benefits and that we will set out to tackle the poverty which undoubtedly exists in such families?

My hon. Friend will know that the Chancellor took a deliberate decision in his previous Budget to ensure that not only child benefit, but the premiums paid for those in receipt of income-related benefits would be increased. The help that we are giving through the new deal for lone parents and the introduction of the working families tax credit—both of which are opposed by the Conservatives—will offer substantial assistance to the very people to whom my hon. Friend has referred. That is a far better use of public money than the proposal that the Conservative party has come up with today—to spend between £3 billion and £5 billion per annum on a transferable tax allowance. It would be far better to spend that money in a far more targeted way—to help people to get back into work as well as to help those on the lowest incomes.

May I ask why a lone parent with the same income as a married couple with a single income will do considerably better under the working families tax credit? It cannot have been the Government's objective to discriminate deliberately against married couples and their children, but that is the way that the finances work out.

The Government's objective is to provide the maximum help that they can to all families—couples as well as lone parents. The working families tax credit is designed to make work pay for both types of family and to remove some of the barriers to work—the disincentives—under the scheme that we inherited. We believe that that is the best possible use of public money, because helping people into work and off benefit must and should be a central objective of any civilised Government.

Benefit Integrity Project


How many people have been taken off benefit as a result of the benefit integrity project. [58376]


If he will make a statement on the replacement for the benefit integrity project. [58378]

By 30 September, 138,000 cases had been checked under the benefit integrity project. Of those, 32,500 people were found initially not to be receiving the right amount of benefit. The number fell to 29,300, after the reviews and appeals that have been completed so far.

It is right to check whether people are receiving the correct rate of benefit, but the benefit integrity project, as conceived by the previous Government, was flawed in two specific respects. First, it was insensitive to the circumstances of disabled people—we have made a number of improvements—and, secondly, it focused only on people with high rates of disability living allowance so that payment changes could, in the great majority of cases, be downwards only.

That is why we plan to replace BIP with a new system—part of the routine administration of the benefit—which is sensitive to people's circumstances and which is fair, because it will apply to all benefit rates and so result in upward, or downward, revisions to ensure that people are receiving the correct amount of benefit.

I thank my hon. Friend for that answer, with which I agree whole-heartedly. Can he tell us how soon the new system, which needs to be introduced urgently, will come in? Can he assure us that it will not include the coercive aspects of the benefit integrity project? They have clouded the debate on disablement and benefit with a fog of fear and alarm which is felt by those who think that they are being coerced and subjected to a shake down to get them off the benefit that they had received from the previous Administration. We should deal with fraud, but not at the expense of inducing terror among those people who are entitled to benefit.

We intend to learn from the many lessons of the BIP experience and to introduce the new system as soon as possible, but it is important that we get it right. We do not want to rush into a new system without properly planning for it. We want to ensure, for example, that staff are properly trained by the time that the new arrangements start. The disability benefits forum set up a working group last week to work with us to plan how those new arrangements should work. We will put them in place as soon as we can sensibly do so.

Following the announcement of the scrapping of the benefit integrity project, people who have been assessed or are about to be assessed are concerned that they will face the double jeopardy of being processed through a new system. As the hon. Member for Great Grimsby (Mr. Mitchell) said, it is important that we have a date and guidelines for the establishment of the new system, because there is great concern in the disabled community. I hope that the Minister will be a little more precise. Was the announcement of the new system an aspiration for the next century, or will it be implemented early next year?

No. We are in discussion with the disability benefits forum about the arrangements that will replace BIP. We are not yet able to say precisely when the new arrangements will start, but I reassure the hon. Gentleman's constituents that there will be no question of a double jeopardy as he described. The current arrangements will continue until we have a properly planned and worked-out system with which to replace them.

Does the hon. Gentleman not understand the contradiction in the assurances that he has just given to his Back-Bench Friends? He implied that the benefit integrity project will end some time in the next century. He also suggested that things will be a little easier. Sources close to the Secretary of State have said that the Government intend to save 25 per cent. of the benefits budget. The implication of that is straightforward: people currently on benefit—legitimately, not through fraud—will lose. The Secretary of State has suggested that, for some people, the medical evidence for granting disability living allowance is not immediately obvious. Will Ministers second-guess medical opinion? Will the Minister tell us who will lose?

That question contained a number of disconnected points. There is no truth in the hon. Gentleman's allegation about a 25 per cent. saving. It is important that the Department and claimants are confident that they are receiving the correct amount of benefit. The previous Government introduced the BIP programme, which was designed to move people from high to lower rates of benefit. That was wrong and unfair. We will introduce arrangements that are fair and apply to all levels of disability living allowance, so that we can be certain that people are receiving the amount of benefit to which they are entitled. That is right for them, for the Department, for the Government and for society. I hope that the hon. Gentleman will apologise on behalf of the Conservative party for the BIP scheme that he supported, and that he will support the new arrangements that we will put in place.

Family Credit


What estimate he has made of the take-up rate for family credit for 1998–99. [58379]

As I told the hon. Member for Canterbury (Mr. Brazier), family credit take-up, by case load, is estimated to be 72 per cent., but measured by levels of expenditure it is 84 per cent.

Will the extra £1.5 billion being spent on the working families tax credit introduce other families to dependency, including higher earners? Will the hon. Lady explain why, under the new system, it will be more financially advantageous to look after other people's children than to look after one's own?

To be honest, I do not understand why the Conservative party insists on thinking that a more generous tax credit, with lower tapers which create pathways into work for the lowest paid, increases dependency. Conservative Members have a bizarre view of the benefits system.

Disability Benefits

What medical training or advice is available to adjudication officers in the Benefits Agency and independent tribunal service members when establishing the eligibility of claimants for disability benefits. [58380]

There are separate arrangements for Benefits Agency adjudication officers and members of independent tribunals. Benefits Agency adjudication officers complete 12 weeks' technical training in adjudication, which, in the case of disability living allowance, includes sessions given by doctors about the effects of disabling conditions on a person's need for help with personal care and mobility. Once trained, they have access to the disability handbook, a new edition of which was published recently, and, formally and informally, to doctors working under contract to the Benefits Agency.

The Independent Tribunal Service provides members with training in disability awareness and relevant legislation. Of the three tribunal members, there is always one who is medically qualified and another who has professional or personal experience of the effects of disability.

I thank my hon. Friend for that reply. However, in a recent case involving a constituent who was appealing against a reduction in disability living allowance, the appellant was told both that there was no point in proceeding with the appeal because the result was inevitable and that the ITS had no knowledge of his disability. Does not that suggest that, despite the training given, further training on medical matters and interpersonal skills is required? Indeed, the number of letters in my postbag about the ITS suggests that the training need may be greater still.

I know that my hon. Friend has been concerned about the case of his constituent, and has been pursuing it. If he remains dissatisfied and would like to write to me, I shall be glad to investigate. The judicial aspect of ITS is the responsibility of the Lord Chancellor's Department; we are introducing new arrangements for appeals in order to improve the service.

Does the Minister agree that the benefit integrity project has demonstrated the inadvisability of lifetime awards, and the necessity for proper medical examination in all cases in which benefits are awarded?

I agree with both points. We intend to introduce legislation to end the use of the term "lifetime award", which is a confusing and unfortunate feature of the system introduced by the previous Government. It has always been the case that, if people's benefit entitlement is reduced because of a change in their circumstances, the benefit is reduced. We will clarify that as soon as we can.

I also agree with the hon. Gentleman about the need for clear evidence to support all disability benefit claims.

Does my hon. Friend agree that a general practitioner who has long-standing experience of his patient's case, and knows the extent of that patient's disability, may feel very irritated if his judgment is cast aside following a brief examination by another doctor? Will my hon. Friend take that into account in his intended reform of the benefit integrity project?

In fact, information from a claimant's own GP can be used in the determination of benefit entitlement, and we intend that to continue.

Housing Benefit


What plans he has to review housing benefit. [58386]

As I told my hon. Friend the Member for Workington (Mr. Campbell-Savours) in response to an earlier question, we are currently reviewing housing benefit with the aim of simplifying and improving its administration.

I am well aware that that review is a review of legislation passed in 1990, but will it also take into account an anomaly known to hon. Members on both sides of the House? Poor council tenants are having to subsidise rent rebates for those who are even less well off. In those circumstances, it is little wonder that my local authority, Wealden district council, has incurred a £2 million bill to help them on their way—money that could be far better spent on investment in housing, repairs and maintenance and better facilities for the disabled.

I can confirm that the review is wide-ranging, and is examining a number of aspects of a benefit that is complex and difficult to deliver. Under the previous Government there was a massive shift from subsidy for bricks and mortar to subsidy for rent, via the housing benefit system. It is difficult even to think of reviewing housing benefit without taking housing policy into account: we must consider the two together.

Disabled Children


If he will make a statement on the action he is proposing to take to support disabled children. [58387]

We have announced two proposals for significant improvements in support for disabled children: the disability income guarantee, and the extension of the higher-rate mobility component of disability living allowance to children aged three and four. Disabled children will also be among those who benefit from our package on child poverty, the £1.5 billion programme on working families tax credit and the £300 million project for the national child care strategy.

I welcome the extension of the mobility component of DLA to disabled children aged three and four. Many families in my constituency will appreciate it. Can my hon. Friend also say whether families of those children will have access to the Motability scheme? I am sure that he will appreciate the tremendous difficulties with transport for such families.

I thank my hon. Friend for her support and for raising an important point. I can confirm the important point that the change will convey with it access to the Motability scheme. That scheme, which celebrates its 21st anniversary next month, can provide a vehicle, vehicle adaptations or an electric wheel chair. Recent research has shown that children as young as three and four can suffer if their mobility needs are not met. Our proposals will be an important step forward for those children and will allow their families access to Motability.

Disability Living Allowance


What representations he has received concerning disability living allowance reforms. [58390]

A list of more than 1,000 organisations and individuals who responded to the welfare reform Green Paper is in the House of Commons Library, most of them touching on disability issues. As we promised in the Green Paper, we have established a disability benefits forum, which has a working group dealing specifically with reforms to the disability living allowance. The Select Committee on Social Security also published a valuable report on DLA on 20 May.

Can the Minister give the House an estimate of how many people he believes are receiving disability living allowance who should not be entitled to it? How many of those who appeal when they lose DLA have that payment restored? May I ask him to ensure that appeals are held as quickly as possible once a claimant lodges an appeal?

Perhaps I can draw the hon. Gentleman's attention to the figures that I gave some moments ago. I said that, so far, 138,000 cases under BIP had been checked and, of those, 32,500 people were found initially not to be receiving the right benefit. That number fell to 29,300, after the reviews and appeals that have been completed so far.

The hon. Gentleman's question gives me the opportunity to make one important point. The level of fraud in disability living allowance is very low: the level of confirmed fraud is about 1.5 per cent. The level of incorrectness is greater than that. It is important to distinguish between those two things and to make it clear to the House that the level of fraud is very low.

Benefits (Personal Advisers)


What services will be offered by the personal adviser to people applying for benefits through the single gateway. [58393]

The personal adviser will help benefit claimants of working age to explore ways in which they can overcome barriers that prevent participation in the labour market. The adviser will be able to provide information and advice on the options that are available and a personalised calculation of potential in-work income.

The personal adviser will also help individuals to gain access to a range of services such as child care provision, specialist counselling, housing support and training.

I thank my hon. Friend for her reply. Any measure that sensibly cuts bureaucracy and introduces clarity into the system has to be welcomed, but can she help to explain whether we are talking about one gateway or two? Do people have one personal adviser or two? Can she assure me that just one person is advising people on the gateway and those who enter the new deal?

My hon. Friend must not mix up the new deal programmes that have been launched throughout the country with the 12 pilots of the single gateway, which will begin in June next year and be extended in November. We hope to learn lessons from those pilots and then consider whether to extend them throughout the benefit system.

National Insurance


What plans he has to change the rules on employers' contributions to the national insurance fund. [58397]

I am delighted that my hon. Friend is here.

From April 1999, the point at which employers start to pay secondary class 1 contributions will be raised to a new "earning threshold" set at the level of the personal tax allowance—which is £83 per week, as announced by my right hon. Friend the Chancellor of the Exchequer, on 3 November, in the pre-Budget report. Additionally, the current multiplicity of employers' contribution rates for different earnings levels will be abolished and replaced with a single 12.2 per cent. contribution rate payable on earnings above the new earnings threshold. Employers will no longer have to pay contributions on the portion of earnings below the earnings threshold.

Provision for the changes was made in the Social Security Act 1998—which made provision also for the introduction of a new class 1B employers' national insurance contribution, so that treatment of contributions on payments and benefits to employees included in a pay-as-you-earn settlement agreement can be aligned with the tax treatment. Regulations to give effect to all those changes will be laid before both Houses in due course.

I concentrated on that reply with considerable vigour. May I ask the Minister what he will do about employers—such as P and O Stena, and Cable and Wireless—who have the practice of paying their employees offshore, thereby avoiding paying national insurance contributions? That practice is not only unfair but unpatriotic. Should it not be stopped, immediately, by legislation? What does he say?

I am aware of the concerns expressed by hon. Friend, which we are closely examining.


3.30 pm

Madam Speaker, with your permission, I shall make a statement on the situation in Iraq.

As the House will know, on Saturday I had authorised substantial military action as part of a joint US-UK strike against targets in Iraq. British Tornado fighter bombers were about to take to the air, and I had already spoken to the detachment commander to thank the detachment for its bravery and professionalism, when we received word that the Iraqis were telling the United Nations Secretary-General that they had backed down. I should like to explain to the House why we were ready to take such action, why we decided to stay our hand, and why we remain ready to strike if the Iraqis do not fully comply with their obligations.

Let me first put the events in context. Security Council resolution 687 of April 1991, containing the ceasefire terms for the Gulf war, obliged Iraq to accept the destruction of all its weapons of mass destruction and not to develop such weapons in the future. The United Nations Special Commission was established to oversee those processes, with the International Atomic Energy Agency. A further resolution required immediate, unconditional and unrestricted access to any places and records in Iraq that inspectors wished to inspect.

The seven years since then have been a constant struggle between Iraq and the weapons inspectors, who have been backed by the full authority of the UN. The inspectors themselves have been harassed and threatened. Iraq has deceived and concealed and lied at every turn. A deliberate mechanism to hide existing weapons and to develop new ones has been in place, involving organisations close to Saddam Hussein, particularly his Special Republican Guard.

Despite all the obstruction, UNSCOM and the IAEA have been remarkably successful in uncovering and destroying massive amounts of weaponry, particularly following the defection of Saddam Hussein's son-in-law, Hussein Kamel, in 1995. He was murdered on his return to Iraq the following year.

UNSCOM has destroyed, for example, more than 38,000 chemical weapon munitions, 690 tonnes of chemical weapon agents and 3,000 tonnes of precursor chemicals. Furthermore, 48 Scud missiles have been destroyed, as has a biological weapons factory designed to produce up to 50,000 litres of anthrax, botulism toxin and other agents. Without the weapons inspectors, that deadly arsenal would have been available to Saddam Hussein to use against his neighbours. Who can say with any confidence that he would not already have used it?

Huge question marks remain, for example, over 610 tonnes of unaccounted-for precursor chemicals for the nerve gas VX; over imports of growth media capable of producing huge amounts of anthrax; and over missile warheads, particularly those designed for chemical and biological weapons. Iraq has denied weaponising VX, but analysis of missile warhead fragments in a US laboratory showed traces of VX. Further tests were carried out in French and Swiss laboratories. A multinational group of experts concluded in late October that the original US tests were accurate, that the French laboratory had found evidence consistent with the trace of a nerve gas on one fragment, and that all three laboratories had found evidence of Iraqi attempts to decontaminate the warheads.

The simple truth therefore is that, before the Gulf war, Iraq had built up a vast arsenal of weapons of mass destruction. It has been trying to hide them, and to acquire more, ever since. Despite UNSCOM, Iraq still has weapons of mass destruction capability. We do not know precisely how many, but it still has the skills, the engineers and the equipment to make more. Saddam Hussein has used these weapons before, including on his own people. I am in no doubt that he would use them again, given half a chance.

Let us not forget either that Saddam's conventional military capabilities remain at a very high level: more than 1 million men under arms, including 75,000 in the Republican Guard and 15,000 members of the Special Republican Guard, 2,700 main battle tanks and nearly 400 combat aircraft. That is what he continues to spend his money on, rather than the welfare of his own people.

In October 1997, Iraq sought to exclude US personnel from UNSCOM teams. In the face of international pressure, the Iraqis backed down then, but continued to try to impose controls on the so-called presidential sites. In January 1998, Iraq again objected to US and UK personnel, made explicit a ban on access to eight presidential sites, and threatened to end co-operation with UNSCOM if it had not completed its work by May 1998. We, the Americans and others made it clear that we would use force if Saddam did not change his mind.

On that occasion, Kofi Annan, the Secretary-General of the UN, negotiated a memorandum of understanding under which Iraq confirmed its acceptance of all relevant Security Council resolutions and its readiness to co-operate fully with UNSCOM and the IAEA. This averted military action at the 11th hour. The Security Council's endorsement of this MOU stressed that any violation of it would have the severest consequences for Iraq.

Iraq subsequently resumed superficial co-operation, but on 5 August this year suspended everything but the most routine monitoring when its demand for a declaration saying that it had fulfilled all its disarmament obligations was rejected. A further Security Council resolution in September suspended reviews of sanctions in consequence but endorsed the idea of a comprehensive review of Iraq's compliance with its obligations.

On 30 October, the Security Council unanimously agreed terms of reference for the review, holding out the clear prospect of a statement of the steps that Iraq still had to take, and of the likely time frame for their completion, assuming full co-operation by Iraq. Astonishingly, this offer was rejected by Iraq on 31 October, and the Iraqis then announced that they were ceasing all co-operation with UNSCOM. The Security Council unanimously condemned this on 5 November as a flagrant violation of Iraq's obligations.

I have set this out in detail because it is important that we understand what is at stake. We are talking not about technical breaches of UN resolutions, but about a pattern of behaviour that continues to pose huge actual risks for Iraq's neighbours, the middle east and the entire international community.

Let me now return to the events of the last few days. Following the Iraqi decision to break off co-operation with UNSCOM on 31 October, despite the offer of a comprehensive review, we and the Americans decided that if Saddam Hussein did not return to full compliance very quickly, we were ready to mount an air attack to reduce substantially Iraq's threat to its neighbours, in particular by degrading its weapons of mass destruction capability, and its ability to develop, control and deliver such weapons.

We did not want a lengthy military build-up of the kind that there had been in February, or endless rhetorical warnings, but we did make it clear that if Iraq did not return to full compliance very quickly indeed, it would face a substantial military strike. A private warning was delivered directly to the Iraqi permanent representative at the UN on Thursday 12 November, giving no details about timing, but leaving no doubt about the scale of what was intended.

Saturday afternoon, London time, was set for the start of the attack. I gave final authorisation that morning for the use of force. I did so with regret, and with a deep sense of responsibility. I saw no credible alternative. The UK's weight in the planned strike would have been substantial, including nearly 20 per cent. of the tactical bomber effort.

Just over two hours before the attack was due to start, we received word that the Iraqis had told the United Nations Secretary-General that they were responding positively to a final letter of appeal which he had sent to them the previous night. We decided that the attack should be put on hold for 24 hours to give us a chance to study the details of the Iraqi response.

The first Iraqi letter appeared to agree to resume co-operation with UNSCOM and the IAEA. It was described as unconditional by Iraqi spokesmen, but the full text of the letter, and in particular nine assurances that the Iraqis were seeking about the comprehensive review—they were listed in an annex—left that unclear. We and the Americans spelled out that that was unacceptable, and that there could be no question of any conditions.

During the course of Saturday night and Sunday morning, the Iraqis offered a stream of further written and oral clarifications, making it clear that their compliance was unconditional, that the nine points were merely a wish-list, not conditions, that their decisions of August and October to withdraw co-operation had been formally rescinded, and that the weapons inspectors would be allowed to resume the full range of their activities in accordance with UN resolutions, without let or hindrance. I have placed the text of the Iraqi letters in the Library of the House.

The clarifications, taken together, mean that Saddam Hussein has completely withdrawn his positions of August and October. No concessions of any kind were offered to him in exchange. There was no negotiation of any kind. Nor could there have been. Nor will there be in future.

We do not take Iraqi words at face value. Long experience has taught us to do the opposite. However, we had asked for unconditional resumption of co-operation, and, in the face of the credible threat of force—in this case very imminent force—Iraq offered that resumption. In those circumstances, we and the Americans have suspended further military action while we bolt down every detail of what the Iraqis have said, and while we test the words in practice. The Security Council decided last night that UNSCOM and IAEA inspectors should resume their work in Iraq immediately. They will be in Iraq tomorrow, and they must be afforded full co-operation in every respect.

As ever, we do not rely on the good faith of Saddam Hussein. He has none. We know, however, that under threat of force, we can make him move. We will be watching with extreme care and a high degree of scepticism. Our forces remain in place and on high alert. We and the Americans remain ready, willing and able to go back to the use of force at any time. There will be no further warnings. The inspectors will now carry out their work.

There are in my view two substantial and fundamental differences between the Iraqi climbdown this time and the climbdown in February. First, there is now a very clear diplomatic basis for action without further need for long discussion in the Security Council or elsewhere. In February, we allowed a long time for negotiations. This time we allowed only a short period. If there is a next time, there will be not even that. If there is a next time, everyone will know what to expect, as President Chirac and others have made clear.

Secondly, the world can see more clearly than ever that Saddam Hussein is indeed intimated by the threat of force. Many so-called experts told us that Saddam wanted military action—even needed it—to shore up his position internally and in the region. His complete collapse on Saturday gives the lie to such bogus analysis. When he finally saw, correctly, that we were ready to use force on a substantial scale, he crumbled. I hope that other countries more dubious of the use of force may now see that Saddam is moved by the credible threat of force. He has exposed the fact that his fear is greater than his courage. Let us learn the lesson of that.

If there is a next time, I shall have no hesitation in ordering the use of force. President Clinton's position is the same. The USA and the UK, with far greater international support than ever before, have Saddam Hussein trapped. If he again obstructs the inspectors' work, we will strike. There will be no warnings, no wrangling, no negotiation and no last-minute letters. The next time co-operation is withdrawn, he will be hit.

We have no quarrel with the people of Iraq. On the contrary, we support the desire of the overwhelming majority of them for freedom from Saddam Hussein. They find themselves in a desperate position. I have no doubt of the genuine suffering of many, though not, of course, the elite and those who keep in them in power. We do what we can through our aid programme. Under the oil for food arrangements, the Iraqis can import as much food and medicine as they want, and I hope that we will hear no more echoes here of cynical and hypocritical Iraqi propaganda about this. If Saddam Hussein wants to import more, he can do so freely. If he wants the sanctions position to change, the solution is in his hands through fulfilment of his obligations.

This is far from over. It is merely in a different phase. Our course is set: complete compliance and nothing less, and we shall not be moved from that course.

I thank the Prime Minister for his statement and in particular welcome the willingness that the Government and the United States have shown to use force to ensure Saddam Hussein's compliance with UN resolutions. Last week, we pledged support for the use of force, should it prove necessary. The Opposition also support the Prime Minister's decision at the weekend to authorise the use of RAF aircraft. We join him in commending the bravery and preparedness of the RAF personnel involved in the mission—no less for the fact that they did not in the event go into action. We welcome Saddam Hussein's apparent assurances that he will allow UN inspectors complete and unconditional access to suspected illegal weapons sites, as well as the Prime Minister's statement that if there is any future breach of the undertakings that Iraq has given, air strikes will be launched without further warning.

At the same time, the Prime Minister will no doubt share our concern, first, that the crisis through which we have just passed represents the second time this year that Saddam Hussein has broken his word and failed to comply with UN resolutions; secondly, that he may still be playing for time and testing the west's resolve; and thirdly that these exercises in brinkmanship are being regularly repeated.

Does the Prime Minister accept the Opposition's continuing strong support for maintaining a tough line against Iraq until the complete destruction of that country's biological and chemical weapons capability has been achieved? Does he further accept that we believe that this determination should embrace sanctions as well, and that the lie should be nailed that the sanctions currently in place are depriving the Iraqi people of food and medical supplies? The Prime Minister made the important point that the continuing suffering of many Iraqis is the direct responsibility of their own regime. Given that Iraq can now sell more than $10 billion of oil annually to pay for food, medicine and other humanitarian goods, should not the blame for the deprivation of the Iraqi people be placed firmly at the door of Saddam Hussein himself, who chooses to spend the money on weapons of war and the luxurious life style of his entourage?

Given that it has repeatedly proved impossible to negotiate in good faith with Saddam Hussein, does the Prime Minister associate the Government with President Clinton' s statement:
"what we want and what we will work for is a government in Iraq that represents and respects its people … and one committed to live in peace with its neighbours."?
We all hope that Saddam Hussein is indeed now trapped, but as the Prime Minister said, this matter is far from over. Will he go further and agree that Saddam's continued breaches of faith, and the continuing threat to peace that he presents to the whole of the middle east and thus to the interests of the United Kingdom, mean that although we acknowledge the formidable difficulties involved, a prime objective of western policy should now be the removal of Saddam from power?

I thank the right hon. Gentleman for his support and his party's support in the past few days. Of course we want to see the Iraqi people governed by a regime other than that of Saddam Hussein. We are looking with the Americans at ways in which we can bolster the opposition and improve the possibility of removing Saddam Hussein altogether. I entirely share the sentiments that President Clinton expressed on that point.

I also agree with the right hon. Gentleman about the continued suffering of the Iraqi people. We have to be blunt about it. I have no doubt at all that Saddam Hussein will not fulfil the obligations that he has now entered into unless he is made to do so, but what is interesting and different about the present situation is that this time he was able to see that we had given the authorisation to strike. Indeed, until late Saturday morning, that decision had been taken and was literally minutes away from being implemented. Therefore, no one can doubt the credibility of our willingness to use force and, most important of all, Saddam Hussein no longer doubts that.

What is more, precisely because of the build-up that there has been over a period of months, we are in a far stronger position. Reading between the lines of what Kofi Annan, the UN Secretary-General, said, it is clear that he accepts—as does the entire international community—that the next time there will be no formal negotiation at all. If Saddam Hussein withdraws co-operation, action will follow, irrespective of last-minute pleas, letters and the rest. It is that simple. That represents a significant difference from the position in February.

I also emphasise the other point that I made. I was astounded, because I did not accept the argument, by the number of people who genuinely and in good faith thought that Saddam Hussein would welcome military action and that he needed it to bolster his position. According to so-called experts, it was all part of his ploy and he wanted military action as it would strengthen his position. My goodness—the moment he thought and knew that we were serious about military force, a very different song was sung by those who were speaking for Iraq. The fact that that changed in a fundamental way places us in a very good position.

I should make it quite clear to the House again, however, that this will not be over until the inspectors are in there and have completed their work to their satisfaction; or alternatively, because Saddam Hussein fails to co-operate again, until we have by military force diminished and degraded his capability to threaten the neighbourhood and the outside world. One of two things will now happen: either he will co-operate, in which case inspectors will do their job, or he will fail to co-operate and, as we have made quite clear, force will follow.

I offer my support to the Prime Minister for his statement and for the Government's conduct of these affairs in recent days. In his statement, the Prime Minister refers to a clear diplomatic basis for military action. Is he satisfied that there is clear legal authority for military action? Does he agree that one of the most effective parts of the diplomatic effort against Saddam Hussein was the intervention of a number of Arab states towards the end of last week, in particular Egypt and Syria? Does he agree that it is necessary to seek to maintain the support of Arab opinion; in that regard will he confirm that we will be evenhanded in our application of United Nations Security Council resolutions throughout the entire middle east?

Will the Prime Minister confirm that sanctions are related to compliance and not to the survival in power of Saddam Hussein, and that if there is full compliance all sanctions can be lifted? Finally, will he confirm that, notwithstanding Saddam Hussein's behaviour, we will redouble our efforts to bring humanitarian assistance to those whom Saddam Hussein has so cruelly exploited?

I thank the hon. and learned Gentleman for the support that his party gave for the action that we took. Yes, we are sure that we have—and will have in future—proper legal authority for the action that we were about to take. The support of the Arab states in their statement last week was significant and has strengthened our position. Although it is frustrating for us, when people see that we are prepared to give Iraq every chance to come into compliance, that is an important part of building up the strongest possible diplomatic support. Obviously we want to maintain that.

The fact that, thanks to the intervention of President Clinton and others, the middle east peace process is back within a framework that gives it some chance of success is an indication to the Arab world that we wish to be even-handed in our approach and that we simply want to maintain the security of the region in all its different forms.

The sanctions are, of course, related to compliance. Saddam knows that, which is why the issue has always been in his hands. He can determine the matter, if he is prepared to come into line with the UN resolutions in their entirety. On the humanitarian side, what is important is that we continue to do whatever we can and, at every single stage, counter the lying Iraqi Government propaganda that babies are dying and people are being starved of food because the west will not allow supplies to come in. I think that I am right in saying that, of the aid for medicines, only 30 per cent. has gone anywhere near the people who should have received that medical assistance. The rest of it, and a large part of the money for the food programme, has gone to that small number of elite people around Saddam Hussein who are keeping the rest of the Iraqi people in repression.

The Prime Minister is right to have supported the United States and the United Nations resolutions over the past few days, and I believe that he was right to commit British forces to take part in any punitive exercise that was necessary. He will also be right if he commits British forces in future without further warning, because that warning has now clearly and unequivocally been given.

Since 1991, Saddam has flagrantly broken every promise he has made. He is developing nuclear weapons, chemical weapons, biological weapons and a delivery system. Unless those weapons are removed, no one can have any confidence that the day will not come when he seeks to use them on neighbouring states, whether on Tel Aviv, Riyadh or elsewhere. We are aware that he has those weapons and it would unforgivable if we did not continue to take the action to ensure that he cannot use them in future.

The Prime Minister mentioned the enormously important contribution of the Arab states and he was right to do so. However, he knows that a different message often goes out from the mosques after prayers, week after week. Will he instruct the Foreign Secretary to do everything he can to repeat the message that our dispute is with the Iraqi regime, not with the Iraqi nation and certainly not with Arabs generally across the middle east? It is vital that we continue to retain the active and positive support of Arab nations.

This is Saddam's crisis and nobody else's. It will not be ended until those weapons are moved, one way or another. If the Prime Minister is forced to order further force, he may do so with a clear conscience. The responsibility lies in Baghdad, not in Washington or London.

I agree with everything the right hon. Gentleman says. I thank him for his support and assure him that we shall certainly act as he urges us to do in respect of the Arab states. Their statement last week was an important development, but we have to keep up the argument the entire time. I entirely agree that the dispute is with Saddam Hussein and not with the Iraqi people, nor with the rest of the Arab world. We have to carry on repeating that message all the time.

I thank the right hon. Gentleman for his support, because on issues such as this it is important that there be cross-party support. One of the things that we have learnt from dealing with Saddam Hussein is that he looks carefully to see how much support there is and how much he can attempt to win by means of divide and rule. Therefore the greater support there is across the political divide here, the greater the impact on him and the greater our ability to avoid the use of force.

I also entirely agree with the right hon. Gentleman about weapons. As I said a few moments ago, one of two things will happen: either the inspectors will do their work and complete it, or we shall take action ourselves to diminish the weapons of mass destruction capability.

May I congratulate my right hon. Friend on his steadfast resolution and that of our US allies, which has prevented, for this time, further defiance of the world community by Saddam Hussein? However, as my right hon. Friend will realise, in the US over the weekend there has been a subtle change of policy, which is to heighten the policy objective of toppling the regime in Baghdad. Would he care, first, to spell out whether that is fully agreed to by the Government; and secondly, to state what it means in practice? Does it mean, for example, arming or financing opposition groups? Is he aware that the most credible of those opposition groups have already rejected such assistance?

As I said a moment ago, we have to consider with the US the support that we can give the opposition to the Iraqi regime, and that is a legitimate aim for us. If it is the case—and no one can seriously doubt it—that Saddam Hussein does not act in good faith and unless prevented will unquestionably pose a threat to his neighbours—let alone the repression that he visits on his own country—it is an entirely sensible policy objective for us to do all that we can to support opposition to him. We must simply seek the most sensible way of achieving that. That is by no means inconsistent with, and indeed is complementary to, our other objectives.

I warmly endorse the Prime Minister's praise for UNSCOM, but is he aware that since the Annan agreement, UNSCOM's work, although successful, has been like drawing hen's teeth and it is thought that much of that work has been compromised? Will the Prime Minister tell the House what limits he will assign to obstruction by the regime in Baghdad to UNSCOM's work; and in the event of such obstruction, at what stage he will consider that action will be necessary to ensure that the work is made possible?

The important thing is that UNSCOM does its work without any let or hindrance, and the Iraqis have now agreed to that. We shall obviously consider carefully the reports made by UNSCOM to ensure that that condition is being kept. The hon. Gentleman is right—work has been largely compromised since February. If that starts to happen again, we will regard it as a breach of the undertakings that have been given; so we will make a judgment based on UNSCOM's reports, and we must monitor that situation extremely carefully.

If the Iraqis think that they are returning to the position that they were in between February and 30 October, when they withdrew all co-operation, they are wrong. We expect the inspectors to go back into Iraq and be able to complete the work that they were tasked with by the UN resolutions. Again, I stress that all we are demanding is that the resolutions made at the end of the Gulf war—from which these events derive—be implemented in full. We shall watch the work every inch of the way.

Is the Prime Minister aware that although the world is united in its hostility to the regime of Saddam Hussein and its desire to have the United Nations resolutions carried out, there is no possibility—and the Prime Minister should admit it—of carrying through the Security Council a resolution authorising force against Saddam? He has not even attempted to do so. If an operation, once suspended, were launched now without further notice, the effect on the middle east, as the former Prime Minister, the right hon. Member for Huntingdon (Mr. Major) pointed out, would be absolutely catastrophic for the influence of the United States and Britain in that area.

If force were used to change the regime in Iraq, which President Clinton has hinted at and the Prime Minister has now confirmed, that would put us totally outside the realm of legitimacy in international law and the United Nations charter.

I can say two things to my right hon. Friend. First, we believe that the legal basis for action is secure because of the UN resolutions that have been passed and the need to enforce them.

Secondly, let us examine what has happened over the past few days. I cannot believe that anyone seriously thinks that the Iraqis, who two weeks ago had withdrawn all co-operation and effectively prevented UNSCOM from performing their duties, would have today allowed the inspectors back in unconditionally—they say—to do their work normally, without let or hindrance, except under duress and the threat of force. It is simply not credible that they would have altered their position unless they were threatened with military action.

I say to my right hon. Friend and those in the international community who are hesitant about the use of force that it is no good willing the ends unless we will the means. It is absolutely no good saying to the outside world that we want the UN resolutions on eliminating weapons of mass destruction to be carried through if we are at the same time saying that we will never contemplate the use of force to ensure that they are carried through. It is perfectly obvious from what has happened that if we took that position there would be no elimination of weapons of mass destruction and we might as well render those UN resolutions of no effect at all.

It simply cannot be overstated—we have learnt this on many occasions—that when we are dealing with a dictatorial, brutal and corrupt regime such as that of Saddam Hussein, diplomacy works only if it is backed up by the credible use of force.

Will the Prime Minister confirm that the UNSCOM inspection teams, whose work is absolutely critical, will have the unambiguous and unqualified support of the American and British Governments, in particular, in inspecting both declared and undeclared sites?

I congratulate my right hon. Friend and President Clinton on facing down the procrastinations and tergiversations of murderers and torturers, and on demonstrating to those who toddle off periodically to Baghdad to get their skins tanned and their noses browned that only force or the threat of force has any effect on such people in their violation of a succession of Security Council resolutions.

My right hon. Friend has confirmed to my right hon. Friend the Member for Chesterfield (Mr. Benn) and others that existing Security Council resolutions specifically authorise the use the force—as they did when the right hon. Member for Huntingdon (Mr. Major) was Prime Minister. Although he has understandably dealt today with the consequences of the Iraqi attempts to fail to conform to the United Nations Security Council resolutions on weapons inspection, will my right hon. Friend confirm also that there is no prospect of sanctions being lifted until Iraq complies with not only the weapons resolutions but the whole range of UN resolutions?

It is essential that everything that the United Nations has set out should be implemented. I agree entirely with my right hon. Friend and welcome his support for ensuring that those Security Council resolutions are implemented in full. I emphasise that that must occur because Saddam Hussein has been trying to develop weapons of mass destruction.

I urge upon those who are doubtful of the need to threaten to use force that we are not talking about technical breaches of the agreements. Saddam Hussein was developing weapons of mass destruction before the Gulf war. He has continued to try to do so since then and to conceal it. If he were successful, the threat to the world would be enormous. He is the one who has used chemical weapons—and he used them against his own people. Some 5,000, mainly women and children, were killed as a result of chemical warfare. It is essential that we keep in place the existing mechanisms and maintain eternal vigilance until the Security Council resolutions are complied with in full.

I am put in mind of the relationship between another Prime Minister and another President who met twice a year—first she told him what she thought and then she told him what he thought. However, these are different times and different people. Can we be assured that Britain has an independent voice in this matter and not just an echo; and that there is at least a prospect of revisiting that grand coalition—not only in this country but in the United Nations, and especially in the Arab world and the Gulf states—that was put together when last we committed our armed forces to the Gulf, in 1990-91?

Yes. We have been active in building up as much support as possible. As we have said, the supportive statements made by European Union members and by the Arab states demonstrate the degree of backing for our position. The words of the United Nations Secretary-General yesterday are obviously very important also.

As for our having an independent voice, I believe that what we did was right—if I did not believe it was right, I would not have done it. While I believe that it is important that this country is—and always will be—the master of its own foreign and defence policies, I do not make any apologies for our relationship with the United States of America. As I have often said: thank goodness the United States is there and prepared to act in these situations, even if others are not. If we had not been prepared to act in this situation—I could mention many others who were not—the possibility of securing peace and stability in the world would have been much diminished.

My right hon. Friend has revealed an horrendous list of weapons to the House today. Will he make it clear that, if a man who is unstable and who rules a regime as totally unacceptable as that in Iraq remains in control of savage weapons of war, no one will be safe until we can guarantee that they have been completely withdrawn and destroyed? Does he understand that it is essential that the inspectors work as rapidly as possible, and will he ensure that the period that Iraq is allowed is foreshortened? If those weapons are allowed to remain, no one will be safe.

I entirely agree with the sentiments that my hon. Friend just expressed. It is important that the inspectors be able to gain access, not just to the declared sites, but to the undeclared sites—and to all the various documentation, because that too is important in uncovering the weapons programme. Of course, that is all part of the agreement that Saddam Hussein entered into at the end of the Gulf war. The agreement, negotiated by the then Prime Minister, the right hon. Member for Huntingdon, and by President Bush, was that Saddam Hussein would destroy all weapons of mass destruction; and the inspectors were put in there in order, as it were, to certify that he had carried out that programme. The truth is that they have had to carry out the programme and he has spent six or seven years trying to dodge it.

I totally understand the frustration of people who say, "This has all taken an awful lot of time." Yes, it has, but at each stage we are eliminating the weapons, ensuring that the inspectors can go back in and do their work, and building the basis for the use of force again if Saddam Hussein pulls back from the undertakings that he has given.

May I express my appreciation to Prime Minister for coming to the House in person to make this important statement? He has put his credibility on the line, in as much as he has explained why he has taken our armed forces to the brink of war and not beyond, and we hope that the policy will be successful. He also mentioned the issue of conventional armaments. Does he envisage any extension of sanctions to prevent Saddam Hussein building up his conventional weaponry, which is already fearsome enough?

The Prime Minister spoke of our allies—the United States and President Clinton—in glowing terms, but there were some notable absentees in this matter. What about our European friends? At Vienna, he was eulogising the common foreign and security policy; what has become of it over this crisis?

I thought for a moment that we were going to get through a question by the hon. Gentleman without a knock at Europe. In fact, the European Union—as it said in a statement last week and, I understand, as it is saying today—will be very helpful to, and supportive of, what we do.

The sanctions regime is tied to a series of things that must be done by Saddam Hussein. If we carry out all the things that are in the various UN resolutions, we shall have secured the objectives that we have set ourselves in respect of armaments, and I believe that we shall do so. Those resolutions amply justify the action that we are taking.

Of course our credibility is on the line here; it always is in these situations, but I think that we are right to say that we shall not hesitate to act if Saddam Hussein goes back on the undertakings that he has given.

I am for rooting out these hideous weapons wherever they are, whether they are the ocean of chemical weapons that the United States of America dropped on the people of Vietnam, or the biological weapons in the Israeli arsenal, some of which we read about at the weekend, which strike a new low even in that dreadful alchemy.

In 1956, a less distinguished predecessor of my right hon. Friend stood at that Dispatch Box and asked who would chain
"the mad dog of Cairo".
It was a precursor to a devastating Anglo-Israeli attack on Egypt, with cataclysmic results; this time we were minutes away from an equally cataclysmic mistake. Does the Prime Minister really think that the kings and sheikhs at Doha were speaking for the Arab people—speaking for the Muslims of the world? I hope that he does not; I hope that he knows better than that. Will the Prime Minister answer one question? Why is it that Israel, which illegally occupies three Arab countries, is allowed to have nuclear, chemical and biological weapons, but no Arab Muslim country is allowed to have the same thing?

In trying to compare Israel to Iraq, my hon. Friend simply underlines the misguided nature of his own arguments. Quite apart from the fact that Israel is a democracy, we cannot see Saddam Hussein in the same light at all. At the beginning of his remarks, my hon. Friend said that he was in favour of making sure that the weapons of mass destruction were destroyed. That cannot be done unless there is the threat of force to back up the diplomatic efforts.

As for speaking for the Arab people, I believe that those to whom my hon. Friend referred were speaking for the Arab people, but I agree that there is a large measure of disagreement in the Arab world—all the more reason for us to be out there saying with one voice, "This is not a quarrel with the Arab people. It is not a quarrel with the Iraqi people. It is a quarrel with Saddam Hussein." After all, the biggest single immediate threat that Saddam Hussein poses is to the Arab nations of the world.

I support the Government and the Prime Minister's action in coming to the House to make a statement. The Prime Minister will need no reminding of the complications and difficulties that can arise from the use of limited force in response to unlimited tyranny. Can he assure us that he was operating with the authority of all his colleagues, that the matter was given careful consideration and that the defence and overseas policy committee of the Cabinet had met prior to the decisions that he took on Saturday?

I assure the hon. Gentleman that we were acting with the full authority of the Government, as he would expect. The action that we worked out was proportionate and right. It would have achieved the objectives that we had set for any military action—first, by degrading the capability of making weapons of mass destruction, and secondly, by diminishing the threat that Saddam Hussein posed to his immediate neighbours. Both those objectives would have been satisfied by the military action, and I can assure the hon. Gentleman that that was the united position of the entire Government.

Is my right hon. Friend aware that those of us who, 42 years ago, vigorously demonstrated against the British, French and Israeli aggression, believe that we are perfectly justified in campaigning against the Iraqi dictator at every opportunity? Is it not the case that since 1990, the division in the House has been between those who want to face up to the criminal nature of the regime and those who want to appease Saddam Hussein? Those who now criticise my right hon. Friend and the American Administration for what they have done are the very people who in 1990 and 1991 justified the invasion of Kuwait. Had we listened to such people, no action would have been taken to liberate Kuwait. We were right then, and we are certainly right now.

The Prime Minister is right when he says that the patterns of behaviour demonstrated by Saddam Hussein amount to continued deceit. The Prime Minister is also right to consider the use of force and to maintain that threat, but what will happen if Saddam Hussein again agrees with Kofi Annan, accepts the United Nations proposals and six months later changes his mind? How long will we keep troops on station? How long is the United States prepared to keep two aircraft carrier groups in the region? Once they withdraw, is it not possible, as the Prime Minister admitted, that Saddam Hussein might change his mind again? What will happen if, in the time that it takes to bring our troops back, Saddam Hussein again concedes to the UN demands?

There is a simple answer: we will remain ready to act whenever Saddam Hussein withdraws his co-operation. Although it is easy to say, it is not a correct description of the situation to state that we are in the same position as we were back in February. The substantial differences are, first, in February, there was a long build-up to the memorandum of understanding; it has been two weeks since Saddam Hussein's decision of 30 October to withdraw co-operation. I do not believe that anyone doubts that we will move straight away next time. It is important for us to be able to say to the entire outside world, "This is not action that we take willingly. It is not action that we want to take, but it is action that we feel obliged to take, having exhausted all other avenues."

Secondly, Saddam Hussein now knows that we are deadly serious. He knows that the planes were very nearly ready to mount the strike before he made his offer and climbed down. He has to realise, and I believe that he does, that next time there will be no time for that at all.

I agree with my right hon. Friend that this is far from over—but will it ever be over until such time as there is the prospect of sanctions being lifted? Does my right hon. Friend accept the glimmer of hope that was given by Kofi Annan, that part of a package would be that at last, after seven years, there would be the prospect of sanctions being lifted?

Secondly, last Sunday Albert Reynolds and I sat in the office of Jaakko Ylitalo, who is the acting director of UNSCOM. He said that UNSCOM had visited 496 sites and that there had been no violation in any of those sites. Furthermore, he talked in terms of a three-month time limit. Could a full look be given at this very complex area of precisely what UNSCOM has found and what it hoped to find?

Finally, to use the felicitous phrase of my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman), might it not be so bad an idea if a delegation of preferably Arabic-speaking people—senior officials—went to Baghdad not to get their noses brown but to talk in terms of dignity to the proud northern Arabs whom, let us never forget, we were content to provide with arms throughout the 1980s, when we hoped that they would not be defeated by the Ayatollah and militant Islam? This is a very complicated area. Please send some kind of delegation to talk to them before we think of hurling down missiles.

I respect the fact that my hon. Friend has different views on these matters. First, I say to him that we have made the position very, very clear to the Iraqis again and again. They know what they have to do to get sanctions lifted. They have to do what they agreed to do at the end of the Gulf war. The fact that sanctions are still in place is a measure not of our obduracy but of the fact that they have not implemented what they agreed to do at the end of the Gulf war.

As for UNSCOM, it is there to do a job of work that it knows is not yet complete. There is no doubt at all that there are still weapons unaccounted for. I listed in my statement—I did so deliberately—the vast arsenal of weapons that has been uncovered.

No matter how much we would wish for Saddam Hussein to be a different type of person from what he is, the fact is that he is a brutal dictator who has used chemical weapons against his own people. He has repressed and murdered thousands of his own people. The country is run by an elite guard of people who are well fed, well looked after and well paid while the rest of the population is under repression. When people oppose him, this is a man who seeks a way to murder them. He is not a man in whom we can have any belief that he will do the right thing, except under duress.

As for the Iraqi people, we constantly make the point, as do Arab countries, that the quarrel is not with them. However, we must not be naive about this. There is no way Saddam Hussein will offer us any way forward unless he knows that if he does not do what he has agreed to do force will follow. I am afraid that that is the inescapable conclusion of the past few years.

I commend the Prime Minister's statement that there is no point in wishing the end without willing the means, but has he noted the criticism of some Gulf war veterans that the allies' war aims are somewhat confused? What are the Prime Minister's aims? Are they to remove Saddam? No tyrant has ever been removed by aerial bombing alone. Or are they to destroy chemical and biological stocks? As those are easily dispersed, they cannot be destroyed by aerial bombing alone. Is the Prime Minister therefore willing to contemplate military action on the ground?

We have set out our position with great clarity: we want UNSCOM to do its work because that is what Saddam Hussein agreed. If he refuses to let UNSCOM do its work, we shall take military action, the purpose of which is twofold: first, to degrade the weapons of mass destruction capability; and secondly, to diminish Saddam's general military capability to threaten his neighbours. Those objectives are plainly set out.

We believe that, in the action that we were about to take, we could have delivered both those objectives. They remain our objectives, so there is no confusion at all. However, we should never promise that we can achieve something unless we are sure that we can achieve it. We are sure that we can achieve the objectives that we set out.

I congratulate my right hon. Friend and the Defence Secretary on the resolute way in which they have gone about this matter over the past couple of weeks. May I draw my right hon. Friend's attention to the Foreign Secretary's comments last week in the House, when he conceded that illicit revenues secured in breach of United Nations sanctions—from oil supplies from Iraq to Iran through the straits to the south and through Kurdistan in the north—are funding Saddam Hussein's whole operation in Baghdad, particularly the Republican Guard? Why will not the United Nations carry a resolution to enforce a blockade effectively to cut off those oil revenues? When the money is cut off, Saddam Hussein will fall.

My hon. Friend is right. Together with our allies and friends, we are looking at how we can tighten the regime. He is right to say that there has been seepage from the sanctions regime. Any seepage undermines the efficacy of the sanctions. We hope that we can take steps to tighten that regime.

The Prime Minister has paid generous praise to the United States of America for the enormous effort that it makes to carry out United Nations resolutions. The House knows that this country has often sided with the US in carrying out those resolutions. Although we may not contribute much by way of munitions, it is important psychologically that the world sees that the United States does not stand alone, but has an ally in discharging those obligations.

Should we be rash enough to join a common European foreign and defence policy, it would be practically impossible for us to be an ally to the United States when it tries to carry out such difficult operations. is it fully appreciated in Washington that, if we were propelled into a common European foreign and defence policy, we would no longer be in the present happy position of reinforcing the US President when he takes such action?

I thank the hon. Gentleman for his initial statement. On the second point, however, he is just wrong. I am aware of no discussion of any sort in Europe that would either compel us to join some defence policy that would undermine our alliance with the United States or inhibit our ability to act with the United States where necessary.

I remind the hon. Gentleman that the European security and defence identity within NATO was set up a couple of years ago, quite rightly, to recognise the European dimension. That does not mean to say that we have to act in contradistinction to, or contradiction with, the work that we do with the United States. However, it is important that Europe should have a more effective foreign and security policy. Our bottom line is to achieve that in the right way, which in no way undermines or inhibits our relationship with the US and NATO.

I think that the hon. Gentleman will find, as so often, that, once we strip away the paranoia—if I may describe it as that—of those who are opposed to anything with the word "Europe" in its title, we will see that the United States would welcome a stronger voice from Europe on many occasions. If Britain is sensible, we can use our relationship with the United States—and if we are positive and constructive in Europe, we can use our relationship with the rest of Europe—to make sure that the EU and the United States follow the same strategy. That would be to the benefit of the whole world.

Last week, an all-party delegation visited the United Nations and met members of the Security Council. Is my right hon. Friend aware of the high regard in which the Government are held in the UN? Much credit should be given to Sir Jeremy Greenstock, our ambassador, and his team there.

Would my right hon. Friend remind Members of the House and others who are timorous about doing what is right that eight Arab states last week laid the blame entirely at the door of Saddam Hussein? Will he reiterate his view that, if Saddam Hussein back-tracks by one degree, no more talking will take place, but force will be used?

That is absolutely right, and I thank my hon. Friend for her support. She is right to draw attention to the work that Jeremy Greenstock did in the United Nations over the weekend. He and the team there were quite magnificent and played a great part in securing the result that we wanted.

Agriculture (Aid)

4.31 pm

From swords to ploughshares.

During oral questions on 12 November, I told the House that I would wish to make a statement early this week about the Government's intentions on additional aid to United Kingdom agriculture. I stand here to honour that undertaking.

Since I took office as Minister of Agriculture, Fisheries and Food in July, my colleagues and I have had wide-ranging discussions with farmers' leaders and with working farmers around the country about the problems being faced this year, and how we might reasonably address them. It has become clear that all sectors, but particularly the livestock sector, have been adversely affected by a marked deterioration in market conditions.

The weather has made it difficult to grow adequate supplies of feed for the coming winter and to finish stock. In consequence, animals have had to be kept for longer than usual, and are now coming on to an over-supplied market. The collapse of export markets in Asia and in Russia has exacerbated that situation, leading to further pressures on the United Kingdom market from supplies from countries which would otherwise export to those markets.

Within the constraints imposed by the common agricultural policy, the Government have already taken many steps to offer extra support to farmers. We paid £85 million in agrimonetary compensation to suckler cow and sheep producers at the beginning of this year. We supported the introduction of a European Union private storage aid scheme for pigmeat in the face of a fall of about 50 per cent. in the producer price of pigs. Additional action was taken in Northern Ireland.

We have relaxed the rules on the moisture content of cereals eligible for purchase into intervention, in recognition of the difficulties caused to cereals producers by the wet summer. We successfully lobbied the European Commission to grant two blocks of private storage aid for sheepmeat to help to move lamb on the market. With effect from 8 October, we removed the obstacles to the export of whole sheep carcases to France, and on beef we have successfully negotiated the introduction of the export certified herds scheme in Northern Ireland, and soon expect a partial lifting of the ban for Great Britain.

In addition, we have persuaded the European Commission and other member states to increase beef premium advances from 60 per cent. to 80 per cent. for this year, thereby considerably easing farmers' cash flow problems. We have met the costs for one year of Meat Hygiene Service enforcement of controls on specified risk material from cattle and sheep, and we have met the start-up and first-year running costs of the new cattle tracing system.

I have had useful talks with the retailing sector, resulting in positive undertakings on origin labelling of meat, and on the welfare and feeding standards to apply to purchases of meat, which will be particularly helpful to pig producers. I have also made representations to public sector purchasers of meat.

Not all those initiatives cost money, but those that do have been worth, in total, more than £150 million to the industry, in addition to the continuing support that it receives from the common agricultural policy. Discussions with industry representatives, at both ministerial and official level, have persuaded the Government that more should be done to support United Kingdom agriculture in what are proving to be exceptionally difficult times. In recognition of these extremely difficult circumstances, the Chancellor and Chief Secretary have, exceptionally, allowed me access to the reserve for this financial year, and I am grateful to them for that.

In spring of this year, the Government drew down £85 million of agrimonetary compensation for the beef and sheep sectors. There remains the possibility of drawing on a further £48.3 million for the beef sector in the current year. I have asked officials to notify the European Commission today of the Government's intention to draw this sum, and to make it available to producers on the same basis as the beef element of the spring package—that is, to suckler cow producers in proportion to their 1996 premium claims. I do not anticipate any difficulty in persuading the Commission to approve that arrangement. We expect the eventual rate of payment to be about £29.50 per head.

Although those additional payments to the suckler cow sector will be of some help to hill farmers, the Government recognise that more needs to be done to help that fragile sector. We have decided that, subject to approval from the European Commission, we should increase hill livestock compensatory allowances for the 1999 scheme year by £60 million. Although precise headage rates have still to be worked out, we estimate that, broadly speaking, that will allow us to put up rates across the board by about 55 per cent. As is normally the case, the vast majority of producers will receive the increased rates of allowances during February and March 1999.

In the longer term, the European Commission has proposed replacement of the hill livestock compensatory allowance scheme as part of a range of measures in the Agenda 2000 package to assist the rural economy. I intend to undertake full consultation with farmers' leaders and environmental groups on the shape of the successor arrangements.

On 29 July, I announced the Government's intention to close the calf processing aid scheme when the obligation to run it lapses on 30 November. We considered that the scheme was drawing too many calves from the market and squeezing beef producers' margins. However, the Government were asked to reconsider this matter by farmers, who argued that, in the absence of an export market for British beef, closing the scheme now could have adverse consequences for the market.

We therefore encouraged the Commission to review the rate of aid payable under the scheme, and to fix it at a level that would attract the poorer-quality calves from the dairy herd, while leaving the better-quality calves from that herd and those calves from the beef herd to find their own price level on the market. I am pleased to tell the House that the Commission broadly accepted our arguments in this regard, and will shortly publish a regulation fixing a special rate of aid for the United Kingdom under this scheme of 80 ecu, which is around 70 per cent. of the current rate.

The new rate will come into force on the first Monday following publication of the regulation, which will be either 30 November or 7 December. In view of that, we have decided to continue to operate the scheme for the remainder of the present financial year at the new rate. We shall keep the scheme under review with the industry. I know that maintenance of the scheme will be welcomed by dairy farmers.

This aid package for the livestock sector is worth some £120 million in 1999. In assembling it, the Government have concentrated on those areas to which farmers and their leaders attached the greatest priority.

We also need to think of the longer-term future. Government and all associated with food production in the United Kingdom need to work co-operatively to develop a blueprint for a successful, viable agriculture sector. That means, in particular, securing reform of the common agriculture policy—reform that must create conditions to allow sustainable and competitive European Union agriculture to operate effectively on world markets, reduce the burden currently imposed by the CAP on consumers and taxpayers, and free up resources to offer scope for better-targeted measures to support the rural economy and enhance the environment. That will mean significant changes in the way in which we support agriculture, and will require imagination, flexibility and enterprise on the part of all concerned.

My colleagues and I intend to undertake—in close consultation with all interested parties—a thorough review of the Government's long-term strategy for the rural economy. It will develop policies offering the rural areas a secure future. Over coming months, we shall consult widely on a range of issues. Trading conditions will remain tough in the months ahead, but I hope that this package, and the commitment to generating a vision for agriculture, will give the sector the boost that it needs to face the future with confidence.

The whole House, and the whole farming community, will warmly welcome the Government's recognition that a grave crisis faces agriculture in general and livestock farmers in particular—a crisis that threatens the survival of many farm businesses. I welcome the Minister's statement, and congratulate him on listening to farming organisations, to many individual farmers, and, indeed, to the Opposition. In a motion that we tabled two weeks ago, we specifically highlighted three measures that he has announced in regard to the calf processing scheme, HLCAs and agrimonetary compensation. I am delighted that he was able to use the intervening period to secure the Treasury's support for those proposals.

We would, however, be failing farmers, and the country as a whole, if we did not point out that, although the measures are necessary palliatives, they will treat the symptoms rather than the causes.

Does the Minister agree that this second farm rescue package in a year is needed because the downturn in farm incomes, like the downturn in the whole economy, was made in Downing street? Does he agree that the level of the pound during the last 18 months has been a far more important cause of falling farm incomes than the weather? Will he confirm that the total value of the package barely matches the underspend on the agriculture budget during the past two years? In other words, the money that he won from the Treasury this weekend is really just what had been saved from the total farm budget since Labour came to office. It is welcome, but it must be seen in the context of a drop of more than £2 billion in farm incomes.

Will the Minister confirm that the package will actually be worth less than £2,000 to each of the 60,000 United Kingdom farms that are in less-favoured areas? Will he confirm that, in England, the National Farmers Union estimates that the income of the average farm in a less-favoured area has fallen by £4,700 in this year alone? Will he confirm that many who work on farms in less-favoured areas are earning less than the minimum wage? According to figures relating to the west country, those earnings can be under £1 an hour. Does the Minister realise that farmers need not just cash help, but the level playing field that the Conservative fair deal for farmers would create?

The Minister will be aware of the concern among pig farmers about the contradictions caused by recent conflicting statements from his Ministry and the British Retail Consortium. I fear that his announcement today has added to the confusion rather than ended it. Will he tell us precisely what the positive undertakings he mentioned amount to? For how much longer will British consumers be sold imported meat products that have been produced by methods that are illegal in this country? Why cannot that be stopped now?

Is the Minister saying that, in future, any product that is labelled as British will be grown in Britain, not merely processed here? Does he agree that the poultry industry is also suffering? What does he propose to do to stem the flow of imported poultry from the far east, some of it containing growth promoters that have been banned for years by the European Union? Does he realise that little in his statement clears up the anxieties felt by dairy farmers? Why has he still not announced a lifting of the absurd and unjustified ban on beef on the bone? We wish him well at next week's Council meeting—[Laughter.] Yes, we do. It may be a matter of mirth to Labour Members, but we believe that the country's interests will be served if the Minister can persuade his EU colleagues to lift the export ban.

In that context, will the Minister confirm that, at best, the lifting of the ban will be only partial, and that the export of beef on the bone will continue to be banned? Will he confirm that, in the light of the experience of Northern Ireland, the recovery of our export markets will take some time? As Northern Ireland was helped with export promotion, will he make similar help available to the rest of the United Kingdom?

Does the Minister agree that the heavy burden of regulation on slaughterhouses, for which the industry itself is increasingly having to pay, will lower livestock prices in the future? Is he satisfied that British farms and slaughterhouses are not operating at a disadvantage relative to their European counterparts? Does his statement mean that, from September next year, farmers will be charged for the new cattle tracing scheme? If so, how much will they have to pay?

The package is a helpful aid to the survival of farmers in the short term; but farmers still face huge uncertainties, with Agenda 2000 discussions looming. When will the Minister make the Government's position clear on Agenda 2000, and explain to farmers just what role the Government envisage for them in the future?

I thank the hon. Member for South Suffolk (Mr. Yeo) for wishing me well. I hate to think what he would sound like if I had fallen out with him.

I said that I wanted to involve farmers' leaders in continuing discussions with the Government as the Agenda 2000 package develops. Indeed, we shall have detailed negotiations on that at next week's meeting of the Council of Ministers.

The Government paid for the setting-up costs of the cattle tracing scheme, and relieved the industry of the first year of charges. I shall want to discuss the matter further with the industry, but there will come a time when the charges will have to be transferred to it.

As someone who eats and enjoys eating meat, I am keen for slaughterhouses to be regulated. Regulation is essential to ensuring the safety of the food that is sold.

The hon. Gentleman asked about the beef ban. I have high hopes that we shall be able to secure the implementation of the Commission's proposal for a date-based exports scheme at the meeting of the Council of Ministers on Monday and Tuesday next week. The hon. Gentleman and I share an objective in this regard. As the House will recall, it was the policy of the Conservative party to bring about the lifting of the ban by November; I hope that I shall get it lifted by November—although, admittedly, it will not be the same November. The House will notice another essential difference, in that I am likely to achieve the objective.

My statement contained a good deal for the dairy industry. The hon. Gentleman also referred to the poultry industry. I met representatives of the industry this morning, and they put to me a number of points that I considered entirely reasonable. I shall think very hard about what I can do. The hon. Gentleman was right to put the issue in the context of my initial meeting with the British Retail Consortium, but I intend to meet its representatives again. I am trying to establish a continuing dialogue with retailers, producers and others who work in the food industry, so that we can work co-operatively, rather than the whole industry being characterised by a series of adversarial stances.

I thought that the hon. Gentleman's welcome for my statement was heartfelt, and I am sorry that the rest of his contribution fell away a bit. I noted, however, that he was asking for more money, and I hope that he has cleared that with the shadow Chancellor.

Can I make just one point?

The hon. Member for South Suffolk constantly refers to annually managed expenditure, and confuses it with an underspend or a drawdown from the reserve. If an estimate of demand-led expenditure is not reached, that does not allow the Department to take the rest of the money and spend it on something else. A fair-minded House will realise that I did rather better in my relationships with the real Chancellor of the Exchequer than the hon. Gentleman has done in his with the shadow Chancellor of the Exchequer.

As the owner of a farming business that is determined to do everything possible to keep five men employed—perhaps I should declare an interest—may I express my personal thanks, and, I think, the thanks of farmers throughout the United Kingdom, for a package that demonstrates the Labour Government's powerful commitment to rural Britain?

On a separate point, will my right hon. Friend comment on the huge discrepancies between farmgate prices and the prices that are charged by many supermarkets for many commodities? Can anything further be done about the problem?

I am always happy to hear of a pleased farmer. In fact, after today's announcement, I think that I will even be able to find one or two outside the ranks of the parliamentary Labour party. Nevertheless, I am grateful to my hon. Friend for his support for and welcome to today's announcement.

The Office of Fair Trading is taking a hard look at the discrepancy between farmgate prices and prices in the supermarkets. While I want to keep the different bits of the food sector in continuing dialogue, I am also taking an intelligent interest, as I know many others are, in the OFT investigation, and I look forward to receiving its eventual report.

I welcome the statement and the package of measures contained therein, which will find a broad echo among all rural constituents in all parts of the UK. Does the Minister agree that there is a salutary nature to it, in that it is the second package of relief measures that the Government have been obliged to introduce within the space of 12 calendar months? That in itself vindicates the campaigning that farmers have been undertaking, as well as the parliamentary support, to be fair, in all quarters of the House that has been expressed consistently over that period.

Without being churlish, I think that many hon. Members will reflect on the fact that, not under the current Minister's tenure, but under his predecessor's, if there had been more willingness to try to access a greater extent of the EU compensatory funds earlier, many of those we represent would not be in the depth of difficulty to which they have sunk throughout this calendar year.

As the Minister says, it is inevitably a series of short-term measures. May I therefore direct him beyond the statement—there is no great disagreement about those short-term measures; that is self-evident—to three specific things that he may wish to consider for the future? The first is calling in the chairmen of major high street banks to underscore to them the Government's continuing commitment to agriculture and the need for them to show continuing commitment to farmers who are their customers. That would do a lot to offer stability at community level.

Secondly, on marketing, not least given the Northern Ireland experience since the beef ban was lifted—[HON. MEMBERS: "Where are they?"' Well, perhaps they are out marketing their products. Will the Minister acknowledge that the Northern Ireland experience underscores the need for an aggressive and high-profile marketing drive, both in this country and, more important, in the export markets to which we hope to regain access? Will he do more about that?

Thirdly, will the Minister give even greater emphasis to labelling? There is no doubt that, if there is one silver lining to the overlying cloud that agriculture has been under, it is the fact that at least the British consumer is now more alert to, conscious of, and indeed patriotic about, content, but that that content has to be clearly indicated, particularly with European import products? Will he give further emphasis to that as well?

I thank the hon. Gentleman for his welcome to the package. I am in discussions with the British Retail Consortium over labelling schemes, with the Meat and Livestock Commission over marketing schemes and I am due to see representatives of the high street banks shortly to discuss the finance of agricultural businesses.

The package was shaped by farmers themselves. When I went to their big rally at Blackpool, I said that I was going to listen, to learn and to help if I could. I listened very carefully to what they said, and I hope that the package meets, at least in part, the commitments that I gave them then.

Is my right hon. Friend aware that his announcement deserves a warm welcome because of the benefit that it will bring to the industry at a time of massive crisis? Does he agree that the hon. Member for South Suffolk (Mr. Yeo), who speaks for the Opposition, might show a little more humility, not only because of the extent to which his Government compounded the effect of the BSE crisis on the industry, but because, last Wednesday, an article by the Leader of the Opposition in the Daily Telegraph made it clear that there is no way that a Conservative Government would have found the money for this package? Will my right hon. Friend confirm that all the money in the package is new money for the benefit of the industry?

The bulk of the money is new money that has been given by the Chancellor from the reserve. Some of it is recoverable through the CAP and from the European Union, but even the share that is recoverable in respect of hill livestock compensatory allowances requires a further 71 per cent. contribution from the UK Exchequer, because of the Fontainebleau agreement that was negotiated in 1996. I welcome what my right hon. Friend said about the shape of the package, and thank him for his support.

The Minister will obviously understand that there is great pleasure that today the Lord has given, but there is also concern that in future he may take away. I think particularly of the possible imposition of new charges for a meat hygiene service—specified risk material charges, cattle passports and the threat of a pesticides tax. I urge the Minister to keep all those matters under careful review at a time of great difficulty in the farming industry—difficulty that is likely to endure well beyond today's statement.

On a separate issue, who will lead the review of rural economy policy, an interesting footnote to the Minister's statement? Will it be him or his colleagues at the Department of the Environment, Transport and the Regions?

On the last point, I am working with my right hon. Friend the Deputy Prime Minister on the broader rural agenda, which properly is a matter for both our Departments. Of course, we will consult the territorial Departments as well.

As Chair of the Agriculture Select Committee, the hon. Gentleman is right to remind the House about charges. I intend to discuss those matters further with the industry, but I did say some time ago that there would come a time when charges were transferred from the public purse, which is carrying them at the moment, to the industry. It is clearly right that it should meet those costs in the longer term. Traceability, which underpins the larger of the charges, is here to stay. We would be complete fools to try to push that regime backwards, because it is a requirement of consumer confidence.

I congratulate my right hon. Friend on his sensitivity to the special needs of hill farmers. It has never been easy to eke a living out of upland farming in my constituency, and today's package of measures will be especially welcome there; but will my right hon. Friend give me an assurance that, in looking to the long-term future of British agriculture, he will look for a sustainable and profitable framework for agriculture, especially for hill farmers in constituencies such as mine?

The whole purpose of today's announcement is to help hill farmers and others through times that I freely acknowledge are difficult for them. The purpose of helping them through is, of course, to ensure a long-term sustainable and profitable industry that they can take part in. I thank my hon. Friend for referring to my sensitivity. In my previous job, people did not make such references.

The Minister is aware of the serious crisis that faces pig producers—the worst I can remember—particularly smaller producers, some of whom, if not quite a number, face bankruptcy. Will he therefore clear up the confusion in relation to his meeting with the British Retail Consortium? In relation to imported products from pigs, does that relate only to fresh products, or does it relate to processed products as well? If it is the former, what further action does he intend to take? Will he also say what success he is having in Government procurement schemes, particularly in the armed forces? Is there any prospect of food aid schemes—for example, to Russia—playing a part in the matter?

I am grateful to the right hon. Gentleman for raising the plight of pig farmers. I am extremely sympathetic to the pig industry. As hon. Members who follow the matter know, it has a largely liberal regime, with no great state aids. There are some export refunds and some aids for private storage, but that is about the size of direct state assistance.

There are discussions on opening credit lines to Russia. There may be a possibility of humanitarian aid, including food, being taken up in those discussions, which are on-going. I should welcome anything that would help to clear the surplus from the market.

My discussions with the British Retail Consortium were a genuine attempt by me to help the industry. The agreement applied to fresh meats that would be sold stall and tether-free, and from animals that are not being fed bonemeal—in other words, animals that are produced to the highest United Kingdom standards. The industry's intention was that that covers not only fresh meats but processed meats, including bacon and products such as pork pies. Supermarkets were willing to take responsibility only for those processed products over which they had direct control—in other words, their own brands. However, I am assured that those account for the majority of supermarkets' volume. We shall continue with the discussions.

On the other large procurers of meat products, I am happy to tell the House that the armed forces are 100 per cent. British in their purchase of pork, and just over 50 per cent. British in their purchase of bacon. They are considering ways of improving that.

May I suggest to my right hon. Friend that proof—if any were needed—that he has announced a very good package indeed was provided in the churlish welcome for it given by the hon. Member for South Suffolk (Mr. Yeo)? May I congratulate my right hon. Friend on his negotiating prowess with both the Treasury and the European Commission? May I also praise him for the very speedy way in which he has listened, learnt and now acted to deal with perhaps the worst crisis that I have known in my 20 years as the Member of Parliament for my Teesdale constituency? As hon. Members have already said, is not today's announcement proof of our Labour Government's commitment to the rural economy?

The Government are committed to the rural economy and to farmers. As proof of that, I am now willing to accept the invitation that my right hon. Friend extended to me on Thursday to go and meet his sheep farmers.

Although I welcome the Minister's remarks on the livestock sector, will he tell the House what he is hoping to do for the arable sector? He will be aware that many arable farmers are suffering severe problems, and that prices have collapsed for various crops and products. What will he do specifically for smaller arable farmers? When may we expect an announcement on their sector? When will he tell the House of his discussions with them?

I am not in a position to announce any new or further aids, certainly not to the arable sector. If the hon. Gentleman is asking me to draw down agrimonetary compensation that is available for the arable sector, and to charge 71 per cent. of that to the British taxpayer, he should say so clearly. I have taken action—admittedly it has been modest—to help the arable sector, but it has been proportionate. The crisis in the industry is in the livestock sector.

As my right hon. Friend said, today's package will not financially help every farmer. However, in Norfolk, it will be broadly welcomed as a boost to the morale of almost every Norfolk farmer. My right hon. Friend has in a short time shown farmers that he has the leadership and other skills to tackle the tasks ahead. Will he be as determined as I believe he should be, and as determined as the farmers' union leadership is becoming, to ensure that the package will allow some time to get ahead with Agenda 2000, and not merely delay evil days?

I am grateful to my hon. Friend for his remarks. I plan to embark on a continuing dialogue with those who have an interest in those matters, so that we can work together on the Agenda 2000 package and on the increasing liberalisation of world markets that will inevitably come. The United Kingdom must get ahead of the game, not run along behind it.

The Minister has mentioned help for the upland farmers, and the farmers on Dartmoor in my constituency will be delighted to hear that. However, is he aware that, in the past few years, lowland farmers—who raise those famous Devon cattle—have borne the brunt of the problems? I am just wondering whether the Minister is planning to share with lowland farmers any of the money that he has announced for upland farmers. Will they get any help in their wonderful rearing of Devon beef?

I announced a range of measures—I did not concentrate only on less-favoured areas—and there is something in the package for the entire livestock industry. Moreover, it is a mistake to assume that one bit of the industry does not have a relationship with the other. Even the arable sector, for example, is growing food for the livestock sector. The relationships are far more complex than the hon. Gentleman's question implies. However, I am grateful for his welcome for today's announcement.

I congratulate my right hon. Friend on coming up with a wholesome, desperately needed package. I specifically welcome the fact that he has managed to spread help across the board—to lowland farmers and to upland farmers, especially in the calf processing aid scheme. However, may I urge him to do everything he can to help smaller farmers—particularly tenant farmers, who are going through a very difficult time—by making it clear that it is wrong to increase rents now, and that rents should be decreased if at all possible?

I am very sympathetic to my hon. Friend's comments. Although it is often rash for Ministers to make forecasts from the Dispatch Box, I suspect that, over time, agricultural rents levels will decline as a feature of broader market liberalisation. I welcome his comments on small farmers, and can announce today that I plan to visit Cornwall in January, specifically to meet representatives of small farmers. I shall make that a priority of the visit. I am grateful to my hon. Friend.

The Ministry has been honest enough to recognise that, when a farm suffers from the effects of bovine tuberculosis, compensation offered from the public purse covers only one pound in six of the farmer's true loss. Will the Minister clarify whether the package he has announced today will provide additional compensation to farmers in that very specific situation?

The package provides some extra support to the dairy sector. However, the way of dealing with bovine TB is to press ahead with current Government experiments to establish the science once and for all. We can then take action, based on the science, to prevent the spread of such disease.

May I thank my right hon. Friend for his statement, and tell him that it will be warmly welcomed by the farming community in my rural constituency? May I tell him also that small abattoirs in rural constituencies are suffering great hardship? Will he consider ways in which small abattoirs in rural constituencies might be helped to survive?

I am grateful for my hon. Friend's welcome for today's announcement. Since becoming Agriculture Minister, I have had to focus on some key problems—such as the immediate difficulties in the producer sector, and the need to work very hard on the politics of lifting the ban on our beef exports. Consequently, until now, I have not been able to give sufficient attention to some of the problems in the middle of the producer cycle—the bit between the producer and the retailer. I intend now to focus on those matters.

I am sure that the beef and sheep sectors will be pleased with the Minister's announcement, but I just hope that it does not become an annual event—a sort of farmers' Christmas bonus.

Like other hon. Members, I should like to emphasise the fact that the pig and poultry sectors receive no aid from this package. I am pleased to hear that he met poultry producers today, but I note the confusion between fresh and processed pigmeat. Will the Minister give the House a categorical assurance that, in principle, he is against the import into this country of pig and poultrymeat that is produced to inferior welfare and hygiene standards? Failing that, will he encourage the retail sector to label those products to show that they come from countries with inferior welfare and hygiene standards?

We want a welfare premium for the British industry. As I said, I am very sympathetic to those sectors which work in a relatively liberalised market, especially the pig and poultry sectors. I have engaged retailers in discussions about labelling schemes. I think that, instead of urging me to do something on which I have already embarked, the hon. Gentleman should welcome the fact that I have made a start.

Like many hon. Members, I thank my right hon. Friend for, and congratulate him on, his significant announcement. I am quite sure that the present Secretary of State for Wales, my right hon. Friend the Member for Cardiff, South and Penarth (Mr. Michael), in the short time that he has been in office, and the previous Secretary of State, my right hon. Friend the Member for Caerphilly (Mr. Davies), will both have made significant contributions in putting the Welsh case.

Will the Minister tell us how much farmers in Wales are likely to get? Will he concentrate especially on market issues, as prices in Welsh markets are at absolute rock bottom, and there is a need to push the retail industry along so that farmers get a better deal?

My estimate is that the HLCA package alone might be worth just over £2,000 each to hill farmers in Wales. Clearly, the extent to which they will benefit from the other announcements that I have made today will depend on the mix of the herds. As my hon. Friend will know, I visited Cardiff recently with the previous Secretary of State for Wales to meet representatives of the industry. Those discussions, and the discussions with the present Secretary of State, informed the shape of the package that I have been able to announce today.

I welcome the Minister's proposals, but, given that agriculture is 50 per cent. more important to the Scottish economy and to Scottish employment than it is to the United Kingdom as a whole, how has that been taken into account in those proposals? How does the total match the depth of the problems? if the problems continue, will the Minister be prepared to act again?

I think that the hon. Gentleman could afford to be a little more generous, because Scotland benefits disproportionately from the announcements, as those who follow these matters closely will realise.

I thank my right hon. Friend for this timely and excellent package. May I tell him bluntly what farmers in my constituency are saying about him—that he listens well, and that he is accessible and most courteous? However, will he state the total round sum that is coming to Wales? Does he acknowledge that there are special difficulties for sheepmeat and beef producers on the hilltops and hillsides of Wales? How does this timely package help the family farm which demands so much hard work but often makes so little profit?

I estimate that the announcement is worth just over £21 million to Wales alone. That is a significant package of extra moneys for Wales. I thank my hon. Friend for his kind remarks about how that will be warmly welcomed by the farmers to whom he has spoken.

As the Minister has been listening to farmers, he knows that they will be grateful for the package. What does he say to those farmers who believe that, had the Department—perhaps not the Minister himself—acted earlier, they could have obtained £818 million in agrimonetary compensation? What does he say to those farmers who point out that the £120 million package is worth while, but that the rise in interest rates on their bank loans since the previous election is exactly £126 million?

The idea that there is a huge pile of agrimonetary compensation available for collection in Brussels if only there was the political will to go over and get it and dole it out to farmers is a complete myth. That is not how it works, as the right hon. Gentleman should know, because he was a member of the Government who introduced the Fontainebleau agreement which conditions how such payments are made.

Will my right hon. Friend confirm that the extra £120 million is essentially designed to meet the short-term crisis? In the mid to long term, is it not our aim to bring about reforms of the CAP which would lift the landscape and enhance the environment, and, more particularly, bring new investment, new jobs and a new future to the wider rural economy?

My hon. Friend is absolutely right. That is why there are two elements to today's announcement. First, I am responding to what farmers told me at the large Blackpool rally. They said, "We need help, Mr. Brown, and we need it now." This package is that help. It is specifically targeted to deal with immediate difficulties. Secondly, in the longer term, I want to engage the whole of the producer side of the industry in a sensible discussion about how we get from where we are to where we all realise we need to be. That means working together co-operatively and finding a way forward to deal with the challenges that are marching towards us at a very fast pace.

I welcome the right hon. Gentleman's statement, and appreciate that it offers a great deal of assistance. Essentially, these measures will assist in the short term, but what steps is his Department taking to tackle the important matter of bringing confidence back into the industry and restoring public confidence in it? I should be much obliged if the Minister could respond to that question.

The hon. Gentleman is absolutely right. These measures are targeted on the immediate problems. Farmers asked for help now; this is that help. In the longer term, we have to work co-operatively to move away from a CAP structure based on production support payments. We need to move towards a structure in which payments are area-based, transparent and specific, and which sets the framework within which private sector businesses can work out how they are going to operate and generate a sufficient return on capital and sufficient earnings for those working in the industry to make it worth while. The Government stand ready to help with that.

Does my right hon. Friend accept that, when dealing with difficult farmland such as that in the Pennines, we have to consider the environment and the landscape balance as well as agriculture, as in many cases agriculture will not be viable there? We do not want the Pennines to be full of wind farms, which seem to be the only commercially viable option for many farmers at the moment.

I strongly agree with my hon. Friend. That is why I am working very hard to try to reshape the CAP so that payments are specific and transparent, and are linked to environmental measures such as protecting the very beautiful area to which my hon. Friend referred.

The Minister said, quite fairly, that this welcome package targets the immediate problems. He also said that, in the longer term, he wished to reform the CAP. However, in between, there is still the problem of the very strong pound. What signal is the Minister sending to the industry on how the Government will tackle that problem in the foreseeable future, as it will not go away? How are bank managers and others to envisage a future for the industry if there are no clear signals from the Government as to how, in the medium term, they will deal with the strong pound and its impact on agriculture?

Some people have very short memories. I remember when, under the Conservative Government, interest rates were twice their current level and the value of the pound was falling, which reflects market confidence. The Government's macro-economic strategy is right. To underpin that, I should point out that long-term interest rates are at their lowest level for 30 years.

I, too, congratulate my right hon. Friend on his statement. There will be a genuine welcome for him in the hillsides of Wales, today and in the coming months.

In relation to the dairy sector, my right hon. Friend will know that there has been a substantial collapse in the price of milk, and that that has exacerbated other problems in the livestock sector. He has told the House that he wants to see further co-operation. May I suggest that he brings together the processors and producers of milk, so that he can bang some heads together? I have never known two parts of the same industry to be so greatly at loggerheads that they are depressing the price.

My hon. Friend's suggestion is incredibly tempting, but it would be premature to take it up while the Monopolies and Mergers Commission's inquiry continues.

Mr. Charles Wardle
(Bexhill and Battle)