Commons Chamber

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House Of Commons

Wednesday 17 March 1999

The House met at half-past Nine o'clock

Prayers

[MADAM SPEAKER in the Chair]

Greening Government Initiative

[Relevant document: The Second Report from the Environmental Audit Committee, Session 1997–98, on the Greening Government Initiative (HC 517).]

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Betts.]

9.34 am

I am delighted to introduce this debate on the Environmental Audit Committee's report on the greening government initiative. I wish to express my gratitude to my colleagues on the Liaison Committee for recommending it for consideration today. The report was published on 30 June last year and the Government's reply was received in November. This is, of course, the first report from the Environmental Audit Committee to be debated in the House of Commons, because the Committee was set up as a result of a manifesto commitment by the incoming Labour Government—one pledge that I am glad that they honoured. I shall not comment on any other pledges, because that would be outside the remit of this debate.

I congratulate my colleagues on the Committee on the way in which they have pursued our remit. We have worked hard and produced eight reports in 15 months, which is a considerable strike rate—one with which even Yorke and Cole of Manchester United would be pleased. Our thanks are due to our excellent Clerk and his team and I also wish to thank the Comptroller and Auditor General for seconding one of his best people to our team.

In some Committees, it is traditional to produce a majority report that Government Members support wholeheartedly and a minority report that is supported by the Opposition. All our reports have been unanimous. I am glad of that, and I hope that it will continue.

Our remit is to consider to what extent the policies and programmes of Government Departments and non-departmental public bodies contribute to sustainable development and environmental protection, to audit their performance against such targets as shall be set for them by Ministers from time to time, and to report thereon to the House. Therefore, the report that we are considering today is central to our remit, because it is about the integration of the environment into Government decision making.

Our starting point is the Prime Minister's statement to the United Nations in New York in June 1997. He said:

"We must make the process of government green. Environmental considerations must be integrated into all our decisions, regardless of sector. They must be in at the start, not bolted on later."

I have often thought that the Committee should have that statement put on an illuminated manuscript and sent to the Prime Minister to hang in the rooms occupied by the policy unit at No. 10. Perhaps we should also put it on the internet, as one does with everything these days, to ensure that no one is unaware of it. It is a bold statement and, to address it properly, the Government first need to establish proper machinery. Sensibly, they have based the machinery that they have set up on what was done by the previous Government. The Committee makes various criticisms of that machinery in our report, and I am glad to say that the Government have responded and improved it. Those improvements are elaborated in the Government's response to the report. The Government have not done as much as we would like, because there are still some holes, but our conclusion is that the machinery is adequate for the task. At the very least, it is not an impediment to doing what we all wish to be done in terms of sustainable development and environmental protection.

The Committee has also made the point consistently in all its reports, and especially in this one, that the machinery can be the best in the world but, if political leadership is absent, nothing will be achieved. That was very evident in our report on the multilateral agreement on investment—the MAI—which collapsed totally because of a lack of political agreement. Governments cannot leave civil servants to take decisions that must be taken by politicians. It is unfair, and it does not work.

We have made it clear in all our reports that, on balance, leadership is coming from the Deputy Prime Minister, and the Minister for the Environment can also take some credit. However, we have been scathing about the lack of leadership and commitment from the Treasury. Hon. Members will know that the Chancellor got the booby prize in the green awards this year. However, since the Budget, we have seen evidence of some change in the Treasury's approach. It has been pointed out that the Budget implemented or reinforced 14 of the 18 measures mentioned in the pre-Budget report, which is a good record. Also, at long last, the Government have introduced a new measure of their own and not one that they have inherited from the previous Government and elaborated. I refer of course to the climate change levy. We must hope that their conversion is deep and long-lasting.

So, leadership is evolving, and should lead to a clear strategy. However, here we have yet to see the colour of the Government's money. They have said that their sustainable development strategy will be a catch-all document, but, although it was promised last autumn, it will not now be available until 7 May, at the earliest.

The strategy has been substantially delayed, although, as the Select Committee has repeatedly pointed out, we are nearly two years into this Government, and crucial environmental decisions have already been taken. There have been a review of energy sources and a moratorium on the building of gas-fired stations. We have had the Marshall report and the comprehensive spending review, which fixed spending for three years. There have been public service agreements for every Department, the climate change consultation document, decisions on green-field and brown-field sites, and the roads review. All those decisions have been taken without the benefit of an overarching view from the Government of their role in sustainable development, and that is a great pity.

The up side is that the Government have given themselves time. It is imperative that they produce the goods when they publish their sustainable development strategy. It is particularly important, in the Committee's view, that the strategy should be capable of being audited. Responsibilities for particular areas must be clearly allocated and targets must be attached. The Government are, of course, extremely keen on targets. There are targets for hospital waiting lists, for class sizes, for teachers and for everyone else. It is time that the Government set some targets for themselves in a central area of policy.

We look forward to receiving the new document. Far be it from me to advise the Government on spin, but I would advocate that the Prime Minister should launch the strategy himself. That would provide evidence of commitment at the highest level, both to the Prime Minister's own words and to a proper policy for sustainable development.

I must continue to criticise two glaring omissions in the Government's approach to environmental protection and sustainable development. First, we asked for a day's debate each year on the annual sustainable development review. The Government rejected that idea, arguing in their response to our report that

"The broad scope of sustainable development means that there are likely to be a number of occasions each year when it can be debated in Parliament, for example in considering legislative proposals and the Budget."

The choice of the Budget as an example was rather unfortunate; the Minister for the Environment was not in his place for any of the Budget debate, and his boss, the Secretary of State, was scuba-diving in the Maldives. That is a clear example of how environmental protection and sustainable development are simply sidelined.

One advantage of setting aside a day each year is that it would enable minds to focus on what had been achieved over the previous year and on what difficulties had been experienced. Everyone appreciates that the agenda is difficult, and, if we do not have a day for such a debate, there may be a tendency for people to suggest that the issue is being brushed under the carpet.

My hon. Friend is quite right. We are very glad to have an hour and a half for debate today, but that does not stand comparison, particularly after four days of debate on technicalities of the Budget—important though they are—with focusing the mind of Parliament on the complex issues involved in sustainable development. It is vital that a day each year should be attached to the Government's report on progress on sustainable development so that we may examine policies and programmes in their entirety across the whole landscape of the environment, including wildlife, green fields, pollution and climate change. That debate is essential if the Government are to enter into the spirit of what the Select Committee is proposing. Failure to provide it is one black mark against them.

Even worse is the gaping black hole in the Government's position. We have no evidence that new or substantially revised policies are being subjected to any environmental appraisal. In our report on the comprehensive spending review, we asked three Departments to come up with such appraisals, but answer came there none.

It is particularly bad that the housing division of the Minister's own Department failed to respond with an environmental appraisal of its housing spending. We all know that the United Kingdom's housing stock is not good on warmth or insulation. It compares unfavourably with housing in Denmark—as we found on our trip to Copenhagen—and in other continental countries. Lack of environmental appraisals is jamming up policy on the domestic side of fuel and energy conservation. That is a further bad mark.

Quite apart from the Minister's own Department, the failure of others to provide environmental appraisals to the Select Committee fundamentally suggests that the bread and butter job of environmentally appraising all new policies, Bills and programmes simply is not being done across the range of Departments.

Was it not particularly disappointing that the comprehensive spending review attached no environmental requirements to a rolling spending programme? The CSR was sold to us on the basis that Departments that did not come up to scratch would not receive additional money for each of the three years. It provided an ideal opportunity to attach an environmental requirement, but was it not a lost opportunity?

My hon. Friend will recall that the public service agreements that followed the CSR did not include an adequate reference to the environment in their objectives and aims. The Minister may wish to recall his own words to the Select Committee, where we are always glad to see him. Page 109 of the report states:

"Mr. Meacher told the Committee that the Green Ministers are committed to doing regular collective reviews of the quality and scope of environmental appraisals in their departments. He explained that he would expect departments to draw up a list, revised every six months or so, of important new policies which have significant environmental impacts where environmental appraisals have been done. The Green Ministers Committee would then discuss them and share experience.

The Committee welcomes the intention of the Green Ministers Committee to review experience of policy appraisal in the departments and to spread best practice and experience of appraisals that have not gone so well and we look forward to receiving copies of these reviews in accordance with the Minister's undertaking to this Committee."

The Minister will recall that he suggested that the reviews would be made available to the Committee. There are three meetings a year of the Green Ministers Committee and the next is due next week. We look forward to receiving the review of environmental appraisals, which are a central area of environmental policy.

I can warn the Minister that our annual review of the greening of Government process will be set in train shortly. We have sent out letters calling for evidence, including a letter to the Minister that sets out the remit of this year's analysis. We shall concentrate heavily on the performance of the Green Ministers Committee and on environmental appraisal.

The Select Committee has made a successful start and has made an impact. The Government have responded, although there remain large and unsatisfactory gaps. I look forward to further robust and creative exchanges as we pursue a better environment.

9.49 am

I congratulate the hon. Member for Orpington (Mr. Horam) on securing a debate on the Select Committee on Environmental Audit. The Committee is cross-departmental, and its scrutiny of the Government's work will be important. I pay tribute to the members of the Committee, who have turned out in force today. I remind the House of the context of this debate. At our meeting only yesterday, we discussed the living planet index—compiled by the World Wide Fund for Nature—which reminded us that, in the past 25 years, the world has lost 30 per cent. of its natural resources.

We have just heard that my right hon. Friend the Deputy Prime Minister was not here during the Budget debate last week, but exploring a coral reef was equally important as it gave him the opportunity to see at first hand just how fragile our planet is—if we need reminding of that fact. It is crucial that we take account of all those issues and that we do not rely on emergency crisis talks after the event to ensure that degradation is put right.

As the hon. Member for Orpington said, sustainable development cannot be a bolt-on extra. I also think that that message should be framed as the overarching theme of our Committee. We need to put that at the heart of government. As the House heard, that is what the Prime Minister said that we would do when he addressed the United Nations and it is what the Government are doing. The real question for Governments and for the House is whether we are doing that as well and as quickly as we can, and in time to prevent further degradation of our planet. That is why this morning's debate is so important. It concerns the nuts and bolts—the institutional mechanisms and systems and the appraisals of what we need. Much of our debate will be technical, but, if we do not get those mechanisms and the framework right, we simple will not be able to put the environment at the heart of our Budget, of policy making and of green government.

The nature of the issue means that we can take only one step at a time—we can only make so much progress—but what may seem impossible one day can suddenly become possible the next. In our last pre-Budget report, we thought that the Government had failed. One week after the latest Budget, we feel that they have made huge steps forward, with 22 new measures to assist the environment.

The fact that the Select Committee on Environmental Audit has been on the heels of the Government has helped us to advance the whole procedure. We have done that with the Budget and, through this debate, we need to do it for the entire machinery of government. That is why this debate is so important. We should have an annual debate on sustainable development. We need a formal parliamentary occasion when we can scrutinise what the Government are doing through the Environment Committee at Cabinet level and the Committee of Green Ministers. I expected all the members of the Environmental Audit Committee to be present for this debate, but I also expected to see the Green Minister from each Department on the Front Bench. If they were here, it would send a message to the House and to the nation that they are taking the agenda forward.

Even though the Government have temporarily rejected the idea of an annual formal debate in Parliament, I hope that we will have such debates so that we can have accountability and can measure whether the targets that have been set are the right ones and are being achieved.

Our most important task now is to set out how we can achieve sustainable development and ensure that the Committee of Green Ministers takes collective responsibility for the environmental appraisal system rather than the substance of individual policies. I am pleased that the Government agreed with that approach in their response to our report and said that new and revised policies should include an assessment of implications for the environment. Will my right hon. Friend the Minister tell us how that is being done, where the system is and how Parliament is to be made aware of the substance of it—for example, within specific Departments?

The Local Government Bill is going through Parliament. What has been done by way of an environmental appraisal of that Bill? The Energy Efficiency Bill, which would require environmental and energy efficiency advice to be provided for someone purchasing a home, has been introduced, enabling us to focus on energy efficiency. Conservative Members blocked the Energy Conservation (Housing) Bill, which would have followed up other home energy conservation legislation, and increased the energy efficiency of homes owned by housing associations. I understand that parliamentary counsel has drawn up amendments to that effect, for the Association for the Conservation of Energy, which could have been put at the heart of the Local Government Bill. Have we had an environmental appraisal of that Bill? If so, could the measures in the two energy efficiency Bills be included? That would demonstrate that the Government are ensuring at every opportunity that they take account of the need to put environmental concerns at the heart of government and not to treat them as a bolt-on extra.

Major constitutional changes are about to take place, and they will have clear implications for environmental policy in Scotland and Wales and the policy of the new regional development agencies. Again, there has been concern that sustainable development has not been put at the heart of those agencies and that somehow or other, despite the guidance issued, economic arguments are at the heart. Those issues are important.

Before my hon. Friend moves too far from the local government argument, may I remind her that we stood for Parliament on a manifesto that talked of the need for a new duty for local authorities to promote the economic, social and—crucially—the environmental well-being of their areas to be part of local government reform? Does she agree that it would be useful if our right hon. Friend the Minister would confirm that that new duty is to be a part of the draft legislation on local government which we understand is due to be published shortly?

I am grateful to my hon. Friend for raising that issue. I hope that my right hon. Friend the Minister will refer to it. I understand that there will shortly be an announcement in the House on future local government legislation. It is imperative that a duty to take account of sustainable development is set at the heart of such a Bill. Perhaps my right hon. Friend would deal also with Local Agenda 21 and what the Department of the Environment, Transport and the Regions feels about whether we rely on local authorities to produce voluntary arrangements to implement it or whether we should require them to put the ethos behind it at the heart of policies. Perhaps he would even say whether he intends to name and shame those authorities that have not yet adopted Local Agenda 21, which was conceived at the United Nations conference in Rio de Janeiro some years ago.

There is a fear and suspicion that environmental appraisals are not carried out within and across Departments as we would wish. That was evident six weeks ago, when I initiated a debate in the House on genetically modified foods. During that debate and the public debate that followed, it became clear that the Ministry of Agriculture, Fisheries and Food is involved in the issue because of its labelling policy and that the Department of the Environment, Transport and the Regions is involved in planting and trials and deciding whether it is safe—on environmental grounds—to plant genetically modified crops commercially or experimentally. There are also implications in terms of Government scientific advice on health matters and in terms of scrutiny of European policy. There has to be some mechanism at the heart of government to square all those issues and strike the proper balance between them in the course of decision making.

On the issue of working across Departments and getting environmental concerns at the heart of government, when we questioned the Department for Education and Employment on its comprehensive spending review plans, we were concerned to learn that there had been no proper environmental appraisal of how the money for the new-build programme for school buildings would be spent, or of whether it would give at local level all the benefits that we would want to flow from spending such sums of money.

I am conscious of the time, so I shall merely add that we are all singing from the same hymn sheet. A tremendous amount of progress can and will be made, and we are determined to ensure that it is made. However, to achieve that, we have to have the institutional framework in place and be clear about the targets set. For example, if we have a 20 per cent. target on climate change, it is important that the Budget statement contains that 20 per cent. overall target, rather than the 12 per cent. target agreed by European Ministers. Those are all crucial issues, on which we have to make progress, and I am grateful for this brief opportunity to discuss them.

10.1 am

I thank the Government for establishing the Select Committee on Environmental Audit, a move that showed foresight. The Committee has worked well, as its Chairman, the hon. Member for Orpington (Mr. Horam), said. It has worked across parties and has produced some good reports; I even saw it referred to in the Treasury's Budget commentary, so we are clearly making some inroads into thinking by the Government.

The Government have said that they will put the environment at the heart of government, and that is becoming something of a cliché, over-used by all of us: there is so much at the heart of government that there can be little else in the body; nevertheless, it is encouraging to hear that statement repeated time and again. I do not underestimate the difficulties facing the Government in achieving that aim. We have a traditional structure of government that is based on individual Departments pointing in different directions and dealing with their own problems in a rather self-contained manner. The idea of joined-up government—another cliché—cuts across that traditional way of running the country, but it is not necessarily easy to get everyone facing in the same direction. A start has been made, but there is some way to go.

I shall not be over-critical of the Government's environmental record. The Minister for the Environment is present and he is aware that I wrote an article for the Daily Express some time ago, so I should say that I painted a balanced picture, but my words of praise for the Government were cut out before the article appeared in the newspaper—I shall be happy to show the Minister the original if he wants proof of that. On balance, my overall tone was clearly critical, but there were elements of praise, which disappeared.

I share the view of the hon. Member for Stoke-on-Trent, North (Ms Walley) that it is a shame that the only Minister present is the Minister for the Environment: that makes this debate an exercise in preaching to the converted. After all, the right hon. Gentleman won one of the green ribbon awards at a recent ceremony, whereas those who won grey ribbon awards and were not congratulated are not present in the Chamber. I hope that he will take the message from this debate to his colleagues and encourage them to attend the next time that a report of the Environmental Audit Committee is debated on the Floor of the House. It would be good to see them. I am sure that the right hon. Gentleman will agree with almost everything said in the debate, but his departmental colleagues might not necessarily do so. The hon. Member for Stoke-on-Trent, North suggested that we should name and shame local authorities that fall down on the job, but perhaps we should also name and shame Departments that fall down on the job—a task that I would happily hand to the Minister for the Environment, as part of his remit.

A Green Ministers team was established by the previous Conservative Government; it has met four times since the general election and is due to meet again this month. Although it is fortunate that it is continuing to meet, I wonder whether its remit is quite right: it appears to me to be, if not moribund, then dealing with minor issues rather than tackling major issues. There is continuing uncertainty about the role of the Green Ministers team compared with that of the ENV Cabinet Committee, to which our report refers. Clarification of those roles is required and both bodies need to take a more proactive role, rather than firefighting, which is what they have been doing hitherto.

It is a shame that the Green Ministers team is not chaired by the Deputy Prime Minister. As the Minister for the Environment will be aware, that was a recommendation of the Environmental Audit Committee. The Deputy Prime Minister does a good job on the environment and we would like to have his weight behind environmental measures to bring the rest of the Government on board.

It is also a pity that officials, rather than Ministers, are sent to many of the meetings of the Green Ministers team. There is no excuse for officials being sent; they cannot command the support from others at the meeting that a Minister would command. That downgrades the officials' views, no matter how eloquent they are, and therefore downgrades their Departments' views. With such a huge team—there are more than 100 members of the Government—I see no reason why another Minister should not attend the Committee if the designated Green Minister cannot. I would like to see that practised from now on.

There is a lack of co-ordination across government, but that is the way in which government works, so I shall not be over-critical. The Government are trying to do something new and I congratulate them on that; however, the situation is by no means perfect yet. The hon. Member for Stoke-on-Trent, North referred to the subject of genetically modified organisms which, as the Minister will know, is a particular interest of mine. There has been a lack of co-ordination across government with regard to that issue, although they have tried to address it by setting up a biotechnology committee.

When the public concern blew up a month or so ago, it was clear that elements of the Government were taken completely by surprise and did not know what to expect. It was also plain that they were speaking from different hymn sheets—or whatever the metaphor might be. The Prime Minister, rather unwisely, said that GMOs were the best thing since sliced bread, or some such phrase—I am not a great fan of sliced bread, but that is the line that he took. The Minister for the Cabinet Office said that GMOs were products of Harold Wilson's "white heat of technology", that we should all be grateful for them and that we have a great biotechnology industry. That went down with the public like the proverbial lead balloon; those Ministers were quickly wheeled off-stage and the Minister for the Environment and the Minister of State, Ministry of Agriculture, Fisheries and Food, who has responsibility for food safety, were wheeled on later in the week to reassure the public. They did so, but they said different things and adopted different approaches.

That goes to the heart of government. How serious are the Government about the precautionary principle? How serious are they about co-ordinating their views on the environment and the role that such considerations should play in government? How far is the environment to be sacrificed for the achievement of other policy objectives? Sustainable development assessments were referred to earlier, but to what extent does the environment have the first bite in terms of assessment?

Different Ministers are saying different things; the Government have not yet produced a unified voice. It is clear from what he says that the Minister for the Environment applies the precautionary principle, but some of his colleagues do not. There is a lack of co-ordination on that basic point. It is clear that the right hon. Gentleman wants a moratorium on the commercial planting of genetically modified crops, but it is also clear that others in the Government think that that is not necessary and that it would slow down the biotechnology industry.

I use that as an example, but my argument goes beyond that—for example, to our relations with the World Trade Organisation and its agreement on trade-related aspects of intellectual property rights, the so-called TRIPS clauses. I have asked several parliamentary questions on that subject in the past few days, but the Department of the Environment, Transport and the Regions laid an emphasis in its replies that was wholly at variance with that of the Department of Trade and Industry.

The Treasury is a great player in the Government and has achieved a great deal over many decades. It was responsible for producing the form of national accounts that has become an international standard. I should like the Treasury to take a similar lead in producing a new form of national accounts that takes the environment into account. I have not yet seen evidence that such a co-ordinated approach will be produced to cover the whole of the Treasury's work, but I hope that it will be adopted, as it could mean that the Treasury again gave a lead internationally.

The Treasury seems still to regard the environment as a bolt-on; its thinking is still somewhere in the 1950s. Hooray and three cheers for the energy tax that was announced in last week's Budget. I welcome that measure and am grateful to all those—in the Treasury and elsewhere—who were instrumental in bringing it forward. However, I am not sure—I hope that the Minister can reassure me—that the energy tax is not simply a very big bolt-on to Treasury thinking that is self-contained and works quite well in itself. Is that a sign of a new thinking permeating the Department? Has the Treasury signed up to the idea that taxes should be shifted from good things, such as employment, to bad things, such as pollution? Will the Treasury approach all of its decision making in that way or does it view the energy tax simply as one environmental tax that happens to work in a self-contained box? In other words, will we see further steps in that direction, or is the measure a one-off?

The Budget figures that support the Government's environmental measures are a bit thin on the ground. The Budget is a bit finger in the air when it comes to working out and justifying the carbon dioxide emission savings. I hope that there will be greater justification in future—perhaps in the Green Book, which we were promised originally but has not appeared.

I will not speak for too long as I am aware that other hon. Members wish to participate in the debate. However, I echo the call that has long been my party's policy—it was articulated by the hon. Member for Stoke-on-Trent, North—for an annual state of the environment report, which hon. Members can debate. With due respect to the Minister, I think that report should be handled by the Deputy Prime Minister or the Prime Minister. If the environment is at the heart of government, it is important for the Deputy Prime Minister and the Prime Minister to demonstrate that by being in the Chamber for debates such as this.

10.12 am

I am aware of the time pressures, so I shall try to truncate my remarks accordingly. The report of the Environmental Audit Select Committee is obviously a snapshot of past events. I hope that the greening government inquiry will reveal that considerably more progress has been made. However, the signs are not particularly good.

That is not a criticism of my right hon. Friend the Minister for the Environment. I hope that all my colleagues on the Environmental Audit Committee share my view that his appearances before us are never less than impressive. As almost a resident turn, he takes some beating. However, I sometimes fear that he is cast in a role similar to that of the sheriff played by Gary Cooper in "High Noon". He is courageous, dedicated and committed, yet, like the good sheriff, the Minister is not getting the backing of his posse—which is primarily the Green Ministers Committee.

During our deliberations, it was easy to conclude that the Green Ministers Committee did not necessarily know precisely what its role was—and no one appeared to be monitoring what it was doing. We were told that the Committee would submit its first report to the Ministerial Committee on the Environment, ENV, at the end of last year. Did it do so? If the Committee has reported, has the ENV met to discuss it? Did the report include departmental aims and objectives? If the report has slipped, what are the new time scales?

We were also told that the Green Ministers Committee is to report to Parliament this summer. It will be helpful if it reports in time for the House to consider the document before the summer recess. As the hon. Member for Orpington (Mr. Horam) pointed out, we are also awaiting the publication of the sustainable development strategy, which was trailed for autumn last year. However, there is still no sign of it. Can my right hon. Friend give some indication of its publication date? Will the strategy contain clear statements about direction, process, responsibility and how progress will be measured?

I also echo the comments of other Committee members who have spoken this morning about holding an annual debate on sustainable development. Will the Government reconsider their decision not to allow such a debate?

On the question of environmental policy appraisal, the posse seems not to have even put on its boots. The Department of the Environment, Transport and the Regions guidance states that Departments should consider making their policy appraisals public. The guidance should be tightened so that there is a presumption that appraisals will be published and should place an onus on Departments to justify not doing so.

At present, any tightening of the guidance would be academic as there is little evidence that such appraisals are carried out, let alone published. One of the best examples of that came from the Department for Education and Employment. We asked the Department whether it had conducted an environmental appraisal of school and college building plans. It had not. Yet the guidance produced by DETR gives the building of schools and colleges as an example of a policy that should be appraised. Such policies have clear transport, green-field and housekeeping implications. We were also told that the Green Ministers Committee was appraising the appraisals. What progress has been made in that direction and is it at a trot, a canter or a gallop?

We often talk—it has been mentioned in the debate today—about the need to integrate environmental considerations in policy making to avoid bolting on policies. It is clear to the Committee that some policies do not even enjoy the luxury of a bolt; they are falling off departmental agendas.

I am sorry that my right hon. Friend has been cast in the role of whipping boy for those criticisms. I am sure that his response will be characteristically eloquent, robust and persuasive. No Minister deserves more than he to ride off in triumph with his best gal by his side. However, unlike Gary Cooper, I doubt that he will do so without much better, more energetic backing from his green posse. Unfortunately, many members of that posse appear not to have saddled their horses.

10.16 am

It is a pleasure to participate briefly in this debate. I shall keep my comments short, as I am aware that other hon. Members wish to contribute.

It has been said that the Environmental Audit Committee was appointed as a terrier to bite at the heels of Government. I hope that we have succeeded in doing that. I am mindful of the fact that some of my remarks about the report may have been superseded by events. For example, the establishment of the Green Ministers Committee excited considerable concern on our part. We discovered that the initial meeting of the Committee, which had been set up with a fanfare of publicity, was attended by 15 out of a possible 17 Ministers so that they could all be part of the photo opportunity. However, when the Committee next met—it was only its second meeting in the first 12 months of this Government—the number of Ministers had reduced considerably. They had been replaced by officials.

After we noted that trend, it appeared that numbers increased again for the last meeting. However, that example is symptomatic of the difficulties that the Green Ministers Committee and the Ministerial Committee on the Environment face when grappling with policy issues. There is always a tendency for Governments to have pious aspirations. Although they say that they are trying to do their best, inertia sets in. I think inertia started to set in fairly badly in the first 12 months of this Government. As has been said during the debate, we will achieve the goals of sustainable development and green government through structures. Committee members often kick themselves in an effort to remember that and to keep themselves from discussing tangential issues. Without the structure, we will not get the results.

It is all very well to establish a Green Ministers Committee, but I am not clear whether it is a formulating or an executive and reporting Committee. It is the nature of Government that most decisions are taken at Cabinet Committee level. If that is so, the role of the Green Ministers Committee is probably more limited than was trumpeted at the time of its establishment. All the evidence suggests that that is what has happened.

I confess that, when I read the Government's response to our report, I was anxious about the structures, because, although it was acknowledged that ENV had to be upgraded and that its remit had to change to put sustainable development at the top of the agenda, the relationship between ENV and the Green Ministers Committee remains far from clear. I accept that one reason is that the Green Ministers meet only three times a year, so it may be difficult, until the next meeting, to start to take a snapshot of how matters are progressing. I should be particularly interested to hear from the Minister how that aspect is developing.

Unless there is input from Cabinet Committee level—and, as my hon. Friend the Member for Orpington (Mr. Horam) said, with the Prime Minister ultimately providing a lead—the inertia that inevitably exists in Government will get the better of progress, and progress is what we want. Tentative steps have been taken. The Budget was undoubtedly a massive improvement in that respect on last year's Budget, but its proposals are tentative. There is, above all, a lack of willingness to engage in open discussion about the issues.

That brings me to my second and last point, which I made in my intervention, about an annual debate. Sustainable development is not about buzz words or easy options and may sometimes require an acceptance that measures that people find superficially attractive and necessary cannot, for good reasons, be taken. That requires open debate.

The Minister knows that there is complete cross-party consensus on that matter, certainly on the Select Committee. We have never fallen out among ourselves in examining the Government's problems and role. We are also fairly sympathetic to those problems. We accept, as do Labour Members, that the first initiatives and tentative steps were taken by the previous Government—and all credit to them—and are being built on by this Government, but we need discussion.

Having one day a year set aside for that and turning it into a Commons event with the opportunity for Ministers to answer for their Departments is central to that discussion; otherwise, in three years, we will still be having these occasional days attended by interested Members and the Minister, who I know is dedicated to these issues, but nobody else will be getting the message. People who do not have as much information about what is going on will not be informed. I urge the Minister to recognise that there should be greater opportunities for an exchange of views, and this is a good place for that to happen, at least on a yearly basis.

10.22 am

The Environmental Audit Committee was unanimous in its support for the Government's basic sustainable development and environmental strategies. We felt, therefore, that our duty was to consider whether their future planning, administrative structures and policies would deliver those strategies.

Four basic principles need to be observed when we consider environmental matters. First, long-term vision is necessary. Secondly, environmental strategies have to be integral, pervasive and co-ordinated throughout government. Thirdly, they must be applied at every level from global down to local. Finally, they need the maximum cross-party consensus.

It has presumably been true throughout the millennia that mankind has been able to affect future environments, but it is undoubtedly true that scientific and technical progress accelerates and that we have a greater ability to affect, more extensively and enduringly, our environment, for good or ill. We must be wary of the possibility that we can now have a greater effect on our tiny, fragile planet, and even more so on the tiny, fragile species, including our own, that inhabit it.

It is therefore vital that we have long-term vision; if we are honest, we must acknowledge that that is difficult for all politicians. If a week is a long time in politics, and looking beyond annual Budgets to three-year comprehensive spending reviews seems long term, how much more true is that for environmental strategies? Most of us find it difficult to focus beyond the next election. How much more difficult is it for us to focus on the next generation or the next centuries?

With environmental matters, we are often discussing intangibles. There is a difficulty in persuading people to appreciate the importance of long-term intangible effects as against short-term tangible ones—for example, the benefits of climate change compared to the convenience of a car—or immediate effects. We want newspapers to recognise that more people may die in their area from the effects of the invisible traffic accidents of air pollution than die in car accidents. It is important that we get the support of journalists so that they stop concentrating on ill-founded fears and realistically consider, rather than deride, the serious scientific bases for our concern about our environment.

We need to think like statesmen, not merely politicians. To do so, and to overcome the inevitable temptations, it is important that we built robust administrative structures that provide added incentives to give the environment its correct place in our concerns.

My second point, therefore, is that the environment must be absolutely integral and co-ordinated throughout government. There is a correct comparison to be drawn with the position that finance has traditionally had. It is encouraging that our Committee has been viewed almost as an equivalent to the Public Accounts Committee. It is important to mirror that in the ministerial structure, which is why we applaud the idea that the environment should be a prime ministerial or deputy prime ministerial responsibility. Traditionally, the Prime Minister has been the First Lord of the Treasury, and it is encouraging that we have a Deputy Prime Minister as first lord of the environment. Those issues must have clout within government if they are to have sufficient influence.

In global and local affairs, it is now almost commonplace to say that the environment must be an international matter because pollution and climate change do not recognise national boundaries. It is therefore important that someone with clout—the Deputy Prime Minister—conducted the international negotiations in Kyoto. We all praise him and my right hon. Friend the Minister for the Environment for their statesmanlike position at Kyoto.

At Rio, local government matters were recognised by Agenda 21, and environmental matters are therefore appropriate for devolution. It is good that they are being devolved to the Scottish Parliament, the Northern Ireland Assembly and the Welsh Assembly. It is important that this country has the structures to co-ordinate strategies between those Parliaments after devolution. Our Select Committee would hope to co-ordinate with their Select Committees.

Environmental concern must transcend party divides. In times of war, we have been able to find common cause against human enemies who were threatening us. In the future, we must increasingly be able to make common cause against the abstract forces that can threaten humanity. It is encouraging that our Select Committee has had no divisions, as our Chairman, the hon. Member for Orpington (Mr. Horam), has said. I pay tribute to him for his part in that consensus. We should try to avoid short-term political advantage and look to the long term.

I said that, to overcome the difficulties inherent in environmental matters, it is important to have strong administrative structures. We are pleased that the Government have responded so positively to some of our suggestions. We are pleased that ENV will play a strong co-ordinating role on sustainable development; that, in future, departmental reports to Cabinet Committees will contain an environmental cost-benefit analysis; that the number of meetings of the Green Ministers Committee and ENV is rising from two to three a year; and that the GMC will report annually to ENV.

I stress the point, however, which was made so cogently by the hon. Member for Beaconsfield (Mr. Grieve) and other hon. Members, that an annual report to Parliament should include a Budget-style debate. It would obviously not take up as many days, but the report needs such a debate so that the environment can receive the necessary focus. As my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) said, rather than some Back Benchers being present, the Front Benches would be full for such a debate.

I shall move rapidly to a conclusion on a positive note. I am aware of the pressure of time. We have said that we need administrative structures, and the idea is that they should produce practical results. It is commonly said, even by those who have previously been critical of the Treasury, that it is encouraging that the Budget will provide for the taking of positive steps towards a stronger environmental emphasis in government. We look forward enthusiastically to the statement on sustainable development strategy.

10.30 am

I pay warm tribute to my hon. Friend the Member for Orpington (Mr. Horam) and to the other members of the Environmental Audit Committee for producing an extremely interesting and important report which will move the debate forward significantly in enhancing the green agenda both inside government, and by its example, beyond government.

By the comments of hon. Members during the debate and by the very nature of the debate, it is clear that the environment is, fortunately, not a partisan, party political issue. Certainly there may be differences of opinion on how to achieve objectives, but it is a subject too important to be despoiled by narrow party political point scoring. We have been fortunate both today and in the work of the Committee, during its short existence, that the issue has not been marred by such point scoring.

I agreed very much with the hon. Member for Aberdeen, North (Mr. Savidge) when he said that he would like the Committee to evolve into something similar to the Public Accounts Committee—a respected Committee to which people listen because of its impartiality and its work towards the common aim and the common good, a Committee that attracts a significantly greater audience in the Chamber than at present when it is the subject of debates.

I add my voice to those of the many hon. Members who have rightly said this morning that they believe that there should be an annual debate on the Floor of the House to highlight environmental issues, including the progress that is being made and the problems that have been encountered. I hope that the Minister for the Environment, who, above all Ministers, has a strong commitment to the environment, will take that message, loud and clear, back to the Government Whips Office and to the Government, to try to establish such a precedent.

As my hon. Friend the Member for Orpington rightly said, the Labour party had a manifesto commitment to put the environment at the heart of policy making. I make no bones about it: I welcome that commitment. However, it would be churlish of me not to mention the work that, first, Chris Patten and then my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) undertook while in office to put environmental considerations at the heart of government. They set the example that the Labour Government have rightly chosen to follow and emulate.

By their very nature, environmental considerations do not respect national boundaries. That being so, there must be a global approach to green issues and problems. At a national level, environmental issues cannot be isolated and dealt with on an ad hoc basis by individual Departments. There must be an holistic approach across the broad range of Departments. Even if there is a lead Department such as the Department of the Environment, Transport and the Regions, it will have simply a co-ordinating role to ensure that other Departments pull their full weight in advancing solutions to the problems that face us.

In its report, the Select Committee has rightly drawn attention to that approach. It comments on the progress being made by the setting up of the Cabinet Committee on the Environment and the role that Green Ministers can have in a Government's pursuit of sustainable development. I believe, however, that the Government should pay special attention to the Committee's recommendations in paragraph (f). First, it recommends:

"the authority and status of the Green Ministers Committee should be further underpinned by a clearer statement of its relationship to the Cabinet Committee".

Secondly, it adds:

"the Green Ministers Committee should report to the Cabinet Committee on progress on an annual basis and that this report should be published".

As I said earlier, and as the debate has clearly shown, these matters should be debated annually on the Floor of the House. Thirdly, and possibly most important, the Committee recommends:

"the Green Ministers Committee's forthcoming programme of action should contain concrete objectives and targets for advancing of the take-up of best practise with regard to greening operations, environmental appraisal and policy integration".

It adds:

"the Committee should make full reports … on its meetings and its progress"

to Parliament.

I welcome the Government's response to those recommendations in paragraph 11 of their document. I hope that, in the spirit of the Select Committee's recommendations, their reporting of progress will be a genuine way of advancing the debate and the Government's actions, rather than a glossing over if the going gets tough. It is in no one's interest or advantage simply to produce an air-brushed report. It must be positive, coherent and accurate. The Government, whether the current Administration, a future Conservative Government or whatever, must have the maturity to accept the difficulties facing government and the problems that they have in achieving their aims and aspirations.

The Royal Society for the Protection of Birds, in a very good brief that it provided to hon. Members before the debate, made a valid point on this subject, when it said:

"The Comprehensive Spending Review was a test of the departmental commitment of their"—

the Government's—

"policies."

The RSPB was therefore

"disappointed that the review showed little evidence that an environmental appraisal had been carried out."

I suspect that few would disagree with that analysis.

I urge the Government to give serious thought to a suggestion made by the RSPB, which I believe is worthy of further consideration and involves the use of strategic environmental assessment policies. As the RSPB said,

"carrying out such an assessment during the preparation of policies ensures that environmental objectives are included at the stage when all the policy options are being considered, rather than when the final option has already been chosen."

In many ways, that dovetails with the point made in June 1997 by the Prime Minister, when he was saying that the environment must not be a bolt-on, added extra. I hope that Ministers will see the merits of such a proposal and give serious consideration to moving towards that aim.

Similarly, I hope that Ministers will pay particular attention to recommendation (mm), which suggests that the Government

"should require all departments to have begun introducing an environmental management system by the end of the Parliament with a view to all having extended them across their estate by the earliest practical date."

That is an important recommendation. I know that the Government have responded by saying that they accept the recommendation in general, but with the crucial proviso that they

"would limit this to cases where that would be efficient and cost-effective."

That suggests that the Government might be seeking to avoid their responsibilities if the going gets tough. I would appreciate it if the Minister would elaborate on what exactly the Government mean and what they really intend to do. There is a danger that that response could become a cop-out for any Government if they wished so to exercise the proviso.

Similarly, the Committee recommends that the Government

"should adopt for itself the challenge it has thrown down for the top 100 FTSE companies, namely that at least 75 per cent of government departments should have at least one site registered to IS014001 by 2001."

That seems to have been sidestepped by the Government in their response. Logically, whatever the Government expect of industry should be followed by the Government. They should lead by example. I hope that they will think further about these matters. The impression given in their response—it may be only an impression—is that they are brushing the idea aside.

The Government, to their credit, have carried forward the environmental agenda left to them by my right hon. Friend the Member for Suffolk, Coastal, as I have said, but there is a view abroad that the Government are sometimes not living up to their rhetoric in their actions. There are two areas where the Government have moved on from the agenda that they inherited. First, as hon. Members have said, the recent Budget was certainly a step forward in this context, and I recognise that. I do not criticise the Budget in that respect. A second step forward was the Government's response to the Marshall report.

On the Budget and the introduction of green taxes on industry, I share the view of my right hon. Friend the Leader of the Opposition that green taxes to deal with environmental problems must be met by a corresponding tax cut elsewhere, to ensure that the overall impact of the taxation is neutral. That view was outlined by my right hon. Friend in a speech on the environment that he gave in Oxford a few months ago.

To be fair, the Chancellor accepted that in principle by making the point in his Budget. However, I draw to the Minister's attention one concern arising out of the Chancellor's Budget statement. He has counter-balanced his green taxes on industry by introducing cuts in national insurance contributions, but he has created a potential problem that underlies the good intentions that he announced.

The tax will have the greatest impact on companies that are high-energy users, but may have few or relatively few employees. If that is the case, as it certainly will be in a number of industries, how will the taxation be neutral for those businesses? That is an important point, and I hope that the Minister will give serious consideration to the potential problem, which could cause hardship and—more worryingly—bitterness, and undermine the concept of fiscally responsible and fiscally neutral green taxes.

Is my hon. Friend not disappointed that the energy tax is a downstream tax, and is not a carbon tax, whereby the more heavily polluting producers of electricity would be hit, rather than industrial users?

My hon. Friend goes to the heart of the matter and raises another important issue relating to green taxes. I hope that the Minister will use his influence in Government to redress any imbalances and problems. I understand that he was at the forefront in advising and influencing the Chancellor on the measures announced in the Budget statement.

I expect that all hon. Members present could speak far longer on such an important report. Although this short debate is welcome, it would have been better if we could have had a longer debate, reinforcing—I say this for a third time—the importance of an annual environment debate.

I reiterate the point that the report is a major step towards establishing a green environmental mentality at the heart of government. I look forward to further reports from the Committee.

10.43 am

I am grateful for the opportunity to speak in the debate. I congratulate the Chairman of the Environmental Audit Committee on securing it.

The debate and the existence of the Committee, of which I am a member, testify to how far we have come. Twenty years ago, the consideration of the environment at the heart of government would have been inconceivable. That we now debate how to address environmental concerns, not whether they should be addressed, is no small achievement.

I take this opportunity to welcome the Government's commitment to high-level political leadership on sustainable development. The process of greening government stretches from putting the Government's house in order to integrating environmental consideration into every area of policy. That is so small task, and it will not be possible unless it is led from the very top, as my right hon. Friend the Deputy Prime Minister is doing. I look forward to seeing my right hon. Friend the Prime Minister attaching the same importance to the issue.

The Cabinet Committee—the Ministerial Committee on the Environment—should be central to such high-level lead taking; yet, as we noted in our report, we were disappointed to find that it has no proactive role. The Government's action to rectify that, by expanding the remit of the Committee to

"consider environmental policies and co-ordinate those on sustainable development",

fails to address the problem. The Committee still has no explicit commitment to examine the impact of non-environmental policies. The shortcomings of that approach were underlined when the Committee did not even meet to consider the multilateral agreement on investment, an issue which, as we are all aware, had far-reaching environmental consequences.

The Committee still meets only to resolve disputes between Departments that disagree on the need for or method of greening government measures. My right hon. Friend the Minister for the Environment told us that the fact that the Committee had met so rarely should be seen as evidence of the consensus in Whitehall on the need for environmental considerations to be at the heart of policy formation. Perhaps I am a cynic, but I am of the opinion that a lack of disagreement between Departments means that little is being changed. Complete agreement in Whitehall means business as usual.

With those points in mind, I urge my right hon. Friend the Minister to consider again the need for the Committee to be more proactive in championing the greening government initiative.

The continuation of the Green Ministers by the present Administration, and the formation of the Green Ministers Committee was a welcome example of the Government's commitment to strong leadership on the issue. The Government's response to our recommendations was encouraging, and clarified and enhanced the role of that Committee.

However, I was disappointed to note that meetings of the GMC were often attended by officials, not Ministers. Although we all understand the pressure of time on Ministers, Green Ministers must prioritise that important role. Equally, it was a great disappointment that the Government rejected our recommendation that the GMC be chaired sometimes by the Deputy Prime Minister. That seemed to be an excellent opportunity for the Government to reinforce their pledge of strong leadership, and at the same time, dare I say, to boost attendance.

By making Green Ministers report twice a year to the Ministerial Committee on the Environment, the Government have exceeded our recommendation of an annual report, but that will be significant only if the reports are considered by the Cabinet Committee. The first report from the Green Ministers was due at the end of last year. Will my right hon. Friend tell the House whether the report was submitted and whether the Cabinet Committee met to consider it?

I shall draw my remarks to a close, as I know that we are all eager to hear my right hon. Friend's response to the debate. Our report was intended to be an in-depth and positive look at progress in the greening government initiative, and to serve as a catalyst to further action where that was needed. It is encouraging that the Government response accepted many of our points, and many of our recommendations had already been actioned. However, there is still a long way to go.

When the Environmental Audit Committee was set up, the Deputy Prime Minister said, as we have heard again today, that he intended it to be

"a terrier to snap at the heels of Government or bite".

My colleagues and I on the Committee have made admirable terriers, and the House can be assured that we will continue to snap and bite. We know that the Deputy Prime Minister and the House have no interest in poodles.

10.48 am

We have had an excellent debate in the best House of Commons style—pretty critical, but in a positive and cross-party manner, which I welcome. I, like others, warmly thank the hon. Member for Orpington (Mr. Horam) as the Chair of the Environmental Audit Committee and other members of that Committee, and all those who have spoken, for a lively debate on greening government.

I recognise that the Committee has already produced eight reports—which, as the hon. Gentleman said, is a pretty good hit rate—and a valuable report on the greening government initiative. I look forward to the Committee's next report on the subject, which is due later in the year. If it is anything like the first, it will be full of genuinely constructive proposals, many of which the Government have acted on.

The hon. Gentleman had the good grace to recognise that the Budget was a turning point. It would not be an exaggeration to say that there has been a significant change, with the Budget underpinning the Red Book. There are 22 measures on the environment and they certainly are not bolted on, as the hon. Member for Lewes (Mr. Baker) opined. The Budget is clearly about taxing bads and benefiting goods, and it is revenue neutral because of the offset on employers' national insurance contributions, which is as green taxes should be.

In answer to the point made from the Opposition Front Bench by the hon. Member for West Chelmsford (Mr. Burns), high-energy users are in a special category and, inevitably, are likely to be penalised by that tax. That is why my right hon. Friend the Chancellor said specifically that they could be given a lower rate to take account of their special requirement—the inevitable use of carbon for many of their processes—provided they could produce an adequate energy-efficiency package, to the satisfaction of my Department.

The Budget is not just about the climate change levy, which will raise nearly £2 billion and save 1.5 million tonnes of carbon a year—about 5 per cent. of our target under the Kyoto protocol. It concerns the landfill tax escalator, quarrying taxes, pesticides tax and transport measures, which will lead to major environmental sensitivity in that important area.

The second point made by the hon. Member for Orpington concerned the sustainable development strategy, and I can assure him that we intend to publish it shortly, perhaps in May. He said that the strategy should be capable of being audited. We absolutely agree, which is precisely why we have introduced 13 headline indicators. If my right hon. Friend the Deputy Prime Minister can talk about the Environmental Audit Committee being a terrier to bite the Government's ankles, I can regard the indicators as a rod to beat our own back. We will have to keep the trend line moving in the right direction or we will be heavily criticised. I welcome the fact that the strategy will be very capable of being audited.

Thirdly, the hon. Gentleman raised a number of specific points, which were endorsed by almost every speaker, and said that there should be a sustainable development debate. The Government have given a response, but the loud and clear message from this debate, on both sides—

Three sides.

The message from all three sides is that the Government should reconsider their response, and I certainly undertake to raise that issue with the business managers.

The hon. Member for Orpington said that there had been a failure to provide sufficient environmental appraisals, and that point was repeated a number of times, but, as my hon. Friends the Members for Stoke-on-Trent, North (Ms Walley) and for Aberdeen, North (Mr. Savidge) correctly said, all Cabinet papers now have to set out whether new policies would have any significant costs or benefits to the environment. That applies to the Local Government Bill, which was mentioned, and to the question of a duty to meet social and environmental objectives in a local area, which we looked at extremely closely during preparation of the report.

The hon. Gentleman's last point was about the comprehensive spending review. I take his point; as he said, public service agreements—including, among other things, an element of environmental appraisal—are associated with the CSR. I accept that that element is not as strong as it should be, but I want to make it considerably stronger and we have a foot in the door.

The hon. Member for Lewes encouraged me to name and shame other Departments. That is not the normal practice in British Government—not publicly, at least; the practice is to persuade, to cajole and to press other Departments. As I have made clear, I welcome the work of the Environmental Audit Committee in assisting me with that process as I work with my colleagues.

The hon. Gentleman also made the perfectly fair point that my right hon. Friend the Deputy Prime Minister, given his weight and importance within the Government, could, very helpfully, be more closely associated with Green Ministers. My right hon. Friend will be attending the debate next week, as will my right hon. Friend the Chancellor, so it is perfectly clear that he is keeping a careful eye not only on Green Ministers, but on other Departments and their commitment to our overriding objective.

I say to my hon. Friend the Member for Pudsey (Mr. Truswell) that the Green Ministers' report will go to the Cabinet Committee on the Environment and Green Ministers will have a full debate next week on the sustainable development strategy. I thank him for what he said about the posse and my putative role and I hope, as I am sure he does, that my colleagues will read his strictures.

I have tried to deal with what the hon. Member for Beaconsfield (Mr. Grieve) said about structures and machinery. He also mentioned an annual debate. My hon. Friend the Member for Aberdeen, North made the point, with which we all agree, that policies on the environment should be integral to and co-ordinated throughout government. He also said that the involvement of my right hon. Friends the Prime Minister and the Deputy Prime Minister in the sustainable development strategy was important in sending that message. All I can say at this moment is that I note the strong views that have been expressed in the Chamber, particularly by my hon. Friends.

The hon. Member for West Chelmsford raised a couple of points, and I shall deal with them briefly. First, he mentioned a strategic environmental appraisal, but, of course, we already carry one out. We discussed such an appraisal and whether to regard it as one of the main issues on which to make progress in our presidency of the European Union, but we decided against that on the ground of priorities. However, we accept that an appraisal has an important role to play, so long as it does not further bureaucratise and elongate a planning process that is sometimes too lengthy.

Secondly, there is no question of there being a cop-out on environmental management systems for all Departments—quite the reverse. The sustainable development unit in my Department has provided a help desk and a call-off consultancy contract for Departments and their agencies and for non-departmental public bodies.

My hon. Friend the Member for Peterborough (Mrs. Brinton) said that the Government did not get their cross-departmental act together adequately on the multilateral agreement on investment. That is a charge to which I would plead guilty. The whole process was undertaken rather secretively, internationally and in other ways, but that is a lesson that we have learned. I would never accuse her of being a cynic—perish the thought—but she underestimates the effectiveness of Green Ministers. We meet only three times a year, but there are other ways of getting that message across.

The Government have tried to listen to the Environmental Audit Committee, which we believe to be extremely worth while, and we have taken action in a number of areas specifically as a result of its recommendations. The remit of the Cabinet Committee on the Environment has been extended to include the co-ordination of policies on sustainable development. Green Ministers meet three times a year, but I emphasise that they report directly to the Cabinet Committe on the Environment twice a year—a point queried by the hon. Member for West Chelmsford.

The Committee's first published report is due this summer, and it will not be air-brushed. I would never be involved in the air-brushing of that or of any report. It will concentrate not only on some of the good things that we have done—I am not complacent and would be the first to say that they are not enough—but on the weaknesses. I shall be looking for support, around the Chamber and around the Government, to deal with those issues.

Thirdly, Departments are reviewing the scope for including sustainable development in their objectives and those of the public bodies that they sponsor. That is exactly what we will be discussing next week.

The Environmental Audit Committee is unquestionably an important part of that framework.

Order. I am afraid that we must move on to the debate on the Maritime and Coastguard Agency.

Maritime And Coastguard Agency

[Relevant document: The Sixth Report from the Environment, Transport and Regional Affairs Committee, Session 1998–99, on the Maritime and Coastguard Agency (HC 31).]

11 am

The work of a Select Committee is at its best when it is able to inquire, in considerable detail, into a problem that is not only vital to this country, but needs careful elucidation. In 1994, the Select Committee on Transport looked at the work of the coastguard service and made a number of recommendations, which it suggested should be looked at closely by the Government. It said that it believed that the coastguard service at that time would benefit from a period of stability. Unfortunately, the service immediately instigated a review of how it worked and produced a five-year strategy.

As a result of considerable worries about both closures and changes, the new Transport Sub-Committee then decided that it was more than time that it looked at what had happened in the interim and what was going to happen in the immediate future. We are deeply disturbed about some of what we found, not least because the service is absolutely vital.

The Maritime and Coastguard Agency is a co-ordinating service, responsible for many emergency services. It not only co-ordinates the work of people such as lifeguards and other emergency services, but plays a direct role itself. Through its local knowledge and its ability to respond rapidly and efficiently, it saves lives and constitutes an essential way of safeguarding the lives of our people.

Although as a nation we own fewer and fewer ships, an increasing number of people are going to sea in little boats. Some 90 per cent. of coastguard calls are to just-on-the-coast or just-off-the-coast incidents, and those are largely—apart from the occasional hoax call—from people who have gone to sea for recreational and leisure purposes.

The Committee's report is very important and I should like to go through some of the conclusions. We have said that we are concerned about the state of the Maritime and Coastguard Agency. The merger of the two previous agencies was supposed to save money on administrative functions. Anybody would say that that was sensible. Indeed, if more agencies cut some of their top administrators and spent the money on the people who actually do the work at the sharp end, they might find a tremendous improvement in the quality of their services. However, we saw no clear evidence that the merger had resulted in improved safety. Indeed, the Committee was extremely concerned about some of the evidence given to us by the agency. Let me take our concerns in a sensible order.

The Maritime and Coastguard Agency seemed to believe that it would be able to concentrate more services in fewer stations and still provide the same level of care. It discounted the need for local knowledge and said that, in effect, coastguards no longer had a visual role—in spite of the lady who rang up a coastguard station and said, "Can you see me?" Coastguards no longer have a window out of which they can see boats from the shore. What they need is high-quality communications. We not only understood that, but supported it.

Clearly, it is the combination of the local knowledge of the auxiliaries who give their time for small sums, many of them working long extra hours that are unpaid, and the professional work of the coastguards that produces such good results. It is important to protect that mix.

The Committee was told that the agency had asked for reassessment and reorganisation. I looked—in a personal capacity, and not as Committee Chairman—at the places selected for closure because I wanted to find out whether there was a common denominator. The only one that I could find—I hope that this was not correct—was that the stations marked out for closure were those furthest away from the offices of the sector in charge. I hope that that is not the rationale, because it would make nonsense of sensible decisions and show that we are not talking about soundly based organisational decisions.

The Committee decided, however, that it would not only take evidence from everyone concerned—from those who work in the service and those who use the service—but ask why aspects such as local knowledge were so important. I ask the House to address the evidence that we took from, for example, the Scottish Fishermen's Federation. It instanced a particular case in which a canoeist went adrift off the north-west coast of Scotland. It was only because of the local Oban coastguard's knowledge of the strange tidal configurations that the helicopter was able to go in darkness to the correct point and pluck the canoeist out of the water.

We took evidence from the Cruising Association and from people who were professionally involved at sea. They all said that it was the combination of local knowledge and the ability to respond quickly that saved lives. That is the point that we want to emphasise time and again.

May I congratulate the hon. Lady on chairing the Committee that came up with this excellent and sensible report? I wonder whether she gets the same impression as I do—that the only motivation for the Maritime and Coastguard Agency proposing this set of closures and mergers was that the proposal was so ridiculous that it expected the Minister to reject it? It could then go to the Minister and say, "By the way, we cannot make the savings that you ask us to make." Is that not the only logical conclusion?

I am glad that the hon. Gentleman thinks that there is some logic in the conclusion. If I thought that such Machiavellian intelligence was involved in those decisions, I might feel a bit happier than I do.

What actually happened was that a consultation was launched even while the House of Commons was asking for the whole organisation to be kept stable for a while to see how it worked. That consultation was not terribly impressive. It did not give the impression of wanting to know the opinions of people concerned or of wanting to know what the staff felt about how the system could be improved. Mr. Maurice Storey, who gave evidence to the Committee, sent out an e-mail when two of his coastguard officers dared to bring their views to the public and described them as "miscreants". As industrial relations go, that is not terribly impressive. We asked him about it, but received no clear or satisfying response.

Thus, we were worried about all aspects of the consultation exercise. We accepted that new communications technology was needed. No one suggested that the service should not move on, but there were considerable doubts about the system being suggested. Indeed, after the Committee hearing had been broadcast on one of the television channels, I was approached by somebody with evidence about a similar service, which had been put in for the Cambridgeshire police and had occasioned considerable difficulty, to the extent that it slowed down responses to emergency calls. I therefore trust that my hon. Friend the Minister will not simply say that the Committee was taking a luddite view in saying that the agency should not have new telephones or new communications systems. That is not the case, but we remain extremely worried about the system being suggested for the changeover. While I was in one operations room, I heard the sort of incident about which I had been warned by the coastguards. Some systems will override others simply because they are more powerful. All those aspects were not satisfactorily discussed by the Maritime and Coastguard Agency when it gave us evidence.

I have said that local knowledge is fundamental. When we look at the closure programme, we realise why so many people are worried. Let us take Liverpool coastguard station; I make no excuse for mentioning a coastguard station in my region because it was one that I had the opportunity to visit. If it is closed, its work will be covered from Holyhead, which is already the seventh busiest coastguard station. It will cover a stretch almost halfway into Scotland.

Although they will take more and more work, those coastguards may be able to deal with problems highly efficiently. However, no one can pretend that they will have the detailed knowledge of the Liverpool area, of the Morecambe bay area, or of the developments that are taking place there both in industry and in leisure, or that we can discount the fact that Blackpool, which is in the Liverpool coastguard station area, is one of the largest tourist towns in the United Kingdom. It is important that we realise that we are talking about not a minor problem, but something of major importance to the working of the coastguard service which can have an immediate and direct impact.

The Committee was not impressed by the arguments. It did not believe even that the money to be saved by the closures could be justified in any way. We did not believe that, in terms of the overall budget, the savings were significant, or that there was any sensible reason to suggest that they had been forced on the agency by changes in work loads.

I would have liked to go into some aspects of the report in greater detail, but I see that many hon. Members want to speak. The suggestion that the coastguard service, particularly coastguard watch officers, can be used to do the work of marine surveyors is not intelligent and will lead to considerable difficulty. I hope that other hon. Members will make it clear why that is so.

The Prime Minister wrote to my hon. Friend the Member for Liverpool, West Derby (Mr. Wareing) on the matter and said at Prime Minister's Question Time that the plan would go ahead because of the amount of money involved and because of changes in the service. Those arguments will not wash any more. Simply repeating the same mantra over and again is not the way in which to deal with the House of Commons.

It seemed to the Select Committee that the agency had gone through an exercise that was fairly artificial. It had not carried it out properly. It certainly was not justified in closing the stations and sub-stations that it looked at. It could not demonstrate that the work of coastguard services would be improved by the closure programme. Indeed, it was clear that the opposite would happen.

If all those things are true—the argument about technology is almost a side issue, because all the emergency agencies have to improve their technology; that is not in dispute—Ministers have a responsibility to do something. A previous Government introduced the closure programme, not the present Government. We do not have to do everything that the previous Government decided to do. They may have tried to justify the plan, but the Committee does not believe that it is justified.

I do not think that Ministers in the previous Government asked for the plan to be introduced; it was generated by the Chief Coastguard. Therefore, we do not believe that there will be any loss of face if the Government say, "All right. We have looked at the plan again. We think that it is not a good idea. We will not go ahead with it. We do not believe that it can be justified."

I am grateful for the hon. Lady's generosity of spirit towards us in the debate. I was Parliamentary Private Secretary at the Scottish Office when the proposals first emerged. I can assure her that Ministers were by no means convinced that they were the right way forward. I make no bones about the fact that we did not think the pre-election period would be a sensible time to conduct a debate about the proposals—someone said that we might lose more seats in Scotland. In all sincerity, we can approach the matter in a non-partisan way. In that respect, I fully share her sentiments.

That is a useful confirmation of what worried me. The Government do not need to feel that they have to defend anything. It was a suggestion that was put forward; it was looked at; it cannot be justified. It is not particularly intelligent; it does not improve safety; it does not save money. Why we are going ahead with it? Why do we not just say that it was a mistake? People do make mistakes—even in government, impossible though it may seem.

The Government should for once have sufficient ability to say, "All right. It is wrong." They should hold their hands up and say that it is not their intention to go ahead with the reorganisation and closure programme. It is not necessary and it will not contribute to the future happiness of the people of the United Kingdom. I say only one more thing to the Minister. She should say with Voltaire:

"I am very fond of truth, but not at all of martyrdom."

11.16 am

I congratulate the Chairman and members of the Transport Sub-Committee on producing a robust report and on the way in which the Chairman has introduced it. Those of us who have constituencies where stations are under threat of closure particularly welcome both the report and the early opportunity that the debate provides to discuss it.

What struck us most about the report was that it appeared to echo the concerns and underline the arguments that many of us who oppose the closures have been advancing all along. We advanced them in a debate in the Chamber on 26 November 1997, and my hon. Friend the Member for Argyll and Bute (Mrs. Michie) put them to the Minister and officials from the Coastguard Agency at a meeting in December 1997. Those concerns were reflected in the many responses to the so-called consultation document. Having examined the arguments and come to conclusions, the Committee's report gives great weight to the case for maintaining the present structure of 21 co-ordinating centres.

I share the concern of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) and the Committee about the apparent lack of proper consultation during the whole exercise. The Committee was unhappy with all aspects of the exercise, and I reached the same conclusion. I got the clear impression that there was never really any intention to consult. It was only because of the furore that was created, not least in the debate in November 1997, that, at the last moment, a consultation document was put together.

My clear impression of the document was that it was issued more to justify a decision that had already been taken than to examine properly all the different options. The lack of consultation was instanced by my constituent Dr. Jonathan Wills in a submission to the Committee. He sits on the Shetland sub-committee of the Northern Ireland and Scotland district marine safety committee. Shetland coastguard station was to inherit responsibilities from Pentland, yet no one ever discussed the matter with or consulted the committee, which was set up by the Government to examine issues of shipping and maritime safety.

The original timetable in the document was for the Coastguard Agency, as it then was, to receive, analyse and assess all responses and to report to the Minister within one week. After protest, the time span of the consultation was extended, but other aspects of the document show a lack of genuine consultation. It said, for example, that there would be no reduction in the lifeboat service. No one had ever suggested that there would be. For that matter, the service is not the responsibility of the Maritime and Coastguard Agency.

When analysing the work load of different stations, the document used the loaded term "false alarms". I think that the phrase "false alarms" is intended to make people believe that the service is a waste of time and money. The term is not used by the agency itself, however. A written answer from the Minister uses the proper expression "assistance not rendered". That could refer to, for instance, a fire on a fishing vessel that was put out by the time the emergency services arrived. No one in their right mind would consider that to be a false alarm.

In the case of Pentland, "false alarms" involved seven helicopter call-outs, 12 lifeboat launches and 37 call-outs of rescue teams. It turned out that assistance was not required, but those were potential emergencies. Account must be taken of so-called false alarms, as well as occasions on which services have been rendered, if we are to see the full picture of the responsibilities and work load of a station.

The consultation document suggested that, to be properly effective, a coastal station would have to deal with two or three incidents each day. Where in the world did that come from? In a written answer on 18 February 1998, the Minister told me that in 1996, only five co-ordinating centres in the United Kingdom would have met that criterion, and only six in 1997. The implication is that many employees lack experience, which I do not believe.

Is the hon. and learned Gentleman not taken by the strange dichotomy whereby it is decided that the Scottish coastguard stations should be closed because they are not busy enough and that, because the two busiest stations, Portland and Solent, are so busy, they ought to be located in the same building? Is it not odd that the same report should contain both those arguments?

We should also take into account what the hon. Member for Crewe and Nantwich said about Liverpool—which is already a very busy station—transferring some of its functions to Holyhead, which I believe is the seventh busiest station in the United Kingdom. As the hon. Lady said, there is not much logic in that.

I find it rather suspicious that there appears to be one closure or co-location in each of the regional areas. It may be just coincidence, but some of us need to be persuaded of that.

The results of the consultation seem to have been largely ignored. Of those who expressed a view on the Pentland closure, 84 per cent. were against it; 79 per cent. opposed the closure of Oban, 71 per cent. opposed the closure of Tyne Tees and 88 per cent. opposed that of Liverpool. I believe that only 8 per cent. of respondents supported the collocation of Portland and Solent. Despite that overwhelming opposition, however, the proposals went ahead. The only alteration related to timing: the closures of Pentland and Oban were delayed by a year, to 2000.

I do not believe that any member of the Committee—or, indeed, any hon. Member—has denied that there is a constant need for improvement and upgrading of technology. What has never been established is why that should require closures. There does not seem to be any link, except, perhaps, one related to cost. The 1998 National Audit Office report stated:

"Financial savings generated by the proposed reduction in the number of co-ordinating centres would be used to fund the introduction of new communications technology."

Proposals should not be cost-driven when health and safety at sea are involved. In any case, as the Committee pointed out, the cost is very small, and the position could be reversed at no real additional expense. Surely the answer is to link all 21 centres to the new technology, rather than proceeding with the closures.

Local knowledge is another important factor. The consultation document referred to what it described as an apparent disbenefit. The hon. Member for Crewe and Nantwich mentioned the example given by the Scottish Fishermen's Federation, and those of us who represent areas in the north of Scotland know that the same names crop up in different parts of the country. Sandwick is an example: goodness knows how many Sandwicks there are in Shetland, Orkney and the north-west. According to the consultation document, however, what is required is a "general familiarity". Justifying the use of that term, it referred to a report on staff inspection of marine divisions in 1978–79—blithely ignoring the coastguard search and rescue operational, planning and procedures manual, which states that "thorough local knowledge" is required.

It is not simply a question of knowing headlands, tides and place names, although that is important. Local knowledge also means

"regular face to face contact with the other emergency services … well established contacts with the fishing industry and other marine users; having a recognised presence in the community, and bringing a coastguard perspective to … local issues."

Both in the report and in meetings that I have had with the Minister, the importance of coastguards' getting rid of the bunker mentality and getting out into the community has been stressed. Either the former chief executive of the Coastguard Agency or the Chief Coastguard—I cannot remember which—regretted that there had been so few opportunities recently for coastguards to get out and about, and that accident prevention had not been given the profile that it deserved. In stations such as Pentland, however, there is good practice: coastguards are getting out into the community, and there are good working relationships with the other emergency services. But what is the response? In the name of improvement, a station that could provide a good example is being closed.

There is considerable scepticism in the coastguard service. At a time when resources are under restraint, it is not possible for coastguards to travel more widely along the coast, even in the quieter months.

There is a big problem with morale. As the hon. Lady pointed out, the 1994 Select Committee report called for a period of organisational stability, but that did not happen. In April 1997, the former chief executive of the agency sought to reassure me that Pentland station would not be closed, but it was closed six months later.

Those who serve as coastguards will have been buoyed up by the detail in which the hon. Lady's Committee has examined the issue, and the conclusions that it has reached. If our system is to be credible, when a House of Commons Committee has examined all the arguments and has reached so unequivocal a conclusion, the Minister concerned should give that conclusion full consideration. Let me tell this Minister that she will not lose face if she backs down. We shall be delighted; I assure her that we shall not rub her nose in it.

This is not a question of sentiment. I believe that the objective of securing a good, efficient coastguard service would be enhanced by our maintaining the present network of 21 co-ordinating centres, not least because of the importance of local knowledge. I believe that the service would be impaired by the closures, and I therefore ask the Minister—especially in view of the fact that Pentland and Oban are scheduled to close in less than 18 months—to end the uncertainty, and tell us that those and the other stations will remain open.

11.28 am

As a member of the Transport Sub-Committee, I welcome the opportunity to speak. I shall be brief, because I know that a number of my hon. Friends with constituency interests also wish to speak; but I want to make a number of points.

Having been a member of the Committee under the last Administration, and having been party to its full examination of the coastguard service—which reached similar conclusions to those reached on this occasion— I do not want it to be thought that I am a hypocrite, and have changed my mind just because I am now a member of the party that is in government. I want the Minister to give closer attention to this issue, to heed what is said both this morning and in the report and to exercise more common sense than has been exercised so far. I believe that the Committee has made the case, and has made it very well.

I want to reinforce what has been said about two matters. Local knowledge has been mentioned. In preparing our report, we took evidence from a number of sources, including two former Chief Coastguards. We were told:

"'Local knowledge' is vital to the officers controlling an incident especially in the first few minutes. No computer can replace knowledge and instinct. A computer simply provides facts for use. Local knowledge often saves vital time in effecting a rescue. The suggestion that an officer on receipt of a distress call or 999 call should consult a database or telephone for advice from Section Managers or coastal auxiliaries is totally unacceptable."

Two previous Chief Coastguards gave us that information, which most precisely explains the importance of local knowledge.

Only those who have local knowledge, especially in my own constituency, are able to understand peculiar local tides. The tide at the bar of the mouth of my part of the River Irvine, for example, could take any one of five possible directions. On many occasions, people get into difficulty on the river, and the only ones who are able to save the situation are those with local knowledge of the tides. Local knowledge is so important.

The report also deals with the presumed savings to be made by closing stations. If it is correct that closures will create savings of £500,000, that is but a mere pittance in overall Government expenditure. A possible consequence of the Department's desire to save £500,000 is loss of life. I should not like to have that on my conscience, and I imagine that my hon. Friend the Minister shares that feeling.

Last week, in his Budget statement, my right hon. Friend the Chancellor dealt with the need to support Customs and Excise in combating smuggling and more closely safeguarding our borders. When we consider allocating resources to achieve that objective, we should appreciate the importance of local knowledge. I should, therefore, think that—in the light of the stations' value in stopping the smuggling of goods—Transport Ministers will have the Chancellor's support when reconsidering the value of the savings to be made by making closures.

I ask Ministers to reconsider the matter, and to give the House a positive reply.

11.33 am

Like everyone else, I congratulate the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) on securing this debate, and congratulate the Transport Sub-Committee on its excellent report. I should also like to express my appreciation, and that of the people of Oban, for the effort that the hon. Lady made in visiting the town. I should stress that she visited in a personal capacity, not as the Committee Chairman. She spoke with many of those working in search and rescue, and with many who could, at any time, be the subject of such a rescue. Her initiative was greatly welcomed and lifted spirits, as everyone felt that, at last, someone was listening. I should add that Oban is not the easiest place to get to from London. She made a sterling effort.

I do not want, in the short time available to me, to rehearse all the arguments against closure of the Oban coastguard station. The Minister knows the arguments well enough—particularly those on the increase in maritime activity along the lengthy Argyll coastline, and the dangerous waters round all the islands and many sea lochs. Involved now in the area are ferries, fishing trawlers, yachts and year-round diving. Salmon fishing is intruding ever more into the sea. Liners are coming to dock in Oban bay, as are bulk carriers from the Glen Sanda quarry. It is a very busy area, and all parts of it require a co-ordinated rescue service. It is inconceivable that the Oban coastguard station might no longer be there to give that service.

Hon. Members have mentioned the work done by coastguard station personnel. In Oban, they have fostered and developed an excellent relationship with the other emergency services—they know one another, and they trust one another's knowledge and expertise. There are seven lifeboat stations in the area—at Oban, Portree, Mallaig, Kyle, Tobermory, Barra and Islay—and the Oban lifeboat is one of the busiest in the whole country. Last year, it recorded more than 100 call-outs, whereas the coastguard station itself recorded a 22 per cent. increase in operational work.

It is a treacherous and often very stormy part of the country, and the situation is likely to get worse. In a letter to the Committee, the North Argyll Development Agency said:

"Global warming, meteorologists inform us, is responsible for the deeper areas of low pressure which sweep across the Atlantic and most are hitting the West Coast of Scotland. Rainfall is greater and wind speeds are higher. Forecasters say they will get progressively worse and this means increased levels of danger at sea. The Coastguard agency is going to need all its present resources and more in the future, not less."

I can vouch for that. This has been one of the stormiest winters that we have had in the west, certainly for over 20 years. Moreover, as the North Argyll Development Agency said, it will get worse.

I should like to highlight two specific points, which have already been highlighted today by other hon. Members. Time and again, the report returns to the matter of local knowledge: it is invaluable. It is invaluable in deciding what resources to deploy and, most importantly, where to deploy them—particularly in an area such as the west coast of Scotland, which is similar to the area of my hon. and learned Friend the Member for Orkney and Shetland (Mr. Wallace) in having Gaelic place names scattered throughout the many islands and indented coastline. We have been told that the similarity of the names often leads to confusion.

As the hon. Member for Crewe and Nantwich said, the overwhelming majority of incidents dealt with by rescue co-ordination centres are either on the coast or just offshore, exactly where local knowledge is so valuable. We all accept that, whereas local knowledge is not the only source of information for coastguards, it is, as the report said, a fundamental tool in watch officers' armouries.

Although new technology is very welcome and necessary, I am concerned that too much reliance has been placed on it. I have a map—which hon. Members probably cannot see—showing all the current communication black spots, which are shown in yellow. There are very many such spots, and there is no evidence that new technology will overcome them.

I also have a note from Seawork International, a company of marine consultants and contractors, on bad weather communication failures. It states:

"Power sources for Telecommunications, Radio microwave links, and landlines are notoriously prone to failure on the West Coast, and due to the mountainous terrain, and sparse population, their swift repair is usually impossible. They regularly fail when the Winds and weather are at their worst, in other words, exactly when the Coastguards are likely to need them most!"

It is not at all clear who—other than the Minister, her officials and the hierarchy in the agency itself—is in favour of the strategy. Those who believe that it is wrong can be counted in their thousands. They include experienced seafarers and mariners from throughout the United Kingdom. I have letters to substantiate that claim.

My constituents are dismayed. They knew that they had the support of Labour in opposition, led by the now Deputy Prime Minister. They thought that the Labour party would continue that support in government. In the light of the report, I hope that the Minister will reconsider the closure programme, particularly the closure of the Oban coastguard station.

11.40 am

I extend my thanks to the Environment, Transport and Regional Affairs Committee for undertaking the inquiry. My constituency contains the Crosby coastguard station, which was signalled for closure in the Government's recommendations. The people at the station did not anticipate such a great response from the community. We have recently submitted a petition with 53,000 signatures to the Department of the Environment, Transport and the Regions. It was not organised by the staff of the Crosby coastguard station, but came as confetti through the door one day, the result of a voluntary reaction from the people of Merseyside, who intuitively understood the value of the coastguard service and did not want it to be amalgamated or removed.

Since then, many of my colleagues from Merseyside and I have written countless letters on the closure programme, questioning the need for it. I am grateful to them for their support. We have received very little positive response other than a repetition of the mantra of the Department of the Environment, Transport and the Regions. However, that has not stopped us. We were delighted when the Select Committee decided to undertake an inquiry, because we felt that it would provide an impartial, objective review of the arguments. I made it known to those who supported the retention of the Crosby station that we should accept the recommendations of the Committee. If the Committee felt that the closures were necessary and that there was no argument against them, we would concede. We recognised the value of the Committee's contribution and decided to uphold its recommendations.

It was with mixed feelings that I saw that the recommendations came out so resoundingly in our favour, calling for the retention of all the coastguard stations. I hope that my hon. Friend the Minister will concede that there have been oversights, omissions, misunderstandings and a lack of appreciation of many of the points that have been raised this morning, and accept that we should retain the coastguard stations that are considered imperative for safety not just by us, but by hundreds of thousands of seafarers, sea users and coastal shore users.

The arguments for the closure of the Crosby coastguard station included the suggestion that staff would be more effectively used by being stationed at Holyhead. It was envisaged that during quiet periods they would be required to carry out accident prevention and district liaison work. Figures quoted in the five-year strategy group document reviewing the work load for Liverpool appeared to show that Liverpool was not as busy as Holyhead and that the variety of incidents dealt with at Liverpool was not as great. The variety of incidents was stated as being an important factor in the training of officers.

It was also said that the Liverpool building was too old to be adapted for the new technology and that it could not be adapted for the expected increase in the number of staff required to cover the proposed new district. Local knowledge was alleged to be less important with the advent of new technology and it was said that that technology would mean that fewer, not more, marine rescue sub-centres would be required to monitor distress frequencies.

There are many valid, coherent arguments against those reasons for closure. The proposal to base the staff at the new enlarged district at Holyhead is not an effective use of taxpayers' money. Holyhead is at the end of the district. With the greatest respect to hon. Members from that area, it is at the end of a large cul de sac. The notion of staff going into the community and liaising with the other services, who are 60 miles away, is nonsense. That would not be an effective use of the services of coastguard agents.

The figures for incidents quoted on page 20 of the consultative document are seriously misleading. Other hon. Members have already pointed out that they do not accurately reflect the work load at Liverpool. The total figures quoted for Liverpool do not include hoax calls and false alarms. That is a serious omission. The same criteria have not been applied to the figures for other stations. We cannot compare like with like.

It is implied that hoax and false calls need no co-ordinating action. That is not true. At the outset of such incidents, life is believed to be at risk. Many such incidents require extensive co-ordination. Hoax calls often necessitate more work due to their nature: details of incidents are misleading and confused and investigations need to be conducted to find out who the culprits are. A call is regarded as a false alarm when resources are deployed but no assistance is rendered, such as when a large-scale search is conducted for an overdue boat that subsequently returns safely.

It has also been stated that there is a greater variety of incidents at Holyhead, giving officers wider experience and more job satisfaction. That is not true, as an examination of the real statistics shows. The argument that the building is too old to be adapted does not stand examination. We are not talking about a derelict building in the middle of a sand dune. It is a 16-year-old, single-storey building. We have no reason to believe that there would be any serious opposition to plans to extend it to take on board new technology.

I warmly support the comments made about local knowledge. I do not want to repeat the arguments, but local knowledge is vital. It is farcical to suggest that it can be replaced or dealt with by a computer or that it is possible to ring around when there is an emergency. Anyone working in an emergency needs expertise at hand. If local knowledge is so irrelevant, why is there an examination for it? It is one of the requirements. Does the move to a more amalgamated service come with an assumption that the local knowledge that can be retained by an individual can be stretched and stretched? I question the ability of an ordinary human being to retain the amount of information that the people at Holyhead will be expected to retain. It is not possible without compromising safety.

The current radio technology is analogue. As an engineer, I am pleased that it is going to be replaced by more modern technology. That will allow considerable savings in the cost of private wires, which will carry signals from the aerials to the MCS. However, the true benefits of a digital system will not be realised until a great majority of the seafaring public also have digital equipment, which is prohibitively expensive. I understand that it costs £2,000. It could be many years before the benefits of the system are realised to all. Those who call on the maritime rescue and co-ordination service do not necessarily have a radio. The new digital system will make no difference to those in dinghies, sailors, sailboarders, swimmers and walkers—90 per cent. of those who currently access the service. The new technology has yet to be tested. I believe that no provision has been made to ensure that an adequate safety system will be in place to protect the owners of small boats, leisure sailors and fishermen. There is no guarantee that we shall meet the specified safety standards.

There is a continued significant expansion in the Liverpool basin of North sea work, with the erection of new platforms, and of the number of people using the area.

The new development scheme includes new leisure facilities and water sports centres, and the number of visitors to the area will rise. The area already has a number of marinas, diving schools, yacht clubs and windsurfing clubs. It is unlikely that the new digital technology will be of benefit to the majority of people using the area for those activities. It is therefore important that the MRCS remains in the centre of this busy area, where the staff—with their local knowledge—are best placed to be of greater service to the community that they serve.

The analysis of the proposed closure states that, in the present circumstances, it would be wrong to close the Liverpool station. Liverpool is situated in a major port and city—with all the infrastructure that that entails—and is ideally situated for liaison with other emergency services and planners. To transfer its responsibilities to Holyhead would not be cost-effective. Holyhead is at one end of the proposed new district, and liaison with other emergency services in the event of a major incident would be, at best, difficult and, in some cases, totally impractical. Staff visiting the district would have greater distances to cover, with all the expense and the loss of expertise at the station that that would entail.

The new digital technology—which we welcome—merely replaces the present analogue system. There is no evidence for the premise that stations can be closed as a result of its installation. No risk assessment has been undertaken of what will happen to those stations when the technology is introduced. The new technology cannot replace the local knowledge of watch officers. The newly enlarged Holyhead district will be the busiest in the UK, and one of the largest, with approximately 1,000 miles of coastline; every nuance of which, I understand, is supposed to be retained by watch officers. Overseeing such a large district will mean a loss of knowledge and, as the number of incidents rise, stress on staff will increase.

No satisfactory explanation has been given for why the Liverpool station has been chosen for closure; or for why three stations are to remain in Wales, but not one on the west coast of England. The arguments for the closure of the Liverpool station do not stand close examination.

The Committee has recommended that all 21 maritime rescue co-ordination centres and sub-centres be retained, and that the new communications technology—which is so necessary—be installed in all of them. I would support that recommendation, as would the 53,000 people who signed that petition in the north-west. We understand the value of Crosby coastguard station, and we urge the Minister to reconsider the decision and allow us to keep all our coastguard stations open.

11.53 am

I am grateful for the opportunity to speak in the debate, not least because Tyne-Tees coastguard station—due for closure—is in my constituency. I am grateful for the work of the Select Committee, and I welcome the broad conclusions in its report.

I wish to refer to two matters that have been covered in detail this morning: first, the importance of local knowledge in local stations; and, secondly, whether "Focus For Change" and the consultation exercise has given the agency a more stable future. I am a member of the Public Accounts Committee which produced a report last year on the new agency in which we expressed similar reservations about the loss of local knowledge.

I welcome the new investment in the integrated coastguard communication system—I am not a luddite in terms of new technology. I welcome also the assurances, and reassurances, that coastal rescue resources will remain in place. I wish to put on record my appreciation of the work of the coastguard, the helicopter crews and the Royal National Lifeboat Institution, which celebrates its 175th anniversary this month.

The longer the discussion on the future of the agencies concerned went on, the more concern emerged about the loss of local knowledge. Watch officers are tested on their local knowledge, and a previous Chief Coastguard has warned us not to underestimate the importance of local knowledge. We are told, apparently, that thinking that a watch officer can retain detailed local knowledge is somehow misleading; that 1 square nautical mile of sea is much like any other. We are reassured that, in any case, local rescue resources will retain local knowledge. It is dangerous to assume that watch officers are simply there to answer telephones. That ignores their vital role in co-ordinating rescues, which are much more likely to take place along the coast—in some instances, coast that they know very well—than in open sea. Last year, Tyne-Tees dealt with 442 incidents inshore, and only 18 offshore. Alarm calls are often made by infrequent visitors to the coast, and are often made in the heat of an emergency.

It is important for local coastguards to be able to recognise local place names, to be familiar with the local vessels using that stretch of the coast and to be able to tell the difference between a description of Beacon Point in Newbiggin and Beacon Point in Seaham. The report states that local knowledge is

"a fundamental tool in Watch Officers' armouries".

Concern at the loss of local knowledge has been expressed not only by the Committee, but by the United Kingdom Offshore Operators Association, various fire and civil defence authorities and the National Federation of Fishermen's Organisations—including my own fishermen in North Shields. The Committee used the word "catastrophic" to describe the possible effect of the loss of local knowledge. That is a strong term for a report to use, and I hope that the Minister takes note of it.

It is important to address the concerns in the report about how the Maritime and Coastguard Agency managed to get into this position in the first place. I have the highest regard for my hon. Friend the Minister, but I must remind her that we inherited the review, and the recommendations—they are not binding on the Government. Throughout the process, there has been criticism about how the review and the consultation have been handled.

The Public and Commercial Services Union complained that the agency denied having a plan for station closures. When my local fishermen contacted me in the summer of 1997, they had heard rumours that Tyne-Tees was going to close. I contacted the agency, and I was reassured about the future of the station. Imagine how I felt in November 1997 when the announcement was made that the station was, after all, to close.

There is a strong suspicion that the agency has been dragged into the consultation process which followed the announcement, and that the consultation was really about how and when the closures would take place—not about whether or not they would take place. Despite two reports from major Committees, I am still not sure how stations were actually chosen for closure. We are led to believe that it had something to do with incidents—putting aside the fact that an oil tanker adrift of the Northumberland coast counts as one incident, as does a lone fisherman cut off by the tide.

The year chosen by the Maritime and Coastguard Agency was 1996, which just happened to be a year when incidents appeared to be falling. Last year, Tyne-Tees had its busiest year since 1995, and there is no sign—although I would hope that this is the case—that incidents are tailing off. That has resulted in the loss of an important station at Tyne-Tees, which serves nine river estuaries—where most incidents take place.

There are 6,000 annual movements into the Tyne, and the numbers are rising. There are 12,000 annual movements into the Tees—most of which are tankers entering the biggest industrial chemical complex in Europe; yet we are to lose the station. Is it any wonder that local people are left wondering whether this has been a meaningful consultation exercise at all? Is it any surprise that the Committee says that it is

"unhappy with all aspects of the consultation exercise"?

We are told that stations do not need to close to pay for the new technology, but why can we not retain local stations and local knowledge at the same time? Why, for once, cannot new technology enhance a local service, and not simply replace it?

If my hon. Friend the Minister is looking to save money, she should consider the number of incidents caused by recreational craft not looked after properly by their owners. Why do I have to have MOT, tax and insurance as a car owner, when I doubt whether those would be required if I owned a boat? If local boat owners want to make a contribution to the local coastguard service, we should encourage that.

In the meantime, I share the Committee's concerns and I hope that all the centres can be retained. My hon. Friend is aware of the strong feeling on the issue: 61,000 people in my region petitioned the Maritime and Coastguard Agency to ask it to think again, and I would be failing in my responsibility if I did not highlight their concern in the House.

12 noon

Last summer, representatives from the coastguard station at Lee-on-the-Solent came to see me and my hon. Friend the Member for Portsmouth, North (Mr. Rapson) to express a series of concerns about the review then under way. They put the case for the continuation of their centre and the Portland centre as separate entities. They were concerned that the proposal to conjoin the centres would lead, in the not-too-distant future, to one super-centre, and that the principle of effective coastguard operation on the south coast would be undermined.

I was deeply concerned, but I did not want to engage in special pleading, as I recognised that a national review was under way. I was delighted that the Select Committee decided to undertake an inquiry and, like many other hon. Members, I eagerly awaited its report. No one has dissented from the view that the Committee took a long, hard and careful look at the overall picture and concluded that there was not a case for closure, because the projected savings did not outweigh the problems that might be caused.

I felt vindicated, as what would have been special pleading on my part was shown to be part of a wider picture. That wider picture is encapsulated by the proposal to conjoin the Solent and Portland centres, which would effectively mean that along the south coast of England—by far the busiest recreational and commercial stretch of the United Kingdom coast—we would have, between Lyme Regis in the west and Eastbourne in the east, only one centre to respond. There would technically be two centres, but in effect only one.

The two centres were first and third in terms of the number of incidents in both 1996 and 1997, accounting for about 20 per cent. of all incidents recorded by all the coastguard stations in the United Kingdom. The argument that the stations can be conjoined because they are not busy is not borne out by the figures. Studies on the importance of ports and the future of leisure in the south-east of England show that the waters will inevitably become busier still.

I was pleased that, after consultation, the conjoining was put off until after 2003, but that is merely a pause. The Committee has done a good job for the House and for all who are concerned that their lives should not be put in peril when they go to sea. The review and the closures will not necessarily have that outcome, and my hon. Friend the Minister has emphasised the benefits from investment in new technology, but I cannot believe that technology alone could overcome the consequences of the watch officers having to look after new stretches of coast.

I ask the Government to reconsider and to examine carefully the Committee's conclusions and the views that have been expressed today, with virtual unanimity, about the future of the agency.

12.6 pm

I congratulate the Select Committee on its report, if for no other reason than that it totally vindicates the stance that my hon. Friend the Member for Crosby (Mrs. Curtis-Thomas) and I have taken. She rightly said that we have expressed the fears of the maritime interests on Merseyside. What consultations have been held with the Mersey Docks and Harbour Company and the shipowners of Merseyside?

A snippet of information that my hon. Friend the Minister may like to consider is that the latest indications are that the heavy commercial traffic through the port of Liverpool and Merseyside will increase in this year alone by about 40 per cent. As my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) said, we are not asking for a climbdown, but we want the Government to put to rest the accusations coming from maritime expertise in Merseyside that they have made an arrogant decision that flies in the face of all the best advice.

In a former life, if I may put it that way, I had close associations with maritime work, and I retain contacts at every level. I am in touch with captains of supertankers, with shipowners and with ordinary seamen, but I have not come across one person who has defended the proposed closures in any way. I urge my hon. Friend the Minister, in the interests of good maritime sense, to reconsider the proposals. Let us have proper consultation with maritime expertise and not merely pander to the wishes of vested interests that, for one reason or another, support the disastrous closure of stations all around the coast.

I beg my hon. Friend to listen to the pleas of all those who have spoken today. Not one voice has spoken in favour of the closures, and I appeal to her to take that into consideration.

12.8 pm

I support the detailed points made by my hon. Friends the Members for Crosby (Mrs. Curtis-Thomas) and for Bootle (Mr. Benton) on why the Liverpool station at Crosby should be retained. I find it absolutely incredible that, at a time when port trade, ferry services and the use of leisure craft are expanding, we should even consider closing a station where local knowledge has proved so invaluable in saving lives.

I urge my hon. Friend the Minister to consider the important issue of accountability. When the previous Government set up executive agencies, they tried to dissociate the decisions of those agencies from elected Government. I am glad that this Government have changed that situation and we now have to convince the Minister who is responsible for what happens.

Is my hon. Friend the Minister satisfied, after listening to all the contributions and seeing the evidence received—including the evidence from the Select Committee—that proper consultation has been carried out and proper consideration given to the detailed knowledge and expertise that has been included in the submissions? My hon. Friend is responsible and accountable for what happens. If she is not satisfied that the agency has discharged its duties carefully, with the interests of public safety paramount, I ask her to reconsider. This vital issue involves public safety and human lives, and the retention of expertise and local knowledge, as well as new technology. In the light of this debate and the mountains of expert evidence that have been submitted, I ask my hon. Friend the Minister to reconsider.

12.11 pm

I congratulate the hon. Member for Crewe and Nantwich (Mrs. Dunwoody) on her report. I hope that it is not too controversial to say that her Select Committee works very well. The Department of the Environment, Transport and the Regions has received no leaks from her Committee. She runs a tight ship and this is an excellent report which pulls no punches. We have had an excellent debate, although it may be a bit churlish for the official Opposition to say that it was a good debate when not a single hon. Member, from any party, supported the Government's position.

I speak also for my hon. Friends the Members for Poole (Mr. Syms), for Gosport (Mr. Viggers) and for South Dorset (Mr. Bruce), who have spoken in previous debates on this subject, and others who share the concerns about the situation. The hon. and learned Member for Orkney and Shetland (Mr. Wallace) mentioned the importance of local knowledge, and that is included in a recommendation in the report. He mentioned the existence of a number of Sandwicks and Sand Wicks in his constituency, and there are several Tarberts in the constituency of the hon. Member for Argyll and Bute (Mrs. Michie). The hon. and learned Gentleman rightly pointed out the importance of people in the application of local knowledge, and it is the people, mostly volunteers, who put their lives at risk when things go wrong.

The hon. Member for Cunninghame, South (Mr. Donohoe) said that he did not want to be a hypocrite, and I am sure there is no danger of that, but I am reminded of a campaign about 10 years ago with people unfurling banners in front of the House of Commons which read, "Don't sink the coastguard". The Deputy Prime Minister—the Minister for coral reefs—was at the forefront of that campaign and it is not unfair to ask him to be consistent on the issue.

The constituency of the hon. Member for Argyll and Bute contains some of the most dangerous tidal waters in the northern hemisphere, and I have personal experience of those stretches of water. She spoke of the huge increase in demand for Maritime and Coastguard Agency services and the communications black spots in that area. She asked who was in favour of the changes, which is a question that many other hon. Members posed. The hon. Members for Crosby (Mrs. Curtis-Thomas) and for Liverpool, Riverside (Mrs. Ellman) both questioned the situation in Liverpool, and I have received similar representations. Questions were asked about the meaningfulness of the consultation exercise, by the hon. Members for Tynemouth (Mr. Campbell) and for Bootle (Mr. Benton).

There are several key questions for the Minister. Are the proposals part of a strategy to rely more heavily on volunteers from whom the state is withdrawing its commitment? Who has made representations in favour of the proposals? What is the view of the Scottish Office? It is distressing that no Scottish Office Minister is present, when we are discussing an issue of such importance to Scotland. The tradition that Ministers support each other on important issues for which they have shared responsibilities seems to have died a death under this Government.

How much money will the exercise save and is it worth it? The most important question is whether the Minister will listen and make safety her primary concern. We paid the penalty for not listening at the general election: we will listen now and ensure that safety will be the paramount concern. I urge the Minister to think again about the proposals. That is what everyone who has spoken in the debate wants to hear and, in the interests of Back Benchers whose occasion this is, I shall end my remarks so that the Minister has plenty of time to reply to the points that have been raised.

12.15pm

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions

(Ms Glenda Jackson)

I add my thanks to those already presented to my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody), as Chairman of the Transport Committee, for the work that she and every member of the Committee have put into the report on the Maritime and Coastguard Agency. As is usual, the Government's response to the report will be made within the next month. I congratulate the Committee, which is probably the hardest working of all the Select Committees.

The Government will respond to the report in due course, but I shall respond directly to the contributions from hon. Members on both sides of the House this morning. The hon. Member for North Essex (Mr. Jenkin) said that party politics should not be involved, but he then proceeded to attempt, in his short contribution, to make empty party political points. All the other contributions this morning have treated the issue with the gravitas that it warrants.

I am the daughter of a fishing family and my right hon. Friend the Deputy Prime Minister began his working life as a seaman. It is inconceivable that this Government would contemplate for 30 seconds any strategy that would increase the risks and dangers to those who live and work on the sea. No other considerations will influence our approach to the issue.

The contributions from the hon. and learned Member for Orkney and Shetland (Mr. Wallace) and the hon. Member for Argyll and Bute (Mrs. Michie), and from my hon. Friends the Members for Cunninghame, South (Mr. Donohoe), for Crosby (Mrs. Curtis-Thomas), for Tynemouth (Mr. Campbell), for Southampton, Test (Dr. Whitehead), for Bootle (Mr. Benton) and for Liverpool, Riverside (Mrs. Ellman) have contained recurring themes. As well as justifiable constituency concerns, it has emerged from the debate that the coastguard is regarded by the entire population of this United Kingdom as a service that deserves the highest possible respect and is immensely valued. It has a special and particular place in the hearts and minds of all the people of our maritime nations. Therefore, I trust that I can, in this comparatively short contribution, put to rest some of the fears that have been expressed on both sides of the House, including the possible loss of local knowledge; the misperception that the five-year strategy is a cost-cutting exercise; the fear that the new equipment is so technologically difficult that it will be hard for coastguards to operate it; and the belief that the new equipment does not have a safe track record.

I shall deal first with whether the change is a cost-cutting exercise. That is not the case. We propose massive capital investment in the five-year strategy. The Government's clear commitment is to ensure that a search and rescue service regarded as the best in the world should maintain its primacy.

There will be a massive capital investment programme, and the £500,000 mentioned by several hon. Members relates to the savings arrived at by combining the two services into the Maritime and Coastguard Agency, and locating them in one headquarters. There has been no reduction in investment either on the coast or in the proposed strategy. The combined budget for the new Maritime and Coastguard Agency before the merger was £88.8 million; this year, it is £92.1 million, and is expected to rise.

Will the Minister give way?

No, I am sorry, but I have too little time.

Concerns have been expressed that the strategy will lead to a reduction in coastguard numbers. Again, that is not the case. We expect an increase in the number of coastguards by July, because the agency is taking over radio services that have until now been the responsibility of BT. That will lead to an increase of 42 new coastguards, taking the total to 600.

There has also been confusion over watch assistants. In the past, watch assistants were often volunteers, and—I mean no criticism of them—they were not necessarily reliable. Coastguard watch assistants are no longer volunteers; they are trained, they form part of the coastguard service and they are properly paid for the vital duties that they perform.

Proposed new equipment will be bench tested at Highcliffe training centre for at least two months, and the equipment will be mocked up as if it were in an operations room. It is not true that such equipment would be put into place on the stroke of midnight on a particular date. It would be installed at relevant co-ordinating centres and, only when it was clearly doing the job for which it was created, would the switch from the existing equipment take place. Obviously, all relevant coastguards will be trained. This is the third time that there has been a change of equipment, and the present equipment, which is vital for receiving and disseminating information, is coming to the end of its shelf life.

There are two central issues, and I shall deal first with the second. As several hon. Members said, during this debate not a word has been raised in support of the five-year strategy, and they would be interested to know who has supported it. The report last year by the National Audit Office into civil search and rescue said:

"The number of centres could be reduced without adversely affecting search and rescue operations, and positive benefits in allowing more flexible and effective use of staff."

In response to our consultation, the Royal National Lifeboat Institution said:

"We have been fully supportive of the rationale behind the closure of the four MRSCs."

It added:

"We fully appreciate that the availability of new digital communications technology will allow a reduction in the existing number of Rescue Centres required, without affecting the radio coverage."

As time is running short, I will send a list of other supporters to the hon. Members who have spoken today.

I should spend the bulk of my time dealing with an issue that rightly concerned every hon. Member who has spoken—what they perceive to be a deleterious loss of local knowledge as a result of the proposed five-year strategy. The informed speeches that I have heard this morning lead me to believe that all Members in the Chamber are aware that each co-ordinating centre deals with a large area of coastline. They average 500 miles and they are typically responsible for many thousands of square sea miles. I visited Holyhead recently and spoke to a coastguard whose most recent rescue co-ordinating duty had been for a vessel in danger off Argentina. That gives some idea of how valuable the coastguard is, not only to vessels in immediate sight of our shores, but to those around the world.

As my hon. Friend the Member for Crosby obliquely said, it would be inconceivable for any person or team of people to retain an absolutely detailed knowledge of such lengths of coastline and areas of sea. Such knowledge is not exclusively held in the brains of the remarkable human beings who are our coastguards. Their undoubted knowledge is supplemented by computer databases and the equally valuable local knowledge of people who carry out the rescues, such as the RNLI, the helicopter services and the other emergency services. Radio direction-finding equipment is of tremendous benefit in providing a positional fix, especially for calls by radio or telephone, which are the overwhelming source of search and rescue calls to co-ordination centres.

There must be, and always will be, a programme of familiarisation wherever the coastguard centre or the co-ordination centre is sited. We are talking about a national service. Each coastguard is a member of that national service, and coastguards expect to move around the country to ensure that the ability of rescue services to protect and save life at sea is fully national.

Part and parcel of that, as my hon. Friend the Member for Crewe and Nantwich said, is the ability proposed in the five-year strategy for coastguards to take part in the vital work of preventing accidents. My hon. Friend mentioned the vast increase in the number of recreational craft around our shores, a point also noted by other hon. Members. Education on prevention of accidents used mostly to be concentrated around our coastline, but the coastguard must now move further inland because people pulled by the sea are going ever-greater distances in the attempt to enjoy such recreational activities both within our shores and around our coastline. Far too frequently, people engage in activities on the sea with little or no knowledge of how dangerous they can be if one is not practised or not educated in the dangers.

There will be no compulsory redundancies. We do not expect to lose any coastguards. I have mentioned the need to increase coastguard numbers when the agency takes over radio marine safety information from BT. The coastguard will deal with weather reports and navigational hazards and will give medical advice. It will be linked to hospitals in Aberdeen and Gosport, and that service will begin on 1 July.

The overriding issue is the maintenance of what is widely recognised as the best search and rescue service in the world. The overall efficiency and effectiveness of the coastguard service can be improved without compromising safety. I have given a personal commitment to ensuring that the search and rescue service retains its primacy. I have been concerned by some remarks on consultation, and should point out that we did consult, and will—

Order. We must now turn to the next debate.

Soccer Grounds (Northern Ireland)

12.30 pm

It is a pleasure to be able to raise this issue today. I hope that the Minister will recognise that, if some of my hon. Friends leave before he finishes speaking, it is not intended as a discourtesy to him. A past leader of our party is preaching at a service in honour of St. Patrick today, and the hon. Gentleman will no doubt appreciate that that, too, is a draw.

I welcome the opportunity to raise the issue of health and safety at Northern Ireland soccer grounds. I do so in an optimistic frame of mind, given the Minister's recognition, during last night's debate on the national stadium for Northern Ireland, that there is now a demand that the Province should have sporting facilities at least on a par with those in other regions of the United Kingdom. That matter concerns a great many people in Northern Ireland—in particular, my constituents in Coleraine, where the showgrounds were recently threatened with closure following the serving on the local football club of three health and safety improvement orders. Those orders were the inevitable consequence of the current legislation. As I am sure that the Minister will appreciate that, if council officials had not acted, they would have been held culpable in the event of a disaster, on the ground that they were not enforcing the necessary health and safety regulations.

Those orders were served last October. At the time, Coleraine football club was given six months to come up with £250,000 to pay for the necessary improvements. That was never a realistic time scale or, indeed, a realistic prospect, given the low attendance and the consequential general lack of finance in the Irish league at present. Thankfully, it appears that the club will now be given a little breathing space to sort itself out, but the problem remains and is certain to spread to other senior soccer clubs in Northern Ireland if the Government do not act soon and come up with a coherent plan and appropriate funding to create a way forward for the Irish league soccer grounds in the Province.

The Minister is well aware of the problems to which I refer. For example, he and my right hon. Friend the Member for Upper Bann (Mr. Trimble) have received several hundred postcards from ordinary fans in the Province, who have been supporting the call of the Northern Ireland Football Supporters Association for Government assistance to fund the improvement of spectator and safety facilities at all senior Irish league clubs.

I am also aware that the Minister recently met my hon. Friend the Member for South Antrim (Mr. Forsythe), together with a number of other hon. Members, to discuss many of these problems. My hon. Friend came away from that meeting encouraged by the Minister's helpful attitude. I hope that the Minister departed feeling equally contented, given that he had just been in the company of a man who, to my knowledge, is the only serving Member of Parliament to have won an Irish cup winner's medal—[HON. MEMBERS: "Oh!"] Oh, yes.

It appears that many of the problems that senior football clubs in Northern Ireland now face are a direct result of the imbalance of grant aid that they receive in comparison with their mainland counterparts. As I understand it, the principal source of funding that is currently available to Irish league clubs is the lottery sports fund, administered by the Sports Council for Northern Ireland. That initiative offers up to 50 per cent. of costs, but only up to a maximum award of £50,000 towards safety work at identified spectator venues, including Irish league grounds—but there are other calls on the funds.

According to the Sports Council for Northern Ireland, the lottery sports fund in the Province has an allocation of only £4 million available each year, and applications for that money—mainly from soccer, rugby and Gaelic Athletic Association clubs—are running in excess of £21 million. Clearly, the solution to the problems faced by Irish league clubs will not be found from that source.

In theory, the Football Trust is another potentially useful source. The reality, I fear, is another matter. The trust is empowered to fund ground improvements in both Great Britain and Northern Ireland. However, as the Football Trust money has traditionally been reserved almost exclusively for improvements demanded as a result of the Taylor report, soccer clubs from the Province have not fared well. One exception is our national football stadium, Windsor Park, which has received a reasonable amount because, I am given to understand, it is the sole soccer ground in Northern Ireland that must abide by the Taylor recommendations.

Until recently, the Football Trust also operated an improvement scheme for clubs in the Irish league, which allocated a number of grants for local projects. However, only yesterday I discovered that the trust no longer has any money available for clubs in Northern Ireland; indeed, I am informed that there appears to be no prospect of its having any money for our clubs in the foreseeable future.

I look forward to hearing from the Minister where on earth our clubs are supposed to turn for the necessary funding. We hear rumours that new legislation on the matter is being developed for consideration by the Northern Ireland Assembly. The Minister will be aware that I am somewhat pessimistic that the Assembly will ever be in a position to act on that or any other issue, given the situation that we now have at Stormont and in the Province in general. That being the case, will our local soccer clubs be left swinging in the wind, with the current state of uncertainty continuing indefinitely? I do not think that that would be allowed: owing to the safety regulations, they have to do something to correct matters.

As I explained, Coleraine football club does not appear to have much time left. The situation is made all the more serious by the fact that the Coleraine showgrounds, which belong to an agricultural society, are also home every July to the Northern Ireland Milk cup, which is the largest and most prestigious youth football tournament in Europe. That competition, which involves matches played in various parts of the Province and in the north-west generally, is a vital component of the Northern Ireland tourist industry. The Coleraine triangle is an important tourist area. In the past, the tournament has attracted to the area teams from as far afield as Brazil, Russia, China, Algeria, the United States and Australia. It is a very popular competition. That showpiece tournament also helps the Province to develop its own home-grown players and—most important, as I am sure the Minister will agree—to convey a positive image of itself across the world, even in the most difficult and trying of circumstances. If the showgrounds were to close for any reason, what would happen to the Milk cup? I am sure that the Minister will agree that the repercussions would deal a disastrous blow not only to football but to the image of the Province.

A number of other senior clubs have been watching developments in Coleraine and awaiting with trepidation their own health and safety improvement orders, and the arrival of officials on their doorstep. That is inevitable. I should explain that the Coleraine ground is not the worst football ground in Northern Ireland; it is generally recognised as one of the most finely equipped stadiums in the Irish league—even so, it is not up to standard.

A recent spate of crowd trouble at some high-profile matches in the Province has not helped the overall situation. We all deplore such activities, which do no one any good and do great damage. As well as highlighting the problems caused by the fact that segregation is needed at some grounds, those incidents put the spotlight on the stewarding of matches. Again, it appears that money is the problem.

Does my hon. Friend agree that the fact that some clubs are suggesting changes in the Irish league might cause even greater problems in future?

My hon. Friend speaks with an intimate knowledge of such matters that I do not possess. He was a professional player for many years, and we can take it for granted that his comments are an accurate reflection of the matter and that he expresses a concern that is current in Northern Ireland football circles.

In the old days, the Royal Ulster Constabulary took the leading role in stewarding Irish league matches, but stewarding is now largely the responsibility of the clubs, and that causes them difficulties. In most cases, the individuals who carry out such tasks are unpaid volunteers, but a far more professional approach is needed for the more high-profile matches and that means employing qualified stewards. Many local clubs survive on gates of barely 100, so where are they supposed to find the money for that?

I sometimes have the impression that people in Northern Ireland prefer to play football than to watch it. That is always healthy. Every young boy in the Province sees himself as a future George Best, and I hope that there are a few such players out there, because that would do us all the world of good.

Funding is obviously required to train club stewards. I am informed that Coleraine football club has pledged that all its stewards will be trained to the required standard, and we all welcome that. The Government should acknowledge such a move by giving some form of subsidy, especially bearing in mind the long-term savings to the public purse through the reduction in policing costs at such matches.

To conclude, I leave the Minister with this thought and a fair length of time in which to reply. I know that he is a keen follower of Celtic football club in Glasgow and hon. Members might be aware that that club has a link with Coleraine—[HON. MEMBERS: "Oh."] Oh, yes. That link is Bertie Peacock, who wore the Celtic shirt with such flair in the 1950s. I recall Bertie telling me that he successfully captained the club for some time. He returned to the Coleraine showgrounds where he managed Coleraine to their sole Irish league championship two decades later. Just as a man of his ability was able to return home and give of his talents, I hope that the Government will be able to give the club some of the cash necessary to upgrade its facilities.

When the Minister next visits Parkhead—which in recent years has been rebuilt at no little cost—I want him to reflect on the fact that my constituents in Coleraine want the opportunity to watch their team in similar comfort. The crowds might not be as large, but there is at least as much enthusiasm. Football fans in Northern Ireland are rightly no less passionate about their local clubs than those in other parts of the United Kingdom. They also pay their taxes, and it appears that they buy more lottery tickets and fill in more pools coupons per head than people in any other part of the United Kingdom. Surely, they, too, should be allowed to watch their teams in a safe and pleasurable environment. For the good of a sport to which the Minister has given his attention and support for many years, I sincerely hope that he will be able to give us good news—if not today, in the near future—about the upgrading of the safety facilities.

12.44 pm

I congratulate the hon. Member for East Londonderry (Mr. Ross) on securing this debate and, for the second time today from the Dispatch Box, I wish him and his right hon. and hon. Friends a very good St. Patrick's day. At the moment, I should be on my knees at the service at which Lord Molyneaux is giving the sermon. Although it might have been better for my soul if I had attended the service, there are urgent temporal matters to which we must attend.

I congratulate hon. Members who have turned up for the debate this morning. The hon. Member for Lagan Valley (Mr. Donaldson) was in the Chamber last night; his local club is the Distillery football club. The right hon. Member for Strangford (Mr. Taylor) has concerns about Ards football club. The hon. Member for East Antrim (Mr. Beggs) is concerned about Larne and Ballyclare football clubs and, I think, Carrick Rangers.

The hon. Member for South Antrim (Mr. Forsythe) was a distinguished footballer and is a personal friend of Bertie Peacock. I remember being taken to Parkhead when I was a tiny tot and seeing Bertie Peacock in his distinguished role as left-half for Celtic. He did himself and the club tremendous credit and he also did Northern Ireland great credit. I must not forget the hon. Member for Belfast, North (Mr. Walker), who is concerned with the Crusaders and Cliftonville clubs. We have a full turnout today and, if we wanted to, we could distinguish ourselves on the football ground as well as in the Chamber.

Let me turn to serious business. The hon. Member for East Londonderry is aware that I wrote to him on 4 January about issues arising from the comprehensive spending review and about safety at football grounds. I have received a number of representations from right hon. and hon. Members since then, and shall mention them later in my speech.

The Government acknowledge the important contribution made by sport to the enhancement of the quality of life of the people of Northern Ireland. As I said in last night's Adjournment debate, the Ulster victories in rugby's European cup and the staging, in two weeks' time, of the world cross-country championships, have brought the significance of sport to the fore in Northern Ireland. I am the first to accept that we have fallen behind and that something needs to be done. In the short time for which I have an influence in such matters, I want to ensure that sport is a live item on the agenda of the Northern Ireland Assembly so that the issue can be tackled, both nationally—the national stadium is extremely important—and locally. That would be positive and good, not only for sport, but for the whole community.

As the hon. Gentleman pointed out, another key consideration is safety at sports grounds. I give an assurance that the Government are fully aware of the need to strengthen health and safety at major sports venues in Northern Ireland. Those venues extend not only to soccer, but to rugby and Gaelic sports. We are aware of the potential of more welcoming grounds to attract increased numbers of spectators and, in so doing, to contribute to the well-being of sport and its development.

I was at Ravenhill for the European rugby semi-final; the official seating figure is 2,000, but temporary seating was installed so total attendance was about 20,000. After the game, we were told that there was to be a match at Lansdowne Road in Dublin, where the capacity is about 60,000. We thought that the ground might be half full but, as right hon. and hon. Members know, on the day, not only was the ground full, but attendance could easily have been doubled. Interest in sport is tremendous and a strong aspect of that interest is that it is cross-community. During the Adjournment debate, I mentioned that I drove from Dublin airport with my right hon. Friend the Secretary of State for Northern Ireland. We passed endless pubs from which people were overflowing into the streets. I was only sad that I did not have time to partake of any Guinness before I reached the ground. The enthusiasm on that day was tremendous and it has had a lasting impact on Northern Ireland.

I am able to report that, in recent months, my officials and I have met a number of interested groups and individuals in Northern Ireland, including an all-party delegation, the Irish Football Association and the Irish Football League to discuss concerns. I have also met representatives of the Football Trust, which has been the main conduit for financial support for safety improvements in Great Britain following the Taylor report on the Hillsborough stadium disaster in 1989. Those meetings have been most useful and we have tried to find a way of making progress in that important area.

I am pleased to be able to provide an update on safety at sports grounds in Northern Ireland. By way of background, I should explain that, following the strengthening of safety legislation in Great Britain in the wake of the Taylor report, the need for equivalent action in Northern Ireland was considered by an inter-departmental working group chaired by the Department of Education and drawn from the health and safety inspectorate of the Department of Economic Development, the Department of the Environment, the Northern Ireland Office, the Royal Ulster Constabulary and the Sports Council for Northern Ireland. The working group's final report has made several recommendations, including the need to introduce for Northern Ireland legislation, similar to that which exists in Great Britain, covering larger venues.

The proposal for new legislation governing safety at sports grounds would affect not only 19 soccer grounds but one rugby ground and seven Gaelic football venues. A compliance cost assessment prepared as part of the report suggests that the cost of upgrading safety standards at Northern Ireland sports grounds in line with Great Britain would be about £20 million. The report envisaged an improvement programme phased over several years, which is again similar to the approach taken in England. It also envisaged that clubs would be required to contribute some 25 per cent. of the cost, but recognised that other funding, perhaps through the Football Trust, would be required.

The hon. Member for East Londonderry mentioned Coleraine football club in his constituency and the fact that it is facing closure. It is clearly important to keep such venues open. The short-term solution involves the Sports Council for Northern Ireland and the long-term solution involves the Football Trust, legislation and the Assembly. However, we do not need legislation to move on that problem initially. I hope that it will reassure hon. Members when I say that we are actively discussing the matter with the Football Trust.

Let me comment on Coleraine football club, to which the hon. Gentleman referred specifically. Local health and safety officers inspected the showgrounds, the home of the club, last year. Media reports suggested that £250,000 would be needed to put the ground in order and mentioned the threat of closure. We understand that, unofficially, the cost is likely to be less than £250,000. However, the club has not approached the Sports Council—which can provide limited help in the short term—for assistance. I suggest that the hon. Gentleman urges Coleraine to explore every funding avenue, including the Sports Council.

Although my ministerial colleagues and I have signed up, in principle, to the recommendations in the report, I emphasise that it will be for the new Northern Ireland Assembly to decide how matters should proceed. I realise that that presents uncertainties, which include the Assembly's acceptance of the proposals and the time scale within the Assembly's legislative programme for introducing any new legislation to strengthen safety requirements.

It is worth noting at this point that individual clubs have an obligation to meet the requirements of existing general health and safety legislation. The Sports Council for Northern Ireland makes available modest grants from the sports lottery fund for health and safety improvements at sports grounds. Although that is a useful contribution, Northern Ireland's share of the sports lottery fund is not sufficiently large to cope with the capital requirements needed to deal with the problem of safety at sports grounds. The Sports Council has begun a safety awareness and education programme involving the major spectator sports. That work is very important as a means of promoting a health and safety culture and encouraging club managers to face up to their obligations.

My overarching concern is that further progress should be made towards ensuring the safety and comfort of those who attend sporting events in Northern Ireland. Progress towards that end will encourage family support, and ultimately help clubs embed themselves more firmly in their local communities. We must remember the community as well as the sporting element. It is important to encourage the fertilisation of communities and eliminate the cross-community divide in the long term. Health and safety improvements at sporting grounds should accompany the implementation of the Belfast agreement so that we secure a new future for Northern Ireland. Sport should take its proper place in Northern Ireland's cultural life.

In light of safety concerns, we have been considering options for moving forward, which include the need to secure funds to support safety improvement costs. We believe that there is scope to fund a programme of safety work under existing legislation that could potentially provide an interim solution in advance of any enactment of new legislation for Northern Ireland. To help progress the development of an interim scheme, the Sports Council has commissioned a health and safety officer from Belfast city council to undertake a feasibility study, which will include a priority needs analysis. That exercise will provide a basis for establishing which grounds have the most pressing need, but it recognises that wide consultation will be required before final conclusions are reached.

As I said earlier, I recently met the chief executive of the Football Trust and its chairman, my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry).

The Minister is well aware of the closure threat to grounds that do not conform to the necessary health and safety regulations within a short time. Is there some way of extending that period to give clubs time to meet those safety requirements?

I am sure the hon. Gentleman agrees that all health and safety problems will not be solved overnight, but the Government are extremely sympathetic when it comes to ensuring that football grounds remain open. I cannot give any commitments from the Dispatch Box, because that is a matter for health and safety officers. However, the Government will make every effort in that regard.

If we marry the short-term solutions that are available through the Sports Council and other areas with the longer-term element—the Government could talk to the Football Trust, legislation might be enacted and lottery funding awarded—progress might be achieved. We recognise that it would be folly to allow football grounds to close, because it would be difficult to generate support for the game again. We must foster the good will that exists in Northern Ireland soccer, and the Government will do everything possible to ensure that football grounds do not close. There is no automatic cut-off date, and the Government and communities will expend much effort considering that question.

As the hon. Gentleman knows, previous attempts to secure some of the Football Trust budget for improving sports grounds in Northern Ireland have received a sympathetic, but negative, response. That is not good enough. In my meeting with my hon. Friend the Member for Stalybridge and Hyde and the chief executive of the Football Trust, I pointed out that Northern Ireland had been left out in the past and that it was now time to act. The Government and the Football Trust were very pleased with the meeting, which we viewed as a seminal event. It was previously believed that legislation was required and that the Assembly had to be up and running before any action could be taken. Some people are optimistic about what legislation will achieve—I know that the hon. Member for East Londonderry takes a pessimistic view. However, whether optimistic or pessimistic, all want to see early action. As a result of my meeting with the Football Trust, I can confirm that action will be taken soon that may be carried through to the Assembly.

I am delighted that the trust is now keen and willing, in principle, to support and become involved in an interim scheme for Northern Ireland. As I have said, the scheme includes soccer, the Gaelic Athletic Association and rugby grounds. An important element is that the Football Trust is looking for—

Order. We now come to the next debate.

Suburban Areas

1 pm

The overriding aim of this debate is to secure from the Government a recognition of the problems associated with the economic, social and environmental decline of many suburban areas and to suggest a way in which to develop a policy programme targeted at those communities. Straightforwardly, it is an unashamed attempt to influence the drafting of the White Paper on the future of urban policy, which is promised for publication later this year. I hope that that will provide an opportunity for a fundamental reappraisal of the urban agenda of central and local government.

The debate on our suburban areas has been a long while coming. Understandably, discussion of urban policy in Britain has concentrated on the dereliction and decline of our inner-city areas and the terrible social consequences for many of their residents. Any discussion of suburban areas has largely focused on their role in the relocation of inner-city populations and as dormitory towns for commuters serving the central urban core.

In the 1980s in London, however, attempts were made to broaden the debate when the Greater London council launched its community areas programme. That acknowledged that significant pockets of deprivation had grown up in suburban areas and required the special attention of central and local government. The programme allocated additional resources and enhanced policy-making powers to those communities so that local organisations throughout the public, private and voluntary sectors could work together to regenerate their areas. The abolition of the GLC by the previous Government halted the community areas programme and contributed to hindering the development of discussion of policies for suburban communities, certainly in London and possibly nationally, for nearly a decade.

By contrast, internationally, there have been several major studies of the problems of suburban areas which have stimulated a healthy debate leading to specifically designed policy initiatives. In this country, the problems and challenges of suburban areas have, in recent months, been placed back on the agenda through a combination of initiatives.

The first was this Government's recognition that several large suburban estates with high levels of unemployment, poverty, alienation and crime demand their urgent attention. The social exclusion unit, set up by the Prime Minister within No. 10, has established policy action teams to launch a strategy for neighbourhood renewal targeted at those estates. Useful lessons will be learned from that initiative, which I welcome. Nevertheless, its remit is geographically limited and although it is often targeted at sizeable estates, it is not envisaged that it will encompass a whole suburb or town or strategically cover a town centre, estates, mixed ownership housing areas and industrial estates.

The second development that highlighted suburban regeneration was the publication in February of the Joseph Rowntree Trust report "Sustainable Renewal of Suburban Areas". The report provides a valuable stimulus to the suburban debate. It confirmed that few recent studies of the suburbs have been undertaken in Britain, in contrast to international analyses. It identified the fact that some suburbs show signs of stress, with deteriorating community facilities, declining local centres, car domination and monotone housing which does not reflect population and social change and has undermined community spirit.

The report drew up a checklist of sustainability criteria and described how some suburbs were becoming less sustainable than when they were first built. In the researchers' judgment, there was a good case for careful intervention in some suburbs by working with the local communities to try to improve facilities and transport patterns and to adapt the housing stock. The researchers argued that there was a need for an urban renaissance and for the contribution of the suburbs to be recognised and fully explored.

The study identified four themes that were regularly identified where scope for early action clearly existed—transport integration and the need to reshape local centres, improve community facilities and renew housing. In a range of recommendations, the report suggested that the Government could pilot community-based programmes in a number of suburban areas and consider how we could tackle the specific problems of suburban communities.

I welcome the fact that the coincidence of Government concerns about the deterioration of the quality of life on suburban estates and the publication of the Rowntree report has contributed to broadening the urban debate. Both initiatives reflect the experience, analysis of problems and emerging policy programme that are evident within my constituency. My area is a typical example of the suburban areas that are under stress, as highlighted in the Rowntree report, and is open to the same policy solutions recommended in it.

After the general election in May 1997, a common theme emerged from my discussions with community groups, employers and residents. People were angry about the state of our town and how it had been allowed to deteriorate. They were angry about issues ranging from the litter in our streets, the running down of our parks, the decline of our town centre and the level of crime to the standards in our schools. They were also worried for the future, especially about the prospects for our children. People were becoming increasingly frustrated that there was nobody to listen to their concerns and that, when they expressed their worries or complained to many official bodies, they appeared to be ignored.

As a result of those discussions, I felt that we could not continue to stand back and let our town decline into a suburban slum. I took the view that we must and could take action to turn that situation around. For that reason, I convened a community conference at our local theatre, to which I invited representatives from as many community organisations, firms and public bodies as I could identify—roughly about 2,500. The aim of the conference was to discuss the future of Hayes and Harlington. For each problem that our community faced, I was determined that we would identify a solution.

All who attended the conference were surprised at the large number of representatives —450—who came and actively participated. The conference was not only well attended, but genuinely representative of all sectors of our community and overwhelmingly positive. It examined the main issues that confronted our community. Our analysis described the long-term spiral of economic, social and environmental decline that had afflicted our area. We produced evidence of the lack of stable investment in our public services under the previous Government and the policy mistakes and neglect that we had experienced at the hands of local and national decision makers.

The result of that neglect was a town with a weakened sense of community, an incoherent structure of community leadership and a lack of any sense of direction or vision. In summary, if we were a school, we would be classed as failing. We had a failing town on our hands. On the positive side, however, we acknowledged that, in the past two decades, we had survived three recessions and that, with a change of Government, we now faced a period of planned, stable investment over the next five years. In addition, the public agencies pledged to concentrate anew on Hayes and Harlington.

The community conference had awakened a new sense of community activity. We concluded that it could stimulate a new structure to give Hayes and Harlington a new start, laying new foundations for a prosperous and successful town in which we could all enjoy living and of which we could all be proud to be a part.

At that conference, subsequent conferences and what we described as brainstorming sessions, we agreed that a succinct and readable prospectus should be drawn up describing the vision for the future of our town and setting out a series of recommendations for action aimed at securing that objective. The aim was not only to describe a way forward for our community, but to agree a programme of action that we could all sign up to and implement over the coming decade.

In 1998, a further community conference was convened to launch the prospectus for consultation. The prospectus tried to address the main concerns within the community and set out the policies and ideas designed to tackle those issues and to give our town a future. It was circulated to local community groups, companies and public bodies for their comments and advice. Numerous local organisations across the public, private and community sectors signed up to support in whatever way they could the achievement of that vision for the future of our community.

Last month, I led a delegation of the chief executives of local bodies, including the chamber of trade, the police, the health authority and the local authority, to present the prospectus to No. 10, and met the head of the Prime Minister's policy unit to discuss the development of suburban policy making.

The prospectus examines the economic, social and environmental problems facing our community and sets out our solutions. A key factor in our decline has been the restructuring of our local economy. Recent structural changes in the economy have led to major losses of traditional sources of employment. There have been significant reductions in employment in, for example, the defence industry and its subsidiaries. There has been intense downsizing in the manufacturing sector. Although there has been growth in the number of jobs at Heathrow airport, even in recent years there have been significant lay-offs at airport-related firms. Those structural changes have produced a black-eye effect around Heathrow, which depicts Heathrow as a centre of heightened economic activity, which is surrounded—especially to the north and east—by an outer ring of relative deprivation. Structural changes and rapid technological advances are forecast to continue and the future of Hayes and Harlington may ultimately depend on how we can respond and adapt to such changes.

Hayes town centre has suffered particularly from the consequences of economic decline and a reduction in residents' spending power over the past two decades. The development of out-of-town retail parks and supermarkets, which was given permission to go ahead by the previous Government, has had a severe detrimental effect on the town. Those developments have drawn people away from the town centre in large numbers. Our task now is to develop the town in a way to enable it to survive alongside the out-of-town parks.

We believe that, if the regeneration of our town is to be successful, we need to bring together a new structure and co-ordinate new initiatives that build on the current successes and avoid present failures. A central aim, therefore, is to build on existing partnerships, notably our single regeneration budget partnership, and those with the Hillingdon chamber of commerce and the West London training and enterprise council, to launch a new economic development forum to promote the growth of economic prosperity in our area. The forum would promote and support initiatives to tackle three key drivers of local economic regeneration. These are business development and competitiveness, developing our skills base and improving the environment and infrastructure to attract inward investment.

Education is seen throughout the community as a key ingredient for the future success of our local economy and for improving the life chances of local people of all ages. We have identified the central questions to be addressed if we are to provide a high-quality education service in Hayes and Harlington. They include the supply of pre-school, school and college places. That has been greatly aided by new Government initiatives. A new school is being built in Hayes and Harlington, as is a new extension to our local TEC college and the first Sikh college in the country.

We have also identified the need to raise standards of attainment at local schools and to retain high-calibre staff, teachers and governors. We have a broad range of very high-quality, committed head teachers and teachers, and we need to retain them within the area. We need more support for parents and pupils out of school. We agree that we need to strengthen local partnerships between schools and business. We need also to develop facilities for lifelong learning. Again, that is greatly assisted by current Government policy.

As local people gain the skills to enter and progress within the local jobs market, it is crucial that we retain them as residents within the area. Too often, an increase in income in Hayes and Harlington has resulted in families moving away. Those residents move away to secure a safer, cleaner and healthier environment in which to raise their families. Our aim, therefore, must be to transform the quality of our local environment so that they remain within the area.

One of the issues is crime. To make our community safer, the community, the council and the police are already working together to tackle crime in Hayes. Consultation on our new community safety plan for the area has recently been completed. The plan highlights the role of partnership between the police, the community via a local sector working group and neighbourhood watch schemes in enhancing safety and tackling issues such as security by design, including street lighting and the use of closed-circuit television; anti-social behaviour and disorder; youth offending; racial harassment and domestic violence; and, unfortunately, drug and alcohol abuse.

We aim to promote a healthier environment and life style in our community, and our prospectus has kick-started action on a number of issues, including plans and consultation to establish a new community hospital in Hayes after the closure and sell-off, under the previous Government, of our two community hospitals. We want to improve the facilities for doctors' surgeries in Hayes and Harlington. We already have two new health centres on the stocks. We want to promote healthy living and increased awareness of conditions that, unfortunately, are increasing in prevalence within the area, such as diabetes and asthma. We want to address the environmental issues that affect health locally—for example, pollution and asthma.

One of the hardest challenges for us is how we can restore the quality of our green environment. Local residents can chart the transformation of Hayes from an industrious town surrounded by villages separated by open fields and market gardens into an urban sprawl. Its open fields were used for gravel pits and rubbish dumps, and its Edwardian parks, gardens and municipal buildings were allowed to fall into dereliction, particularly over the past 20 years.

This historical decline is reflected in the number of key environmental issues that have become self-evident concerns for local residents. These include—they reflect many urban areas such as Hayes and Harlington—street cleanliness and the quality of our built environment, the loss and dereliction of our open spaces and parks and their inaccessibility for social and cultural activity, the protection of local wildlife, air pollution arising from the confluence of the airport and the M4 and M25 motorways and the heavily congested local road network, the lack of adequate recycling facilities and a strategy for minimising and recycling waste.

It has become clear that there is a need for a comprehensive programme to include the quality of the environment in which we live. That is reflected in many suburban areas. That should start with some basic improvements in local environmental services and facilities, leading on to long-term and more ambitious environmental regeneration projects.

Key components of our environmental programme are, first, providing good-quality affordable homes by new build and refurbishment and experimentation in the provision of homes by, for example, converting offices and derelict shops; secondly, enhancing our street environment by tackling litter and fly-tipping and involving residents in the assessment of their own street, architecturally and environmentally, as well as involving them in discussions about improvements; thirdly, reclaiming our parks and open spaces from dereliction and vandalism; fourthly, creating a biodiversity plan for the area, protecting our local wildlife; and, fifthly, implementing a sustainable transport and energy plan which is aimed at reducing air pollution.

The community conference process has identified a weakened sense of community within Hayes and Harlington as one of the key issues to be addressed. There is a general perception that, over recent years, there has been a decline in the organisation of and participation in community and cultural activities. This has led to feelings of isolation and exclusion and a breakdown in many of the networks of support which traditionally existed in our area. The problems that community organisations face in our community include a lack of volunteers, especially people who will take on a leadership role, a lack of resources, a lack of a comprehensive network between groups and a lack of acknowledgement of their valuable contribution to the community.

Although there is a wide range of local community organisations, there is an obvious need to strengthen their ability to act more effectively in serving their communities of interest. There is a need also to ensure that the community organisations in our area come together regularly and are linked to the networks of support in the rest of the borough. This is all about capacity building within our community, and it needs assistance. In particular, it needs assistance through fundraising and the provision of the professional resources to ensure that grant applications are successful.

I am proud that my community, in which I live and which I represent, has risen to the challenge of renewal. Suburban areas are located at the geographical periphery of urban areas, but, for too long, we have been on the periphery of the political agenda. Too often, the image of leafy suburbs has hidden the real deprivation that many suburban areas experience. However, we can succeed in tackling this problem only if the Government go further in recognising the needs of suburban areas such as mine in the development of their urban policy, and especially in the development and drafting of the future White Paper. My community needs that little extra governmental attention and resources to fulfil the promise of our community prospectus. The investment of energy and resources now in suburban areas under stress will halt their decline into inner-city squalor.

I hope that my contribution has given my hon. Friend the Minister some food for thought as he and his colleagues finalise the drafting of the White Paper. I end by inviting my hon. Friend to visit my constituency to see our renewal programme in action and to ascertain what further could be achieved with his assistance.

1.18 pm

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions

(Mr. Alan Meale)

First, I congratulate my hon. Friend the Member for Hayes and Harlington (Mr. McDonnell) on securing this debate on what we in the Government feel is a very important subject. He has drawn attention to just one part of the work that interests us in undertaking the various tasks that we have set ourselves in terms of economic generation.

I pay tribute to my hon. Friend. It is typical of him that, yet again, he is busily at work representing his constituents in a macro-economic approach. His history in the movement in that direction, in everything from being a member of the Greater London council, being a leading figure in local government, particularly in London, and to working in trade unions, has shown him to be someone who is a good soldier in fighting for those whom he represents.

The work carried out by my hon. Friend and the local community in preparing the Hayes and Harlington prospectus makes a valuable contribution. Many new Members should follow his example and try to produce similar reports outlining the economic needs of their areas.

It is right that, from time to time, we should focus on the suburbs. Too often, they are taken for granted. The media often focus on the needs of rural areas, and rightly so, as many topics affecting them need to be discussed. Equally, the issues affecting inner-city areas are often examined, but little attention is paid to the suburbs. Perhaps that is because they are seen, by and large, as pretty ordinary places.

As my hon. Friend commented, the debate on suburban regeneration has been a long time coming. The suburbs are, of course, home to the majority of Britain's urban population. Those who live in the suburbs know that issues affecting the future of their neighbourhoods are well worth considering. I congratulate the Civic Trust and the Rowntree Trust on identifying the need for research on the topic, and on giving us a fine report to stimulate debate, such as our debate today.

It is odd that the word "suburban" is sometimes used in a derogatory manner, especially by people seeking funds for such areas. To many people, the word—wrongly, in my opinion—conjures up an image of rows of semi-detached houses occupied by families keeping themselves to themselves, with a neat lawn and a car in the drive, although such people commute daily to work. The image is respectable, domestic and perhaps rather boring, compared with the vitality of many city centres, or the natural beauty of our rural areas.

The reality is often quite different, as my hon. Friend knows. The suburb is perhaps a peculiarly British development. Few continental cities have suburbs, whereas many of our towns and cities have developed highly successful suburbs over the years. At one time, areas such as Chelsea and Brixton were suburbs of London, but much has changed since then. With the movement of the population to the cities and the growth of public transport, new suburbs were created. The Civic Trust report describes the various categories.

Some suburbs were viable and remain so. Bedford Park in west London, for example, is still an architectural gem. In other cities, there were planned suburbs, such as Bourneville in Birmingham. Those "leafy" suburbs offered the growing urban classes a better quality of life than was available in the inner cities. The original objective of the Barbican centre was to create a new inner-London suburb. The suburbs met the urban population's need for accommodation in a broadly sustainable way.

More recently, there have been some less successful examples. As cities expanded outwards into urban sprawl, we created low-density homogenous suburbs which lacked the distinctiveness and character of earlier suburbs. The newer suburbs tend to be dependent on the car, which makes them less sustainable in terms of transport, social mix and the amount of land that they use.

The report by the Civic Trust and Ove Arup and Partners focuses on different types of suburb and includes some useful case studies based on particular cities. The authors give a timely warning that there is evidence that some suburbs are becoming less stable and sustainable with respect to their local economies, social structures and environment, as my hon. Friend pointed out.

The report draws attention to deteriorating community facilities such as community centres and green spaces, declining shopping centres and parades, public transport that is not adapting to changing needs, and large areas of ageing houses of a single type. Such problems may not be as stark as those in the more deprived inner cities, where there are multiple causes of deprivation and social exclusion, but the authors argue that a stitch in time may prevent the problems from becoming more serious and leading to rapid decline.

The authors of the report make various recommendations directed at government, local authorities and other agencies. They highlight the need to encourage and assist suburbs to adapt to the future. They rule out large-scale restructuring of suburban areas, and suggest that smaller-scale changes over time could improve the quality of suburban life and foster community involvement and civic pride, while contributing to a sustainable urban renaissance.

I am pleased that the report places a high premium on community involvement, as it is recognised in all parts of the House that change that does not have the support of the community will not be sustainable.

The report is timely. As the House knows, the Government will issue White Papers on urban and rural policies later this year. The urban policy White Paper will look at towns and cities, including suburbs, and will suggest how we can help them to become vibrant and prosperous, offering a good quality of life to those who live and work in them.

As my hon. Friend mentioned, Lord Rogers is leading a task force established by my right hon. Friend the Deputy Prime Minister to examine the future of urban areas. It was born out of the need to make sure that we make the best use of previously developed land in meeting the demand for new housing, so that the pressure on green-field sites will be reduced. However, Lord Rogers and his team will consider all the factors affecting the development of urban areas, and will report in the summer.

The social exclusion unit is studying related issues, including neighbourhood management. Some aspects of the Rowntree report will be relevant. Today's debate will become part of the consultation exercise. The unit will produce a strategy for neighbourhood management next year.

My hon. Friend spoke about the economic problems faced by suburban areas. The key to resolving them must be to create national conditions that provide a climate for our towns and cities to prosper. We must promote national economic performance and sustainability, and maintain a stable macro-economic climate with support for enterprise, skills and work initiatives, which will be essential to improve the quality of life in all parts of the country.

That agenda will be driven forward by the recent Budget announced by my right hon. Friend the Chancellor of the Exchequer, and the work that my right hon. Friend the Secretary of State for Trade and Industry has put in train following his competitiveness White Paper. The Government's aim is to provide employment opportunities for all. We are encouraging economic growth, and we are committed to ensuring that everyone has the chance to share in the benefits. My hon. Friend pointed out that, after the election, the Government wasted no time in introducing the new deal initiative to get people back into work. So far, more than 350,000 people have participated, and 70,000 have found jobs. That is real progress.

I know that we are running out of time, Mr. Deputy Speaker. I assure my hon. Friend that I will accept his invitation to visit his constituency shortly.

Water Charges

1.30 pm

I am delighted to have secured the debate, in which I shall raise the issue of regulating water charges. The debate is timely for many of my constituents whose bills, which are already the highest in the country, have risen by an additional 10 per cent. They have written to me expressing their anger and, in some cases, their worry.

It is 10 years since the previous Government privatised the water utilities. There have been undreamed of riches for very few and benefits for many, but some—particularly those water charge payers in the south-west—have had to pay thousands of pounds more than owners of comparable homes in other parts of the country, which is demonstrably unfair.

The House of Commons Library has produced figures showing that the average annual household bill has increased by well over 100 per cent. since the industry was privatised in 1989, but water bills in the south-west have risen by 142 per cent., which is 76 per cent. in real terms. The average annual water and sewerage bill for customers in the south-west is £354, which is well above the national average of £242.

No wonder people in the south-west are angry and frustrated. The south-west includes some of the poorest areas in Europe, something that the Government have clearly recognised in their endorsement of Cornwall's objective 1 bid. Wages are low and unemployment is high. The region is home to far more elderly pensioners than most other regions. Pensioners who have to rely on a meagre state pension are paying roughly 10 per cent. of their income in water and sewerage bills. All those people clearly fall into the Government's classification of vulnerable groups, but they are paying the highest water and sewerage bills in the country.

Customers in my constituency and across the south-west region have the additional burden of paying for the coastal clean-up.

Does my hon. Friend agree that not only are high charges being made against those on the lowest incomes in the United Kingdom, but, in Cornwall, about 1 per cent. of the nation's population has to pay for 20 per cent. of the coastal clean-up?

My hon. Friend is quite right. A relatively small number of people in a poor area have to pay for cleaning up the bathing waters off a large part of the national coastline, but we were told that we need not worry about that because the revenue that would be generated from the tourists who would come to the area because of our clean beaches would offset those costs. For an area with one of the lowest gross domestic products in Europe, let alone the country, that argument does not—forgive me for this—hold water.

The background to the differential in water companies' charges was evident even before privatisation. Geographical factors and other specific characteristics make the area different from other parts of the country, but privatization—and, perhaps more particularly, the way in which the industry was privatized—has widened that gap over the past 10 years. Neither the Government nor the regulator has clearly addressed the inequity of the position of people living in the south-west.

In 1989, when privatisation of the water industry was introduced, the then Conservative Government approved a 10-year plan by South West Water to clean up the coastline. That plan was costed at roughly 5 per cent. above inflation—the so-called K factor—but, 18 months later, the Government had a rethink. The then Secretary of State for the Environment, Chris Patten, decided to concede to European pressure to clean up our bathing waters more quickly. That meant that the 10-year clean-up plan was squeezed into a five-year funding plan, which worked out at 11.5 per cent. above inflation—more than twice the original K factor. That was a good idea at the time, but the then Government's ill-thought-out decision has had enormous repercussions for us 10 years later.

Will the hon. Gentleman give way?

I have only a few moments, so I shall carry on with my speech and then give the Minister an opportunity to reply.

That idea was good at the time, but the then Government's decision was ill thought out, as it has cost customers in the south-west rather dear. It is certainly costing us dearly today.

The latest increase in South West Water bills has grossly affected non-metered customers. Bills for the majority of them have risen well above the 4 per cent. agreed by the regulator. Most customers have meters installed for one reason, and one reason only—they think that they will save money. Not surprisingly, the revenue obtained by South West Water is reducing as more and more people take to meters. To address that shortfall, bills have had to rise. The burden has fallen, harshly, on to customers who are not on meters. Many of them are single-parent families or pensioners and they face huge increases on what were already unacceptably high bills.

In opposition, the Labour party vociferously opposed what is effectively compulsory metering. Less than three years ago, in a debate on water metering, the Secretary of State for Health, who was then shadow environment spokesman, said:

"The regulator has rigged the water price formula, beginning with the startling decision that the cost of installing meters should not fall upon the customers who get the meters but upon those who do not have meters. He also came to the extraordinary conclusion that the fixed cost element of the charge to unmetered customers should be higher than that for metered customers."—[Official Report, 9 July 1996; Vol. 281, c. 192.]

In that same debate, he noted that it was "unacceptable" for the Government to pretend that the regulator had nothing to do with the Government.

It is estimated that installing a domestic water meter costs water companies between £250 and £300. As more and more people adopt water meters—particularly when they will be available free of charge soon—can we seriously believe that the industry can or will foot that bill? No, I suggest; the simple fact is that that would result in even higher charges.

After 10 years, it is surely time for a wholesale review of the regulatory system. The water industry faces a period of immense change, with the periodic price review occupying the time of the regulator and the Water Industry Bill making its way through Parliament. In opposition, the Government rightly berated the Tories' performance over water; now, with the added benefit of 10 years' experience, they have an opportunity to put things right.

November 1999 will be a telling time. We will finally see the results of the much-heralded price review. I understand that the Office of Water Services anticipates a one-off reduction of 15 to 20 per cent. on bills. Such a reduction, which would be welcome, would ensure that bills fell well below the 1999–2000 rate—providing that prices do not rise relentlessly after that initial reduction. However, I am sceptical about whether the industry can deliver that much-needed price stability and implement a substantial permanent reduction to ensure that bills are lowered to about the national average for the long-suffering water charge payers in the south-west.

The regulator has expressed uncertainty about the definition of environmental obligations and the costs associated with those future improvements on which Ministers are insisting. From 2000 to 2005, the industry will be expected to deliver an ambitious package of improvements, although the costs have yet to be assessed in relation to how they will be distributed across the various water companies.

Although we are told that the increase in water bills is likely to be relatively small between 2001 and 2004, sewerage bills are clearly likely to increase significantly —yet again, consumers in coastal areas such as the south-west will be hit.

It is now clear that a framework that will ensure fair, affordable and stable prices is essential. We need firm long-term strategies, implemented by the companies and monitored by the regulator, that provide incentives for efficiency so that customers benefit from a stable pricing structure.

The current regime is based on asset management plans over a 15-year period, while the pricing formula is set for only five years. Companies tend to undertake expenditure towards the end of the pricing period, because they must go through a planning system and deliver improvements by the end of the period. That creates an unbalanced budget, which hampers the long-term investment plans.

The implementation of water directives requiring additional tertiary treatment is a welcome and necessary step, but the effect of those directives has hit the south-west particularly hard. South West Water has been investing heavily in sewage treatment projects to meet the requirements of the urban waste water treatment directive. Those improvements and the way in which customers are charged fall directly in line with the regulator's pricing principle.

A customer's bill should reflect the cost of supplying clean water, disposing of dirty water and draining surface water from the property and the highways, but it should not be significantly higher than the bills of comparable customers elsewhere in the country. Water is a national resource and our coastal waters are national assets. A longer-term view of investment and pricing plans by the regulator, combined with interim reports on progress, would benefit the industry, ensure that companies were carrying out necessary environmental improvements and bring an end to the constant fluctuation in prices.

Customers do not want one-off price cuts if those are then followed by even sharper price increases. In the absence of true commercial competition, which I suspect is a long way off even now, a long-term strategy is the only way to prevent that from happening. The Water Bill offers an opportunity to rectify, within the regulatory system, some of those deficiencies, which have led to unfair bills which often hit the poorest in society.

Although the Bill recognises that there are vulnerable groups, it has failed to replace as a basis for charging the archaic rateable value system, which causes some of those inequities. Indeed, the Bill extends the use of rateable values, many of which are over 30 years old. Both the regulator and the industry representative, Water UK, would like at least a time limit on the use of rateable values as a basis for charging while other methods are properly evaluated.

Some 18 months ago, I introduced a 10-minute Bill advocating the replacement of rateable values with charges based on council tax banding. Metering would continue on a voluntary basis. The introduction of such a system would have many benefits: it would be relatively cheap, easy to administer, easily understandable and, if properly implemented, would broadly reflect the use of water. It would include the ability to give single households discounts and low-income households rebates. Water companies such as Wessex Water have already suggested trialing the council tax banding system as a method of charging. It would certainly provide easier identification of the vulnerable groups whom we all want to support.

Water has long been a politically sensitive issue in the south-west. Customers are simply fed up with having to pay bills that are far higher than the national average. The Conservative Administration's decision to privatise the water industry has resulted, in the south-west, in a relentless increase in bills. I hope that the Minister has some words of encouragement for my constituents and for people throughout the country. We want an end to the boom-bust situation where water companies boom and customers go bust, and rebates given one year are taken away the next.

I hope that the Minister recognises the need to implement a new regulatory framework, which will provide long-term strategies for the companies, environmental improvements for the country and a stable, fair and cost-effective charging system for all water customers.

1.44 pm

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions

(Mr. Alan Meale)

I am grateful to the hon. Member for South-East Cornwall (Mr. Breed) for raising the subject of water charges on behalf of his constituents. Hon. Members on both sides of the House sympathise with some of the points that he has raised. I welcome the opportunity to set the record straight on the past, the present and the future of water charges in the south-west.

Let me say at once that I entirely agree that, in recent years, water customers everywhere have had a lot to put up with. Customers have seen not only soaring prices, but an industry that sometimes seemed more concerned with the welfare of its shareholders and directors than with its customers.

That is why, within three weeks of coming into office, the new Labour Government held a water summit to start fighting on behalf of the customer for a better deal over water. My right hon. Friend the Deputy Prime Minister launched a 10-point action plan to help secure reliable, efficient and environmentally sustainable water supplies in the long term.

We are pleased that the water industry has responded positively to our proposals. We are now starting to achieve our aim of giving this country a world-class, water-efficient, and environmentally sustainable water industry. Significant progress has been made since the water summit, but we accept that there is no room for complacency. To take one key example, leakage targets were introduced following the water summit. Those targets will have reduced leakage by a quarter in just three years, but water companies' performance has been mixed and under-performing companies have been told that they will continue to be pressed hard to catch up.

We have informed all water companies that progress with leakage and water conservation must continue. However, overwhelmingly, the most important issue for water customers is still the level of prices. As the hon. Gentleman pointed out, since privatisation in 1989, average household water bills nationally have increased by 36 per cent. and average household sewerage bills by 42 per cent. Those are real-terms increases after allowing for inflation. In nominal terms, household water and sewerage bills have roughly doubled.

Does my hon. Friend agree that many of my constituents and those of colleagues across the region face a real problem in dealing with South West Water because they face huge bills as well as problems with interim schemes to deal with sewage? I am thinking particularly of the Falmouth sewerage scheme, which may directly threaten the existence of a very old oyster fishery. I have written to the Minister and met his colleagues on a number of occasions about this. It is unacceptable that South West Water has introduced schemes that may have such an environmental effect, at the same time as having the highest charges in the country.

I thank my hon. Friend for that intervention. I congratulate her on the long campaign that she has led in that regard. Like her, I have great sympathy with the people who have had to put up with those problems. I have agreed with her suggestion to visit the area to see for myself the problems that have been caused. She rightly points out, as did the hon. Gentleman, that South West Water must act a little differently than it has acted recently in the interests of its customers.

The Government are determined that that rate of increase must not continue, and that determination is shared by the regulator, the Director General of Water Services, Mr. Ian Byatt. Companies are still working under the price limits set in 1994, but new price limits will apply from April 2000. The director general is concluding his periodic review of prices. In July, we expect him to announce draft limits to apply for 2000–05. Final price limits will be announced later in the year, following further consultation.

The Government have made it clear that we can provide for an ambitious environmental programme: improving our beaches and rivers, making further improvements to our drinking water quality and protecting our precious nature conservation sites. For example, in the south-west, there will be a scheme to protect the internationally important River Camel. The Government believe that such a programme should still leave scope for substantial cuts in average water bills in April 2000. That is wholly in line with the Government's manifesto commitment.

As the Minister refers specifically to the River Camel, which is in my constituency, may I put a point to him? Does he recognise that, when he and I were on the Opposition Benches, we were united in our concern that the way in which the regulator was operating, and the terms under which the then Government had imposed privatisation, were penalising certain parts of the country? Will he give an assurance that, when the Government examine the way in which the new regulatory system is introduced, the comments by the right hon. Member for Holborn and St. Pancras (Mr. Dobson) in the debate to which my hon. Friend the Member for South-East Cornwall (Mr. Breed) referred will be taken into account? Otherwise, people in the south-west and many other regions will suspect that, in terms of the impact on bills in a low-income area, there is not much change from what happened under the previous Government.

I thank the hon. Gentleman. I seem to be congratulating many hon. Members, but it is true that he has raised the issue on many occasions. He is right to say that my right hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) gave a view at that time. I have no doubt that, in the consultation, due regard will be paid to pronouncements that have been made by politicians on both sides of the House.

As I have said, the Government believe that such a programme should still leave scope for substantial cuts in the average water bill in April 2000. That is wholly in line with the Government's manifesto commitment to pursue tough and efficient regulation in the interests of the consumer and the environment.

On 1 March, Ministers announced the detailed company programmes to deliver our national objectives. In its investment programme, South West Water will be required by 2005 to complete improvements to more than 2,000 km of distribution system, to improve 309 unsatisfactory combined sewer outflows and to introduce full treatment of the vast majority of sewage discharges and high-level treatment of all company discharges to bathing and—this is of particular interest to my hon. Friend the Member for Falmouth and Camborne (Ms Atherton)—shellfish waters.

Those environmental improvements are essential if the attractiveness of the region to tourists is to be maintained. That investment programme will strengthen the tourism industry that contributes so much to the south-west's economy. The hon. Member for South-East Cornwall mentioned that people are angry. I realise that, but I think that he would accept the importance of the tourism industry to the region. The Department of the Environment, Transport and the Regions is working hard via its 10-point plan to ensure that there is a proper level of investment to protect the environment.

The Government recognise that the south-west has had the highest price increases of any major water company area since privatisation, and continues to face tough challenges in funding quality improvements. Therefore, we have ensured that the programme does not overburden consumers, while still offering significant improvements in line with our national aims. We have made it clear that we want to ensure that quality objectives do not have unacceptable impacts on water prices in different parts of England and Wales, and that programmes reflect local environmental priorities.

So far, I have been putting the concerns of the hon. Member for South-East Cornwall into context by setting out the background to the current situation. I shall deal now with the specific points about price rises to apply from 1 April 1999.

In the south-west, as elsewhere, companies are still operating under price limits that were set in 1994. For South West Water, average prices are permitted to rise by up to 1 per cent. on top of the rate of inflation. That is the basic limit set by Ofwat. As the hon. Member for South-East Cornwall said, it is referred to as the K factor.

With inflation at 3 per cent., the bills for customers for 1999–2000, which are being issued at this time of year, must not, overall, rise by more than 4 per cent. Price rises of up to RPI plus 1 per cent. have been permitted for South West Water for each year since 1997–98.

Of course, there is no obligation on companies to raise prices to the maximum extent that is allowed by their price limits. I am glad that South West Water has had the grace, in each of the past three years, to give customers a rebate on their bills: £10 in 1996–97 and £15 in both 1997–98 and 1998–99. However, I am sorry that the company has not yet felt able to offer any rebate for next year. I hope that, in view of the continuing and justifiable public concern about water charges in the region, it will look at its position again and consider whether a further rebate is possible in the coming year.

That is one reason for the very high increases in South West Water bills that have been reported in the press. Calculating the increase from last year's bills after rebate to next year's bills without a rebate produces, as I hope hon. Members will appreciate, significant price rises.

There is a further reason why some customers may experience higher price increases. The price limit that is set by Ofwat applies to average increases, but there may be variations around the average in the "tariff basket" that the companies operate. Some customers will see higher increases and some will see lower.

I understand that South West Water makes two technical adjustments in the balance between measured, or metered, charges and unmeasured charges to ensure that there is a fair distribution of charges between those groups. First, customers who choose to be metered tend to use less water than unmetered customers. The costs of metering are charged to metered customers alone, so that a customer with average consumption would pay slightly more to be metered than to pay on an unmeasured basis, but companies make an adjustment to the unmeasured tariff to prevent the differential becoming so great that metered customers are subsidising unmetered customers.

Ofwat has specified that it believes that the difference should be no more than £29 for customers with average consumption. Therefore, South West Water has made an increase of 1.5 per cent. in average unmeasured bills to ensure an appropriate differential between measured and unmeasured charges.

The second, smaller adjustment is to take account of the change in the average rateable value of those properties remaining on an unmeasured charge. Where consumers in higher rateable value properties switch to a meter, there is a fall in the average rateable value for unmeasured properties, requiring some increase in tariffs to ensure that the company receives the same average income.

In the south-west next year, that final adjustment is no more than about 0.5 per cent. An adjustment in the opposite direction would be made if there were a preponderance of occupiers of smaller-value properties moving on to measured charges.

I emphasise that the average permitted increase in price limits for all South West Water customers next year is 4 per cent. While some customers may see their bills rise by more, others will see smaller increases. I do not pretend that a 4 per cent. price increase is good news, but it is not the sensational 10 per cent. or more that has been reported in the press.

As I have already explained, charges from April next year are the subject of the periodic review of price limits. We have specified the environmental objectives to be achieved by 2005, and we expect the Director General of Water Services to announce draft price determinations in the summer. It is for the director general to make decisions on prices, but we believe that the programme that we have set out will allow for some relief to hard-pressed consumers in the south-west in future.

In the little time left before the debate ends, I want to deal with possible use of council tax for water charges. A number of water companies and others have set out a case for using council tax data instead of, or in conjunction with, rateable values as an unmeasured basis of charging.

We shall work with water companies and other groups with an interest to consider proposals for new charging arrangements, but, before any new charging method is implemented, we would need to be assured that it represented an improvement in fairness compared to the present system and that the transition could be managed without unacceptable social effects.

Last, but not least, while still staring at the clock, may I congratulate the hon. Member for South-East Cornwall again on raising what I and other colleagues think is an important issue, which we hope to solve—

Order.

It being Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.

Sitting suspended, pursuant to Standing Order No. 10 (Wednesday sittings), till half-past Two o'clock.

Private Business

City Of Westminster Bill Lords

Considered; to be read the Third time.

Oral Answers To Questions

Cabinet Office

The Minister was asked—

Drug-Testing Programmes

What initiatives have been taken to increase the number of United Kingdom companies operating routine drug-testing programmes. [75356]

The Government encourage individual employers to act in accordance with guidance issued by the Health and Safety Executive, "Drug Misuse at Work", copies of which are in the Library of the House.

It is estimated that only about 10 per cent. of companies in the United Kingdom have drug-testing programmes. Will the Government therefore encourage, through organisations such as the Confederation of British Industry and the Institute of Directors, a zero tolerance policy in regard to drugs in the workplace? Does the right hon. Gentleman agree that, although drug testing is of course vital in the case of jobs to which safety is critical, it should be extended to more sectors to prevent deterioration in work performance, reduce damage to the health of employees and preserve the jobs and careers of those employees?

As I have said, the Government encourage employers to act on the HSE guidance, which was launched by the UK anti-drugs co-ordinator. As for a policy of zero tolerance, we shall continue to urge all employers to follow the guidance; but, ultimately, it is a matter for them. We have no plans to take statutory powers enabling us to insist that they do so.

Better Regulation Task Force

If he will make a statement on the work of the better regulation task force. [75357]

The better regulation task force is providing valuable advice. So far, it has published five major reports, and it will publish a further four over the next three months.

Given that British companies are now expected to swim in a sea of regulation deeper and more hazardous than any that they previously have had to negotiate, and given that the British food industry alone now faces extra regulatory costs of £497 million imposed by the Government, will the Minister urge all his ministerial colleagues to study the United States Regulatory Flexibility Act 1980 and the Small Businesses Regulatory Enforcement Fairness Act 1996, and then to heed the lessons of that crucial legislation?

Not for the first time, the hon. Gentleman has shown his ignorance of what is actually happening in government. He is obviously not aware of the work that is done not only by the better regulation task force, but by the better regulation unit—or of the work that we do to help businesses, small and large, by means of initiatives such as the access business initiative and the outstanding initiative announced recently by my right hon. Friend the Secretary of State for Trade and Industry, which was designed to focus on the needs of small business.

Business—and, not least, his hon. Friend the hon. Member for Totnes (Mr. Steen)—would appreciate it if the hon. Gentleman gave some credit to the Government's attempts to support business, rather than denigrating them. They might even enlighten the hon. Gentleman about what business is actually doing, which bears no relation to his prejudiced view.

I congratulate my hon. Friend on the work that the better regulation task force is doing. Last July, it published an excellent guidance document for Ministers, recommending eight weeks as the minimum period for consultation on Government regulations. Is my hon. Friend's section of the Cabinet Office monitoring whether that good advice is followed? I ask because, over the busy Christmas period, the Medicines Control Agency issued an important regulation, which is causing a good deal of controversy, called MLX 249. Last Wednesday, in an Adjournment debate, we were told that the MCA's consultation period was six to eight weeks.

We have issued guidance, and we are monitoring whether it is followed. I should add that it is advice, not prescriptive guidance. However, my hon. Friend's comments will be brought to the attention of the appropriate Minister.

Government Modernisation

What recent representations he has received concerning the forthcoming White Paper on the modernisation of government. [75358]

I have most recently had meetings with the Council of Civil Service Unions, the Consumers Association and the National Consumer Council.

We have been waiting for that White Paper for some time. What is the real desire for so-called modernisation?

I can tell my hon. Friend.

I thank my hon. Friend.

There is a lot of talk about "modernising Britain", but what exactly does the Minister mean by that? Although we certainly appreciate that the civil service should be "joined up"—to use the terminology of the day—how will the establishment of regional development agencies impact on his own civil servants? No one has ever written to me about regional development agencies. Perhaps the right hon. Gentleman will tell us how many of his own constituents have written to him in the past 20 years asking for such agencies.

I am not sure whether the hon. Gentleman's question was on modernising government, or merely a little ramble. He will not have to wait very much longer for us to publish the White Paper; then he will see the answers for himself.

Is my right hon. Friend aware that there are RATs in the Rotherham council housing and council tax benefits office? Remote access terminals were installed last month and paid for by central Government, allowing council officers to track pensioners entitled to income support regardless of whether they claim support at the Benefits Agency. Does he agree that the next logical step would be to enable those council officers not only to monitor the progress of claims at the Benefits Agency, but to complete income support claims on behalf of those pensioners? Will he give some assurance that the White Paper on modernising government will consider exactly that type of joined-up government service delivery?

Yes, it will.

Are not the Government's claims to be a modern and effective Administration somewhat undermined by the repeated delays in publishing the White Paper on better government, which is now over a year late? Will he assure us that the wait will have been worth while? If one of the White Paper's themes is to be joined-up government and a more coherent approach to the needs of the individual, will that approach not be injured by devolution, and indeed by regional government, leading to the fragmentation of both policy and service provision—with different policies and different approaches at different levels? Will the Government's ill-thought-out constitutional provisions not pull in the opposite direction to better government?

It is difficult to know where the Opposition stand on devolution. I thought that the Conservative party in Scotland had now accepted that devolution was a reality, and that it would work for success in the Scottish Parliament. The right hon. Gentleman really should make it clear where he stands. Apparently, he has taken a different view on the issue from that of the Leader of the Opposition; but that is not new for Opposition Front Benchers, as so many of his colleagues take a different view.

The White Paper will be published soon. As the right hon. Gentleman says, it will be about making life better for people, not about the convenience of civil servants or making life easier for Ministers. Regional development agencies are about joining up government, not about dislocating it.

Genetically Modified Foods

What assessment he has made of (a) the quality and (b) the independence of the advice the Government are receiving on genetically modified foods; and if he will make a statement. [75359]

Independent expert committees are in place to ensure that the Government receive the best possible scientific advice on those issues.

My right hon. Friend will be aware that there is an unhappy tradition of senior civil servants, on retirement, taking up posts with the very commercial interests on whose activities they were supposed to be advising the Government impartially. The example of Sir Walter Marshall and nuclear power springs to mind, but I expect that one could think of others. How confident is my right hon. Friend that some of those who are advising the Government on GM foods will not end up working for the very vested interests whose activities they are supposed to be impartially overseeing?

I was about to say that my hon. Friend's crystal ball was at least as good as mine, but, on reflection, history shows that his is much better than mine, because he has been able to see some things long before the rest of us. Of course, anyone retiring from the Government service has to abide by the rules laid down by the Cabinet Secretary. I assure my hon. Friend that that will be done in future.

My hon. Friend's question gives me the opportunity to lay another ghost to rest. It is not true that the Government have reached or are seeking any secret deal with the industries on genetically modified foods or crops.

The right hon. Gentleman will know that the Conservative party has been keen for safe genetically modified foods to be allowed to be grown in the United Kingdom, but only after the proper tests have been carried out. Are the Government ready to admit that they made a monumental error in trying to go against the advice of an environmental committee to have a three-year moratorium on putting in commercial crops? Surely ignoring such advice is undermining people's trust in the Government and in science.

The hon. Gentleman is confused. The Government have not licensed any crops for commercial development in this country. The only genetically modified foods that are on sale in this country were licensed by the Government of which he was a supporter. The real policy is that we are moving to the farm and field testing of genetically modified crops. Only when we are satisfied with those tests will we move to the next stage.

I understand that a written answer is to be given this afternoon on the labelling of genetically modified foods. Did the Minister see the comments on Monday last week of Professor Philip James of the Rowett research institute to the Select Committee on Science and Technology that the issue of labelling would prove to be irrelevant because it was increasingly difficult to guarantee the segregation of genetically modified ingredients? Would the Minister care to comment?

I do not agree with Professor James on that issue. The Ministry of Agriculture, Fisheries and Food has published a list of companies able to provide non-genetically modified products. As Sainsbury's and others have made clear today, supermarkets are moving to ensure that their own brand products do not contain genetically modified ingredients. The Government are determined to press ahead with clear labelling of food products so that the consumer has a real choice, in contrast with the policy of the previous Government, who steadfastly refused to label foods to help the consumer in that way.

Public Consultation

What mechanisms are available for consulting the public about specific Government initiatives. [75360]

If he will make a statement on the ways in which the Government consult the public about new initiatives. [75361]

The Government use many mechanisms, including written consultation exercises, citizens panels and qualitative research, to consult the public about specific initiatives.

I thank my hon. Friend for that response. I have always believed that good government requires good listening skills. My constituents appreciate the opportunities to discuss and be consulted on Government initiatives. Will my hon. Friend take the opportunity to explain what the Government will do with the results of the consultation exercise and how that feeds into policy deliberations? Does he agree that the fact that the Government listen explains why they are popular and why the Tories are in opposition?

On the second part of my hon. Friend's question, he is self-evidently speaking good sense. As for the first part, we shall place the results of the research in the public domain—unlike the practice of the previous Government. The aim of gathering the information is to inform debate objectively so that we have evidence-based policy making.

I thank my hon. Friend for outlining the methods that he is using to consult the public. Will he consider the model of consensus conferences, which have been used in Denmark and the Netherlands to consult the public on the ethical and social aspects of science policy? Is he aware that consensus conferences have been run in this country—in 1994, on plant biotechnology—and produced some sensible recommendations, which, unfortunately, were not taken up by the previous Government?

Given the overwhelming consensus behind the Government's initiatives, I can do no more than agree with my hon. Friend.

By this time last year, the Government had set up 179 review bodies—after only nine months of government. After 18 months of government, the figure had grown to 224. When will the Government turn this year into the year of delivery, as they promised at the beginning of January?

The £19 billion on education, the £21 billion on the health service and the other measures revealed by my right hon. Friend the Chancellor in his Budget statement answer the hon. Gentleman's question effectively.

How many millions of pounds are the Government spending on focus groups and people's panels? Does the Minister agree that the people would far prefer to see that money being spent on services for the people, rather than on eliciting information to try to help the Government win the next election?

It is a mere drop in the ocean, given the £330 billion that the Government spend overall. It is well worth spending that money. [HON. MEMBERS: "Answer the question."] "Refer to previous parliamentary answers" is my advice to Conservative Members. Informed policy making will be in marked contradistinction to what happened during 18 years of misrule by the Conservative party.

People's Panel

What proposals he has for future use of the people's panel. [75363]

My Department plans to use the people's panel to carry out two further waves of quantitative research this year. The panel is also used by other Departments for various quantitative and qualitative research.

May I suggest that my hon. Friend ask the people's panel to consider the Government's Budget priorities? In particular, will he ask whether the panel would rather see the doubling of support for children, or the freezing of child benefit—[HON. MEMBERS: "Hear, hear."]—whether the panel would rather see £100 support for fuel payments for all pensioner households, or an increase on VAT on fuel—[HON. MEMBERS: "Hear, hear."]—and whether the panel believes that £40 billion extra spending on schools and hospitals is important, or reckless spending, as the Opposition believe?

Although I admire the motivation behind my hon. Friend's question, the answer comes via the popular acclamation for the points that she raised.

After that cringingly nauseating question, may I ask whether the people's panel is the same as the citizens' panel, which sounds like an instrument of the French revolution? How much does it cost, how is it recruited and what are its three greatest achievements to date?

We have before us an expert in cringe. The panel, in itself, will not create something remarkable overnight, but it is a serious enterprise. Conservative Members should give credit to the fact that we are making sure that what people think—rather than what the top-down politicians think—is taken into account when the policy is formed. For the first time, we have evidence-based policy making that reflects what people want—not what politicians and civil servants think that they might want.

And what does it cost?

It costs, in net terms, very little to the taxpayer.

My hon. Friend will recall that, when the panel was established, it was agreed that all the research would be published, as has been done. Will he consider making more of the raw research available more quickly, which would certainly be more helpful to the Opposition in deciding what their policy should be?

We will certainly consider how to make more information available.

Regulations

On which regulations he has recently received representations from the Federation of Small Businesses, the Engineering Employers Federation and the Confederation of British Industry. [75364]

The better regulation task force, supported by officials in the better regulation unit of the Cabinet Office, has received representations from those organisations in the course of the reviews on long-term care, enforcement and consumer affairs.

I am sorry that the unit has not received a representation from the Engineering Employers Federation about the difficulty that engineers are having in dealing with the implementation regulations for the wholly unnecessary and unwanted working time directive. The Minister may be aware that a 200-page document has had to be published to help them with that task, but engineers in Lancashire are still struggling with the complexities. I would be grateful for an assurance that he will dispatch an official from the better regulation task force to Lancashire straight away, to help the engineers with the task that the Government have imposed on them.

The right hon. Gentleman is slightly confused: the better regulation task force is independent of the Government, and it is not for me to dispatch its staff anywhere. I can more than meet his request, however, because—although I am sure that they have had consultations with my right hon. Friend the Secretary of State for Trade and Industry—if members of the Engineering Employers Federation would like to talk to me about the matter, I would be happy to see them.

Information Technology

What assessment he has made of the introduction of new IT systems across government; and if he will make a statement. [75365]

Major information technology-related initiatives have been launched across government, including in the areas of education, social security, health and crime reduction. We will publish information in the early summer about progress towards the Prime Minister's 25 per cent. target.

My concern is that my hon. Friend inherited a situation in which several very large IT projects were under way—some of them delayed under the private finance initiative—and that there is not a sufficient drawing together of the different approaches to information technology in different Departments. Is there any role that the Cabinet Office could play in getting a unified IT strategy throughout government?

My hon. Friend should await the publication of the White Paper, in which she will find the answer to her question. She will be very pleasantly surprised by the initiatives that the Government are undertaking to tackle the problems which, as she rightly said, we inherited from the previous Government, with computer systems that were incompatible and did not speak to each other.

What has happened to electronic red boxes?

Quite simply, things have moved on since then: we now have an extremely effective Government secure intranet, and we are investigating other ways of providing all members of the Government with secure electronic communications.

In drawing up policy for access to information technology, will my hon. Friend remember the needs of disabled people, and especially those who need to use voice-activated equipment? Will he ensure that, consistent with last night's excellent presentation by the Royal National Institute for Deaf People and the Trades Union Congress, those organisations are indeed consulted?

I can assure my right hon. Friend that the contents of the White Paper will reflect the responsibility of my right hon. Friend the Minister for the Cabinet Office for mainstreaming equal opportunities, in access to IT, as in other matters.

Genetically Modified Foods

11.

When he expects the Ministerial Group on Biotechnology and Genetic Modification to complete its examination of the United Kingdom framework for overseeing the technology. [75367]

Officials have now completed the consultation stage of the examination of existing advice and control and will be reporting to Ministers shortly.

The right hon. Gentleman has already refuted extensive reports in Sunday newspapers that the Government have agreed a three-year moratorium on the planting of GM crops. Given the extent of those reports, was that just another spin-doctoring exercise? Given the recent announcement by the Sainsbury's group—an eclectic family if ever there were one—when will the Government accept the representations made by my right hon. Friend the Leader of the Opposition as long ago as 3 February that a three-year moratorium should be announced?

Let me make it clear that there is no secret deal between the Government and the industry in respect of genetically modified crops; nor has one been sought, and nor is any such deal under discussion. The Government are not offering any favours to the industry and I cannot make the position any clearer. We have no intention either of accepting the remarkably absurd suggestion by the Leader of the Opposition that we should bring our bio-sciences and GM programmes to a complete halt with a universal moratorium.

Civil Servants

12.

If he will make a statement on the average length of service of civil servants within his Department. [75368]

On 1 March 1999, the average length of service of civil servants in the Cabinet Office, including both permanent and loaned staff, was 11 years and four months.

I am grateful for that answer. What assurances has the Minister's master given to the permanent secretary of his Department that there will be no repetition of the events that occurred when he was at the Ministry of Agriculture, Fisheries and Food, when Mr. Neil Whitney, who worked in the Minister's private office, was sent to a gulag—the BSE department in Tolworth—for saying that it was improper of the Minister to order six bottles of Macallan malt for his private cabinet at the taxpayer's expense?

Apart from the fact that the hon. Gentleman's question is a load of rubbish, that is as far removed from the reality of the situation as it is possible to be, I can tell him that the Cabinet Office is a happy ship for all who work in it.

Illegal Drugs

13.

What targets he proposes to set for reducing the illegal use of drugs. [75369]

Under the Government's 10-year strategy, we aim to reduce young people's drug misuse, to reduce drug-related offending and access to drugs among young people, and to increase participation in drug treatment programmes.

I wonder whether my right hon. Friend is as unhappy as I am with that response. Until we can quantify what we are trying to do, we will not get real about the problem. I understand that targets cannot be plucked out of a hat. We must ensure that the numerical targets that are set are realistic and that we have the means to deliver them, but when will figures be added to what are widely accepted as good intentions?

Perhaps I had better make it clear to my hon. Friend that, if I had been unhappy with the response, I would not have given it in the first place. As for figures, we have a public service agreement in that area and we are currently putting together the first annual report of the UK drugs co-ordinator. We shall also examine the possibility of setting more specific targets in the future.

Parliamentary Commissioner For Administration

14.

What extensions in the power and scope of the Parliamentary Commissioner for Administration his Department is proposing. [75370]

As I announced to the House on 10 February, the Government are seeking to extend the jurisdiction of the Parliamentary Commissioner for Administration to an additional 158 non-departmental public bodies. An order amending the list of bodies within the commissioner's jurisdiction was laid before the House on 22 February and came into force on 15 March.

I thank my right hon. Friend for that answer, which indicates that the Government's commitment to be more fully accountable to the people has been honoured by that move. However, one of the problems with many of the ombudsman schemes is that the screening process seems to prevent many genuine cases from being examined. Do we need to consider that point and ensure that the ombudsmen take up more of the cases submitted to them?

I am sympathetic to that point. We are determined to ensure that non-departmental bodies are open and accountable, and that they are as effective as we can possibly make them. It would be a natural extension of our determination to have more openness if we were to ensure that the ombudsman's work was as effective as possible, in the interests of consumers.

Prime Minister

The Prime Minister was asked—

Engagements

Q1. [75386]

If he will list his official engagements for Wednesday 17 March.

This morning, I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further such meetings later today.

Since the Prime Minister claimed last week that taxes are set to fall next year, numerous economists, including Anatole Kaletsky in The Times, have described his comments as being completely false. Will he therefore accept the House of Commons Library's figures, which show a whopping £7.1 billion increase in taxes for next year? Does he agree that the public want less tax, not stealth tax? Will he promise to publish a list of all his stealth taxes and hidden taxes, entitled not "Your Financial Health Check", but "Your Financial Stealth Check"?

The public will remember the 22 Tory tax rises. We certainly do.

Let me refer the hon. Gentleman to the Institute for Fiscal Studies, which published an analysis last week indicating that every single decile—every tenth of the population from the bottom right up to the top—gained as a result of the Budget. There will be a net tax cut next year of £4.5 billion, and direct taxes will be down by £9 billion.

Should not the outside police investigation into the foul murder of Rosemary Nelson be absolutely thorough and unhindered in any way? Since those who put that brave lawyer to death describe themselves as loyalists, should we not say without contradiction today that those murderers are traitors to everything that this country stands for?

My hon. Friend is right. No stone will be left unturned in the hunt for the killers, whose clear intent in murdering Mrs. Nelson was to stir up tensions in the local and wider communities and to attack the political process. The investigation by David Phillips, chief constable of Kent, will be independent—as my hon. Friend wishes—and he will be given every possible assistance by the RUC. The investigation's remit will be very wide.

Let us be clear about what the killers are trying to do. They are trying to wreck the hopes of peace for the vast majority of people in Northern Ireland. They are not loyal to anything other than their own bigotry and prejudice. That is not a loyalty shared by any sensible member of the United Kingdom.

I agree with the Prime Minister's last remarks.

Following the devastating report on the European Commission, may I ask the Prime Minister three specific questions? First, does he agree that the huge pay-offs involved should not apply—presumably they were never intended to apply—to Commissioners who are forced to resign in disgrace?

Secondly, does the Prime Minister agree that, in addition to procedural reforms, the Commission should do less, and do it better? Thirdly, is there any reason why we should not agree across the House that the appointment of new British Commissioners should be subject to parliamentary scrutiny and the approval of the House?

It is interesting to reflect on the three points put to me by the right hon. Gentleman who had 18 years to act on them, but never did.

In respect of the pay-offs, if someone is guilty of fraud or misconduct, they will, of course, not apply. In respect of procedural reforms, I believe that the reforms that we set out yesterday, which were based on the findings of the committee of inquiry, and which would overhaul the whole financial management system, are the right reforms. I do not know exactly what the right hon. Gentleman believes the Commission should not do that it is doing at present.

In respect of parliamentary scrutiny, appointments are of course always subject to parliamentary scrutiny, but the system of appointment that has applied under successive Governments is the best system.

The right hon. Gentleman has not appointed Commissioners before and I have not been involved in such appointments. This is an opportunity to talk about the future, not the past. Is it not an opportunity to enhance the role of Parliament? The right hon. Gentleman has never missed an opportunity to diminish its role in the past two years. Can he not agree for once to expand it? People will listen to his lectures abroad more if reform starts here at home. Why should not a parliamentary Committee scrutinise the nominations for the European Commission?

Parliament is always entitled to scrutinise whatever it wishes. The right hon. Gentleman tries to say that the past 18 years were nothing to do with him. This is all part of the new campaign to say, "We were wrong. Everything that we did was wrong in those 18 years." However, the right hon. Gentleman was a member of the last Tory Cabinet. On the nomination of European Commissioners, he made his nomination on behalf of the Conservative party and, as far as I can recollect, his letter never once mentioned that it should be done differently.

I am telling the Prime Minister that we now have an opportunity to do things differently. His response—as ever—to the enhancement of the role of Parliament is utterly inadequate for Parliament and for the occasion. Will he also accept that it is of paramount importance to tell the Commissioners that they must do less? The report that we saw on Monday stated that the Commission was implementing policies over which it was exceedingly difficult to exert effective control and was pursuing highly expensive programmes that it could not manage. So, should not the Prime Minister stop signing up to the Commission doing more, as he has been doing with the employment chapter, the European social model and so forth, and say instead that real reform means doing less?

The theme of the right hon. Gentleman's intervention was less opportunity than opportunism. On the Commission doing less, the employment chapter is an attempt to move away from the regulatory model and was pioneered in part by this Government to do so. As for the other issues, the comments made by the former shadow Home Secretary, the right hon. Member for North-West Cambridgeshire (Sir B. Mawhinney), and the former Prime Minister are worth investigating: that is, how we ensure that the Commission is held more properly to account. That is precisely what we are going to do, but we will do it better if we are working constructively in Europe in alliance with other countries, rather than indulging in the anti-European rhetoric that characterises the Conservative party today.

As a former Greenwich councillor and someone who has supported the millennium experience since before most people knew that there were two "n"s in "millennium", will my right hon. Friend confirm that the New Millennium Experience Company has succeeded in achieving its target for sponsorship for the dome? Will he also comment on the fact that the dome is becoming the internationally recognised symbol of the year 2000? Does that not demonstrate that it will be a resounding success, not merely for my borough, but for this country?

With the eyes of the world on us at midnight Greenwich mean time, it is entirely appropriate that we should celebrate the millennium in that way. We also believe that the resultant incoming tourism will benefit not merely London, but the whole country and will run to several billion pounds. Not a single penny piece of taxpayers' money will be used on the dome itself. We believe that the sponsorship target of £150 million will be met fully. I can announce today that schools will get maximum benefit from the dome at minimum cost. One million school children from schools throughout the United Kingdom will be able to visit the dome for no charge—10,000 schools will benefit.

In so far as the Brussels fiasco of the past few days was a scandal waiting to happen, is it not worth remembering that no Government in Europe were more responsible for the appointment of Mr. Santer and for resisting any expansion in the powers of the European Parliament to hold that Commission to account than the Conservative Government? [Interruption.] A little more quiet regret from this side of the channel would be most welcome.

What urgent steps will the Prime Minister take to ensure that, following the welcome resignation of Mr. Santer today, the Commission is not left leaderless, Europe is not left incapacitated and the essential reforms—

Give him the job.

Order.

I assure hon. Members that it would be subject to scrutiny.

Will the Prime Minister ensure that Europe is not left incapacitated and that the essential reforms that are on the table for the Berlin summit are not indefinitely delayed?

I thank the right hon. Gentleman for that. Labour Members liked the idea, which is a good omen.

In respect of the two points raised by the right hon. Gentleman, first, the reform package should be agreed as quickly as possible. Those reforms are far-reaching, but they are based on what the committee of inquiry revealed and we can put them into practice quickly. Secondly, we should get the new President and the new Commission in place as soon as possible, but we should ensure that we have the right person for President.

I thank the Prime Minister for that answer. Is it not clear that, just as we are embarked on the wholesale reform of Britain's political institutions, so we must now embark on the root-and-branch modernisation of Europe's institutions? Is it not also clear that, at the heart of that reform, there is now an unanswerable case for a new constitutional settlement for Europe which takes the powers of the European institutions and makes them clearly defined, clearly limited and clearly subject to full democratic accountability?

I confess that I am hesitant about trying to draw up a new constitution for the whole of Europe, and the right hon. Gentleman would find that other countries would also be hesitant. However, it is important that we consider the longer-term reforms that are going to bring about greater accountability between the people of Europe and the institutions of Europe. The European Parliament is obviously one avenue; the Council of Ministers is another; and the way in which national Parliaments interact with the European Parliament and the European institutions is another. At the conclusion of our presidency, we made a series of proposals at Cardiff and, although they were not taken up at the time, the time has now come to return to them.

Will my right hon. Friend confirm that the resignation of the European Commissioners will have no effect on the negotiations on objective l status for communities such as my own? Will he also make a statement about progress on matching funding from the Government if those negotiations are successful?

In respect of my hon. Friend's first point, I do not believe that the fact that the Commission has resigned should affect the efficacy of the Agenda 2000 negotiations; those negotiations are now firmly in the hands of the Council of Ministers and the Heads of Government meeting next week. On his second point on additionality or matching funding, the Government will have to consider that in due course.

Q2. [75387]

In the tax year 2000, is a wife who stays at home to look after others worthy of a tax credit?

The working families tax credit will help precisely such a person—[Interruption.] The Tories complain about it now, but, the other day, they complained that we would give the tax credit to people whose incomes were at too high a level. Now, they are complaining about the opposite. The working families tax credit will help the very people about whom the hon. Lady is talking. If there is a family in which one member of a couple is an earner, that family will be better off as a result of the working families tax credit—some people will be better off by up to £20 a week.

Q3. [75388]

Is my right hon. Friend aware of the shocking statistics on child cruelty in Britain, where one child dies every week from abuse or neglect, and the chances of an infant aged less than 12 months being murdered are five times greater than for the rest of us? Does he know that the reason why the National Society for the Prevention of Cruelty to Children launched its "Cruelty to Children Must Stop, Full Stop" campaign in advertisements yesterday is that most of us prefer not to confront those horrible statistics? Can he assure us all that he will confront that horrible abuse and ensure that the Government do everything in their power to make Britain a safe place for children?

Two things are happening in that regard. First, the Protection of Children Bill, which the House should pass, will greatly improve the safety and protection of children. Secondly, the range of measures that we are taking to tackle social exclusion—such as poor housing and poor educational opportunities—and the sure start initiative for young people will strengthen our society and give hope to children who are presently without it.

Q4. [75389]

The Red Book published with the Budget is full of references to the Government's desire to help business. Why do the Government then contradict that policy by introducing measures in the Budget that will increase taxes on business by £3.2 billion in the next three years?

We are cutting corporation tax for business. Under this Government, Britain will have the lowest corporation tax that we have ever had.

Does my right hon. Friend agree that the fact that Jock Santer—[Interruption.] I have forgotten his name already, Madam Speaker. Does my right hon. Friend agree that the fact that Jacques Santer suspended the Dutch official who originally reported the European Commission to the European Parliament illustrates that, far from being whiter than white, he is irredeemably stained? Does my right hon. Friend agree that we should celebrate the mass resignation of the Commission as a victory for democracy, and that the future of Europe lies with increasing democracy and financial transparency, and ending the era of "I'm all right, Jacques"?

I welcome the statement that Jacques Santer has made today. It is correct to point out that we have managed to get to the truth of the matter because the European Parliament decided to set up the committee of inquiry. That is a victory not just for the European Parliament, but for the forces of democracy.

When the Chancellor raised diesel duties by 12 per cent. last week, why did he not mention it in his speech?

The Chancellor specifically mentioned the fuel escalator in his speech.

The Chancellor made no reference whatsoever to the 12 per cent. increase in diesel duty. Is that not a further example of the misleading presentation of a dishonest Budget? Has the Prime Minister seen the widespread forecasts that 53,000 jobs will be lost in the haulage industry? The Budget foreshadowed the loss of 53,000 transport jobs while the Deputy Prime Minister—who has responsibility for transport—was chasing angel fish around a coral reef. The Prime Minister has claimed that business taxes are going down, and he has done so again today. After the Budget, the British Chambers of Commerce said:

"Business today is more heavily taxed and more heavily regulated",

and will be a total of £6 billion worse off each year than it was before the last election. Is it not time the Prime Minister had the guts to admit that that is the truth?

I certainly understand the problems of the road haulage industry as it has set them out. However, one group of people have no right to criticise this Government: the previous Conservative Government. Let me give the facts to the House. The price of derv has risen by 7p since the election, but it rose by 26p under the previous Government. It is true that duty has increased as a result of the fuel duty escalator, but the previous Government introduced the fuel duty escalator. The highest single rise in duty in the past 10 years occurred in 1995 under the Government of whom the right hon. Gentleman was a member of the Cabinet.

To describe accurately the Prime Minister's answers about business taxation would be unparliamentary. The fact is that those duties have increased by 11 per cent. on average under this Government and by 7 per cent. in the last Parliament. The Prime Minister will not answer straightforward questions about diesel duty and about how much taxes have been increased by the last three Budgets because he does not want to admit that his party's commitment at the last election not to increase taxes at all was a total lie.

No, that is not correct. [HON. MEMBERS: "Oh."] I have the facts if hon. Members want them. The last five rises by the right hon. Gentleman's Government were 10 per cent., 10 per cent., 13 per cent., 10 per cent. and 7 per cent. That averages a much higher figure than he is quoting. I also point out to him that this Government have frozen vehicle excise duty for 98 per cent. of lorries, and offered a £1,000 road tax discount for low-emission lorries and a £400 million subsidy in low-sulphur fuel discount. We have also cut corporation tax. In each of those areas, we stand in very good shape in any comparison with the Government of whom the right hon. Gentleman was a member.

Is the Prime Minister aware that, in this Chamber 50 years ago today, almost to the minute, a Labour Government introduced the Bill that became the National Parks and Access to the Countryside Act 1949? The first national park was the Peak District, and, of course, it is still the best. Will he agree that last week's announcement about a statutory right of access to the countryside is a fitting way to mark the 50th anniversary of that wonderful Bill?

My hon. Friend and I once did a photo opportunity together in High Peak, so his question brings back happy memories. I entirely agree that the announcement is a most fitting way to mark the 50th anniversary of that historic legislation, with a Bill that will open up access to people in a sensible and consensual way. Yet again, this party is standing up for the rights of ordinary people, in contrast to the Tory party, which is always standing up for the rights of privilege.

Q5. [75390]

Has the right hon. Gentleman had the time today to reflect on his failure to answer the question put to him last week by my right hon. Friend the Member for Richmond, Yorks (Mr. Hague) about the £250 million that the self-employed will have to pay as a consequence of the Budget statement for the alignment of their national insurance contributions with those of employees? If he did not know about that consequence, surely he is not fit to be First Lord of the Treasury and, if he did know about it, he was demeaning his office because he should have shared that information with the House.

To give the hon. Gentleman the facts, we have cut the entry fee for national insurance contributions for the self-employed. They benefit, as everyone else does, from the cut in the basic standard rate of income tax. I know that Conservative Members do not like it, but, under this Government, the basic rate of tax, like that of corporation tax, is the lowest that it has ever been.

May I tell my right hon. Friend about the case of my constituent, 63-year-old Ted Dudley, whom I have been advising? His lungs are chock-a-block full of asbestos and he is fading away with mesothelioma cancer. He knows precisely when he came into contact with that asbestos. It was for a few months in 1954, when the brake linings on a machine that he was driving gave off the dust. It is probable that those brake linings were made with white asbestos. Will my right hon. Friend therefore take note of the Health and Safety Executive, which says that there is no safe working threshold for white asbestos and has approved the substitutes as safer than white asbestos? Will he support a unilateral ban on the importation into the UK of white asbestos and materials containing it?

I know that the case of my hon. Friend's constituent is not an isolated one, and, like those others, it is tragic. We shall, of course, reflect carefully on the points made by the Health and Safety Executive and my hon. Friend. We have continually said that, on white asbestos, we must proceed according to the scientific evidence, but we are well aware of the points that have been made by many campaigners, such as my hon. Friend, and we shall take careful account of them.

Q6. [75391]

Does the Prime Minister consider himself a socialist?

I get asked some hard questions. The hon. Gentleman will like this answer. We redrafted clause IV so that the first line says:

"The Labour Party is a democratic socialist party."

Q7. [75392]

Today is St. Patrick's day, the day that Irish people throughout the world like to celebrate. Many seek to return to the island of Ireland itself to engage in celebrations. There are some people, however, from Northern Ireland who have been placed in exile by paramilitary groups, who are not allowed to return for celebrations or for any other purposes. Will my right hon. Friend join me in condemning the practice of paramilitaries and calling for an end to this activity? Would it not assist the peace process considerably if the paramilitary groups did that?

I agree entirely with what my hon. Friend says. There can be no justification for these so-called exile sentences; they are simply another form of terrorism. My hon. Friend is also right to draw attention to the necessity to make sure that the peace process deals with all these various issues. The single greatest danger that Northern Ireland faces is that the will of the majority in the centre—the vast majority who want the process to succeed—will be pulled apart by the extremes. Whether it is the murder of Mrs. Nelson, exile sentences or so-called punishment beatings, it is all an attempt to pull apart the vast consensus for peace in Northern Ireland. The best response to it is to say that whatever incidents of violence are carried out in Northern Ireland we, the decent majority, will carry on constructing a peaceful structure for the people there.

Will the Prime Minister tell the House what instructions he has given his Ministers about what the proper action is when they receive leaked Select Committee reports?

We have answered extensively parliamentary questions on this matter. As for the right procedure, I understand that that is being looked into by the House. Whatever recommendations are made, we will fully abide by them.

Q8. [75393]

Is my right hon. Friend aware that there has been a fairly sophisticated attempt to smear my right hon. Friend the Foreign Secretary, using apparently classified material about my hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott)? Will my right hon. Friend call for an inquiry into what has happened? Might this be the right moment to bring the security and intelligence services under the scrutiny of Parliament?

As we have said many times, we believe that the Intelligence and Security Committee is the most effective way for the work of agencies to be scrutinised. As for the attempt to smear my right hon. Friend, he has made it clear that this is an obvious and amateurish fake. He has written to my hon. Friend the Member for Hackney, North and Stoke Newington. I agree that it is not a trivial matter. If she would like to show my right hon. Friend the Home Secretary the full contents of the paper sent to her, I know that we would be happy to consider whether there is anything that should be referred to the police for investigation.

Has the Prime Minister noticed that the Commissioners who have been most directly accused of cronyism are almost entirely socialist Commissioners? Does he, therefore, agree that it would be extremely good if the people of Britain elected an overwhelming number of Conservative MEPs to keep them in their place?

For a Conservative Member who disagrees fundamentally with the Opposition Front-Bench spokesmen's policy on Europe, that was a remarkably supportive question. The answer to it is that the committee of inquiry looked into Commissioners of all political hues. I believe that the people of this country would be better voting for a party that is united on Europe—[Interruption.] I repeat—united on Europe, rather than a party riven with division that reduced this country to having less influence in Europe than at any stage of our membership of the European Union.

Q9. [75394]

May I turn to an issue that will directly affect many people in this country? My right hon. Friend will not have missed the trailing over the weekend of the idea of reforming housing benefit. Of course, that reform will be welcome, but does he recognise that it was the policies of the Conservative Government, in trying spuriously to apply market forces to council and housing association rents, that led directly to the unsustainably high housing benefit costs today?

Yes, of course it was the policy of the previous Government that turned an investment of £10 billion in housing into a housing benefit bill of £10 billion. We want to look at housing benefit as part of housing policy as a whole. That is why we have announced our intention to publish a Green Paper on housing later in the year. The purpose of the reform, as with our other welfare reforms, will be to focus help on people getting back into the labour market and working for themselves. As a result of the Government's policies, we have more people at work. Under the new deal, 200,000 young people are being helped. We know from the policies advanced by the Conservative Opposition that they would scrap the new deal, the working families tax credit and the minimum wage. So much for caring Conservatism.

Overseas Territories

3.31 pm

With permission, Madam Speaker, I shall make a statement on the dependent territories.

We have completed a major review of the relationship between the United Kingdom and the dependent territories. Its objectives were to establish better and more effective communication between the Government of the United Kingdom and the Governments of the dependent territories; to improve the status of the residents of the dependent territories; and to ensure that the United Kingdom could discharge its international responsibilities in respect of those territories.

During the review we consulted widely. We listened to the Governments, Opposition leaders and governors of the dependent territories.

I am today publishing the White Paper "Partnership for Progress", which sets out the results of that review. It provides the basis for a renewed contract and a modern partnership between the United Kingdom and the dependent territories.

It is a striking measure of the degree to which the dependent territories value that partnership that none of their Governments expressed any desire during the review for independence. They all want to preserve the constitutional link with the United Kingdom, which has provided all of them with security, and most of them with a high level of prosperity.

The review has already led to a series of improvements in the arrangements within Government for our relationship with the dependent territories. the Secretary of State for International Development and I have established parallel structures to deal with the dependent territories in our Departments. We have established a ministerial liaison committee to ensure that our activities and policies are fully co-ordinated.

Within the Foreign Office, my noble Friend Baroness Symons has been appointed Minister with specific responsibility for the dependent territories. That responsibility was previously split between a number of geographic departments. The changes we have made will ensure a unified ministerial responsibility for policy on all the dependent territories except Gibraltar and the Falkland islands.

In order to improve liaison with the dependent territories, as well as within Whitehall, we will be establishing a Council of the Territories, which will include the Chief Minister or equivalent of each dependent territory and will be chaired by the Minister for the territories. Its first meeting will be convened later this year in advance of the Commonwealth Heads of Government meeting, in order that the UK can fully reflect their views, particularly in the discussions on the special challenges to small island states.

The White Paper confirms our commitment to drop the title "dependent territories". It is the wrong name for today's territories, which are energetic, self-governing, and anything but dependent. It is also does not fit the concept of partnership on which we want to build our relationship. We will be introducing legislation to rename the territories "United Kingdom overseas territories", and in the meantime we will adopt that title in all Government communications.

There is a strong sense of grievance in many overseas territories that the right of abode in Britain was taken away from them; that is felt particularly strongly in St. Helena. The residents of the overseas territories are proud of their connection with Britain, but are often puzzled that Britain appears not to be proud to have them as British citizens.

I can announce today that we will be offering British citizenship to all residents of the overseas territories who wish to take it up. That improved status will be welcomed throughout the overseas territories. It will give their residents the right to travel freely throughout the European Union and enable their young people to support themselves through work experience while they study in Britain.

We do not expect that change of status to result in any substantial number of people taking up permanent residence in the United Kingdom—70 per cent. of the citizens of the overseas territories have a higher per capita income than citizens of the United Kingdom, and their residents have no incentive to leave on a permanent basis.

The offer of right of abode will be made on a non-reciprocal basis. The unanimous view in consultations with the overseas territories was that they were anxious that their small communities did not have the capacity to absorb uncontrolled numbers of new residents. Our decision on that follows the precedent set by Gibraltar and the Falkland Islands, whose existing right of abode is also non-reciprocal.

We are not extending the offer of citizenship to British dependent territories citizens who were associated with the British Indian Ocean territory and the sovereign base areas in Cyprus, all of whom have alternative nationality.

Although most overseas territories have prosperous economies, the United Kingdom recognises its obligations to promote the development of those territories that need assistance. In the Department for International Development, my hon. Friend the Under-Secretary of State has been appointed Minister responsible for the sustainable development of the overseas territories. The White Paper on international development confirmed:

"The reasonable assistance needs of the Dependent Territories are a first call on the development programme."

It is not possible for all the smaller overseas territories to promote development on their limited resource base alone. We will therefore be maintaining a programme of development aid for the poorer territories to support their economic infrastructure, their social provision and their good government. In the case of the two least developed territories, Montserrat and St. Helena, we will be continuing budgetary aid.

The White Paper demonstrates that the United Kingdom is fully committed to meeting its obligations to the overseas territories. Any partnership, though, must have obligations on both parties. The United Kingdom accepts its responsibility for the defence of the overseas territories and for their international representation. In return, we have to insist on the Governments of the overseas territories fulfilling their obligations to meet the standards of international organisations in which the United Kingdom represents them.

There are two issues which are of priority in meeting those obligations. The first is to match the best international standards in financial regulation. Many overseas territories have made substantial progress in proper and transparent regulation of their large financial sectors. They have recognised that a sound reputation for financial regulation is a prime asset in maintaining the prosperity of a sound financial sector.

Nevertheless, some overseas territories do not yet fully meet international standards. We will therefore be requiring all overseas territories, by the end of this year, to meet in full international standards on money laundering, transparency and co-operation with law enforcement authorities, and independent financial regulation. The globalisation of international finance means that we cannot tolerate a weak link anywhere in the chain without exposing investors everywhere to risk.

The second area of priority is in human rights. Those overseas territories that choose to remain British must abide by the same standards of human rights and good governance that we demand of ourselves. We require our overseas territories to maintain legislation that fully complies with the European convention on human rights and the international convention on civil and political rights, to which the United Kingdom is a party.

Specifically, we require changes in the law in a minority of overseas territories which retain corporal punishment and criminalise consensual homosexual acts in private. Our strong preference is that the overseas territories should enact the necessary reforms themselves, but we are ready to make such reforms by Order in Council if they fail to do so.

One important duty of the United Kingdom, as the sovereign authority for the overseas territories, is to preserve their rich and unique environment. Taken together, the overseas territories contain 10 times as many species of animals and plants as the United Kingdom. The British Antarctic territory acts as a barometer for climate change and atmospheric pollution—it was there that British scientists discovered the hole in the ozone layer. Coral reefs in the Caribbean territories and Bermuda are as beautiful as they are fragile.

We propose to develop an environment charter between the United Kingdom and our overseas territories. That will help the overseas territories to build their capacity to protect their environment, and will ensure that the United Kingdom can fully reflect their interests in international agreements. As support for work under that environment charter, the United Kingdom will provide funding of £1.5 million over the next three years.

The White Paper sets out the basis for a modernised and strengthened partnership between the United Kingdom and our overseas territories. We already have a firm basis for that partnership founded on three centuries of shared history. I believe that the proposals in the White Paper will give us a confident basis for our future partnership in the next century.

Anyone who read this morning's newspapers or listened to the "Today" programme will have had a feeling of déjà vu listening to that statement. BBC radio reported not only that a White Paper would be published today and that it would extend British citizenship to 150,000 residents of overseas territories, but that the overseas territories would have to adapt their legislation accordingly.

Will the Foreign Secretary therefore follow the example of the former Chancellor of the Duchy of Lancaster, the right hon. Member for South Shields (Dr. Clark), who apologised to the House for the premature disclosure of his White Paper on freedom of information—and earned your gratitude in the process, Madam Speaker? Can the Foreign Secretary assure the House that neither his office nor any of the offices of his ministerial colleagues briefed the press prior to this statement? Does he share the annoyance of the right hon. Member for South Shields at such press reports, and does he agree with him that details of White Papers emerging in this way does a disservice to the House?

On the substance of the White Paper, there is much in it that we would welcome and support—the provisions on aid, defence, financial regulation and many other issues. The House will, of course, recall that the review that led to the White Paper was initiated on 27 August 1997 at the height of the golden elephants farce, when Montserrat was the subject of an unedifying tug of war between the Foreign Secretary and the Secretary of State for International Development.

On citizenship, as the Foreign Secretary said in his response to the Foreign Affairs Committee report, the extension of full British citizenship to the citizens of overseas territories who do not at present have it raises significant and complex questions. For example, the Foreign Secretary will be aware of the need to ensure that citizens of third countries cannot secure a right of abode in Britain by becoming citizens of an overseas territory. In his discussions with the Home Office, what reassurances could he offer on that issue? How does he intend to allay such concerns from this House and from members of the public?

Can the Secretary of State confirm that there will be a review of each territory's constitution to ensure that it meets the needs of that territory? Will he also confirm that he will not impose a "one size fits all" policy?

Finally, will the Secretary of State explain why he is imposing European Union human rights obligations on those territories that are not part of the EU? Does he not have confidence in the instincts and abilities of legislators in those territories to reflect the cultural and political wishes of their inhabitants? Why does he not devolve those powers to the overseas territories if, as he says, he believes in devolution and partnership? Is this not legislation without representation?

The promise of early retirement has not made the right hon. and learned Gentleman any more emollient. I am glad that he included the sentence saying that he welcomed our proposals because, apart from that sentence, it was hard to tell that he did.

The bones of what I have announced today have been in the public domain since 4 February 1998, when I addressed the Dependent Territories Association. Nothing in the White Paper will particularly surprise those who have paid attention to the debate since then.

On citizenship, of course it is important that we are protected against an unreasonable number of people taking advantage of the proposal. We are fully protected, because the White Paper makes it plain that British

citizenship will be available only to those who already have a residence qualification for British dependent territory citizenship. Those residence qualifications are quite severe in most of the territories precisely because, as I have said, they themselves are anxious about uncontrolled settlement in their area.

I can assure the House and the right hon. and learned Gentleman that nothing in the White Paper threatens changes to the constitution of any territories. Their constitutions will continue. What the White Paper is about is how the Government relate to them and how we can better service their Governments.

I am surprised that the shadow spokesman on foreign affairs does not understand that the European convention on human rights has nothing to do with the European Union. Indeed, this country was committed to the convention long before we joined the European Union.

I make no apology for the proposal. Britain is committed to the European convention. We accept any obligations that are imposed on us by the European Court of Human Rights. We also are fully signed up to the two international covenants—on civil and political rights and on economic and social rights. We abide by them. We have a perfect right to tell those overseas territories that we represent throughout the world that we expect them to abide by them, too, so that we can defend them throughout the world. We have a particular obligation to all the residents of those territories, including any minorities within them, to ensure that they have the same rights that we claim for ourselves.

May I warmly congratulate my right hon. Friend on his statement and plead with him to ignore the hypocrisy from Opposition Members? He is aware that the nationality legislation that the previous Government introduced some 17 years ago treated residents of dependent territories shamefully. The previous Government made them carry the buck for the problem that they foresaw arising from Hong Kong. To resolve the problem of Hong Kong, they withdrew the right of abode of all residents of the dependent territories. It is right and proper—great credit is due to the Government—that they have decided to give back those people their right of abode in this country and, with it, Britain citizenship. May I welcome that?

Clearly, there will be a—

Order. I cannot allow hon. Members to make speeches on the matter. I am waiting for a question on the statement, so that the Foreign Secretary can answer.

I prefaced my remarks by asking whether my right hon. Friend the Foreign Secretary agreed with my comments—if I did not do so, I do it in retrospect.

Clearly, there will be a time lag before the legislation comes in. Will my right hon. Friend give those people who are resident in dependent territories an assurance that, if they wish to come to the United Kingdom before the legislation is on the statute book, they will not have to apply for visas, as they do at the moment, but will be able to travel freely?

I appreciate my hon. Friend's question and am happy to say that the answer is yes, I accept his welcome.

I have put right something that has long been wrong. What we have said today will be welcomed throughout the dependent territories, particularly by people who felt a strong sense of grievance that they were cheated out of their right of abode in the UK.

I give an assurance that British dependent citizens will not require a visa to come to Britain and do not require one at present. Of course, whether it is possible to anticipate the change in legislation is a matter for my colleague at the Home Office, but we will seek to put the changes in the legislative programme and to bring them into effect as quickly as we can. It should be appreciated that that is important for their access not just to Britain, but to Europe.

Many citizens of British overseas territories find it an affront that, when they visit other European countries, they are treated as non-EU citizens. They see a contrast between their treatment and that of citizens of territories of the Netherlands and of France. After the legislation and in the light of the White Paper, that insult will have been removed.

I welcome both the statement and the White Paper. Given the rather febrile atmosphere of the times, may I assure the Foreign Secretary that I have not seen a pre-publication version of the White Paper?

Is the Foreign Secretary satisfied that the arrangements for ministerial responsibility that he has described will prevent a repeat of the rather undignified scramble—almost a turf war—of the summer of 1997, which erupted, to coin a phrase, over the island of Montserrat? Is he aware that many hon. Members regard the events of the early 1980s that resulted in citizenship being taken away from people living in overseas territories as a particularly shameful chapter in the history of the United Kingdom, and will welcome what he has said today about the restoration of those rights? The sense of grievance to which he referred has been entirely justified, has it not?

There is to be no extension of the offer of citizenship to citizens of British dependent territories who were associated with the British Indian Ocean territory. Am I right in thinking that will apply to the Chagos islanders? If so, why?

If there is any procrastination or unreasonable delay in the introduction of domestic legislation to deal with the issue of homosexual rights, will the Foreign Secretary ensure that the necessary Order in Council will be promoted through the House of Commons at the earliest opportunity?

I thank the right hon. and learned Gentleman for what he has said. For the record, I should say that a pre-publication copy of the White Paper was given to the Chairman of the Foreign Affairs Committee, which is today on a welcome visit to one of the overseas territories, Gibraltar.

I agree with the right hon. and learned Gentleman about what has been done in the past to the citizenship of islanders and other citizens of overseas territories. We put that right after taking office, as quickly as we reasonably could.

The right hon. and learned Gentleman is correct is assuming that what I have announced will not apply to former residents of the Chagos archipelago. That is because they left 30 or 40 years ago, and no one has lived there since. Moreover, they all have access to Mauritian citizenship. The offer of British citizenship that I have made today applies to residents of our territories to whom no other national citizenship is available.

I can give the right hon. and learned Gentleman the assurance that he seeks. If there is no progress to put right the legislation on human rights to which I referred, we shall do it by Order in Council. We would prefer not to do that; we would prefer those concerned to do it themselves, because that would respect the principle of self-government on which our relations are founded. Should they fail to do so, however, we will carry out our obligations to the international community, and also to minorities in the territories.

I should not presume to speak on behalf of St. Helenans, but I congratulate my right hon. Friend on his statement, and assure him that the restoration of those citizens' rights—withdrawn by the last Government in 1982—will be very welcome. I imagine that the islanders will be celebrating joyously today.

Will my right hon. Friend acknowledge the tremendous contribution made by the few relatives but many friends of St. Helenans in this country who have campaigned so tirelessly on their behalf, and whose appeals for justice fell on deaf ears throughout the lifetime of the last Administration but have been met in full today?

I thank my hon. Friend for his comments. When hon. Members have a chance to read the White Paper, they will note that we have made a number of specific commitments in relation to the development of St. Helena. Today's statement will be welcome in relation to its citizens' constitutional status, and our commitments to the development of their infrastructure and communications with the outside world will be almost as welcome.

European treaties contain many references to overseas territories of member states. Is there any difference in the rights, entitlements or obligations of their citizens as a consequence of the change of name? In order to avoid any misunderstanding, will the Foreign Secretary also make it abundantly clear that the statement has no relevance to the Channel islands?

I am happy to respond to that point by saying that the hon. Gentleman is absolutely correct—it has no relevance to the Crown territories, such as the Channel islands or the Isle of Man. The statement was purely on those legally defined as dependent territories, which will now become overseas territories. I am also able to tell him that the statement does not change the status of the overseas territories in relation to the European Union. All of them, with the exception of Gibraltar, are outside the European Union. Gibraltar is within certain competencies of the European Union, although it is not a member of the customs union. Today's statement and White Paper do not change any of that.

Thirty years ago, I stayed for three days with Len Williams, who was the general secretary of the Labour party and—appointed by Harold Wilson—governor of Mauritius. His wife took me to see some of the Ilios people, from the Chagos islands, who were at that time absolutely traumatised by their removal. They are very different from the Mauritians.

The Secretary of State is quite right: at that time, it was hoped that there would be integration and Mauritian citizenship; alas, that has not happened. Will he talk to Professor Tony Bradley—former professor of public law at Edinburgh, whom he will know well—and Bindmans, the lawyers who are operating for the Ilios people, about the possibility of their returning to one of the areas of Diego Garcia? Whereas it might be unreal to think that the biggest base outside the continental United States would be moved for the sake of relatively few people, none the less, could their interests be considered, with a view to returning after 30 years—which is what they desperately want to do?

What is the future of the Diego Garcia base? What are our relations with the Americans on that absolutely crucial, huge base?

I welcomed in particular the reference to coral reefs. As the Under-Secretary of State for International Development will remember, there was an Adjournment debate on coral reefs. I hope that the Foreign Secretary will give the Under-Secretary total support in his good deeds in that matter.

I am well aware of Professor Bradley, and am always happy to seek his advice. However, I am not entirely sure whether it would be right to discuss with him a legal case taken out against the Government. However, I respond to my hon. Friend's point sympathetically. The position of the Ilios in Mauritius is a troubling one and is very unsatisfactory. In fairness to Britain, it should be noted that, over the years, we have made available £5 million in aid for the settlement of the Ilios and to help them to integrate into Mauritian society. We very much regret that more progress has not been achieved on that.

The current status of Diego Garcia is that it is a dependent territory. However, as my hon. Friend knows, it is subject to a defence agreement with the United States that is of value to both the United States and the United Kingdom.

When my hon. Friend reads the White Paper, I think that he will be pleased at the very strong emphasis that we have placed on the environmental dimension of the overseas territories and on our commitment to improving and safeguarding that environment. I hope that the environment charter will deal with many of the problems, including security of the coral reefs.

When the Foreign Secretary mentions St. Helena, will he also add the two words "and dependencies"? Will he confirm that his statement applies equally to Tristan da Cunha and Ascension? On democratic rights and Gibraltar—which, as he said, is a member of the European Union—and following the European Court's decision that the British Government are in breach of international law by denying the people of Gibraltar the right to vote in European elections, what will the British Government do to give them that right in time for the European elections on 10 June?

I can assure the hon. Gentleman that what I have said about St. Helena applies also to the two dependencies with it. When he has an opportunity to study the White Paper, he will see that we are making specific proposals on examining the constitution of Ascension. We accept the ruling of the European Court on Gibraltar, as we accept all its rulings. We shall also seek to deliver the right to the people of Gibraltar to vote in the European election. We are already raising that issue in Brussels, in discussions on the common position on the European Parliament. In fairness, however, I should tell the House that there is no prospect of our being able to secure that in time for the elections this June, as that is beyond any realistic timetable. However, we accept the obligation in principle and shall seek to implement it.

As chairman of the all-party—I stress the words "all-party"—group on overseas territories, may I assure my right hon. Friend, following the churlish comments from the Opposition Front Bench, that many hon. Members on both sides of the House will warmly welcome his statement? I heard his answer to my hon. Friend the Member for Linlithgow (Mr. Dalyell) about the British Indian Ocean territories, but has consideration been given to the right of the Ilios to return, if not for residence, then to visit the burial grounds of their ancestors? Will he comment on the anomaly that citizens of the Spanish colonies or overseas territories of Ceuta and Melilla on the north African mainland are able to vote in European elections, but citizens of Gibraltar, which is part of the territory of the European Union, cannot?

My hon. Friend offers a valuable argument which will be useful ammunition for me in the debate that I am sure that we are going to have with our European Union partners. I am aware of the desire of some of the Ilios to visit their burial grounds. We are examining the issue with understanding. The problems are not simple. Mauritius is 2,000 miles from the Chagos archipelago and there are tight security requirements at the defence base, but it is a legitimate aspiration that we shall continue to consider and try to find a solution to.

The Foreign Secretary will accept that some reciprocity would make the settlement even more acceptable. I understand that, given the numbers, it would be unreasonable to expect dependent territories to accept British citizens going out in large numbers, but will he give us an assurance that those who have a legitimate desire to seek employment, work experience or research projects in the territories will have an appropriate opportunity?

Those are essentially points for the Governments of the overseas territories. By and large, it is possible to visit, to work and to carry out research in the territories. The more successful of them have a number of people working there who are not citizens. They guard the right of residence in their islands jealously. We recognise that our offer of citizenship is non-reciprocal. However, I hope that, in the better spirit of co-operation and partnership that our offer and other commitments in the White Paper will generate, we may be able to resolve some other areas of friction.

In welcoming the White Paper, hon. Members on both sides should, in fairness, welcome the fact that we are putting right the mistakes of the previous Government. I am pleased to be associated with that. Allowing for that, what assurances are there for people crossing from Gibraltar into Spain, particularly after the plight of three of my constituents from Chorley, who were held for 15 hours in the Spanish customs post, not being allowed to go on into Spain or back into Gibraltar? I hope that my right hon. Friend will look into that.

I am aware of my hon. Friend's concerns about his constituents. He raised the issue in the House during the statement on Gibraltar. The delays at the border post at that time were wholly exceptional and wholly unacceptable. I am pleased that there have been considerable improvements in the border situation since then. Nevertheless, the rate at which vehicles and now pedestrians are being cleared is unacceptably slow. There has not been a return to normality.

I saw the Spanish Foreign Minister as recently as last weekend to raise the matter. We hope to discuss it again in the near future and shall be looking for progress that will enable people on both sides of the border to travel freely. It is proper for the House to note that a large number of Spanish residents and workers on the Spanish side of the border have complained just as vigorously as the residents of Gibraltar about the border delays. It is in the interests of Madrid to respond to their concerns as well as those of Gibraltar.

Financial regulation is obviously extremely important. Does the Foreign Secretary accept that, although a number of the dependent territories are highly sophisticated, a number will need considerable help if they are to reach the required standards this year, unless rapid changes are made? What steps are being taken by way of a suitable package of training to enable those dependent territories that have such problems to meet their obligations?

I am pleased to assure the right hon. and learned Gentleman that we provide funding for good government, and specialist advice. In fairness, the deadline of the end of this year has not been announced for the first time today; it was announced in my speech of February 1998. There has been a long lead-in, and it is a reasonable deadline. We will give assistance to those who require it, but those overseas territories that have acted, and acted well, to bring themselves up to the standard are keen that others should do so as well, because they recognise that their own reputation is at stake.

Many of my constituents are interested in the overseas territories, particularly given that Fergus McCann, the owner of Glasgow Celtic, is seeking political asylum in Bermuda—and, after the goings-on in Scottish football, who could blame him?

May I follow the point made on the need for the highest possible financial standards? I seek further clarification on whether the British Government will do all they can to ensure that any territory that changes its rules and regulations does not then face unfair competition from external jurisdictions that adopt much laxer standards, causing a leakage of trade, business and commerce away to such jurisdictions.

On the environment, what steps are the British Government taking to try to ensure that the Americans clear up bases that they have left behind—particularly in Bermuda, where they have made no effort to clear up the pollution that has been left behind? That is in noticeable contrast to the British Government—under the previous regime—who did everything they could to ensure that the British base was cleared up and completely ready to be handed over and redeveloped.

I assure my hon. Friend that there is nothing in the White Paper or my proposals that would give Fergus McCann a reciprocal right of abode in Bermuda. My hon. Friend can look forward to the return of his constituent.

We remain exercised about the environment in all our overseas territories. I cannot comment on the specific point to which my hon. Friend referred, but, if we can influence an allied country in its conduct on overseas territories, we shall certainly do so.

It may be premature to be dancing in the streets of Jamestown, but I welcome the announcement this afternoon; I am sure that all 5,500 residents of St. Helena welcome it. Has the Foreign Secretary received any apologies from the Conservative party for its legislation of the past 18 years, which made the residents of the overseas territories—and in particular St. Helena—second-class citizens when they are, in fact, as British as we are? When precisely will full British citizenship be restored? Is there a timetable? How difficult will it be to legislate? Can any other methods be used so that those people return as soon as possible as full members of the British family?

I am grateful to the hon. Gentleman for his welcome, and I am aware of his long interest in the issue. The proposal will require legislation, and the House will understand that I cannot give a commitment as to precisely when that will take place. We will look for as early an opportunity as is practical because we want to give effect to our commitment.

I have not received any apology, but an apology would be a bridge too far. I will happily settle for an afternoon free of gratuitous insult.

I welcome the statement, particularly as it affects St. Helena. My right hon. Friend will be aware of my correspondence to the Department over a considerable time concerning constituents who served in the armed forces with the Saints and have campaigned for the measure—which is to be welcomed. What plans do the Government have regarding the economy and jobs; and will recruiting into the armed forces continue?

My hon. Friend raises an important point about our connection with the overseas territories. Every year, as Foreign Secretary, I lay a wreath at the cenotaph to honour those in the overseas territories who gave their lives in wars on behalf of Britain. Those who served in that way are entitled to the recognition and citizenship that we have given today.

I can assure my hon. Friend that the armed services will remain open to people from St. Helena, and indeed I understand that there are 20 to 30 currently serving. The White Paper contains several proposals to help with the economy; in particular, we commit ourselves to £26 million of continuing development aid over the next few years. We will work hard with the people of St. Helena to ensure that they have a future in their own community.

I welcome the Foreign Secretary's statement. A wrong has certainly been made right. He stressed that one of the benefits of the changes would be that people from the overseas territories would no longer be treated as second-class citizens compared with those of French and Netherlands overseas territories. Citizens in French overseas territories have votes in European Parliament elections, and we now learn Gibraltar has been awarded the same right.

I recognise that Gibraltar is different from the other dependent territories, in that it is already in the European Union, but does not the Foreign Secretary believe that another step forward must be the consideration of how British citizens in those other territories can be given votes in European elections?

That is not a request that has been made by any overseas territory other than Gibraltar. It is hard to see how it could be contemplated as long as they choose to remain outside the European Union. The parallel with the French and Netherlands overseas territories halts on one leg, because those territories have a long tradition of being highly integrated with the Government systems of the metropolitan country and, in the case of the French ones, are in the European Union. For those reasons, I cannot see a precedent to build on, and I am not aware of any such demand from those overseas territories.

I congratulate my right hon. Friend on ending an injustice that has lasted not only since the British Nationality Act 1981 but, in effect, since 20 years before, and on the associated recognition of human rights standards in the dependent territories. Does the White Paper deal with the administration of justice in some of those territories? I have been concerned about the administration of law in Anguilla and have written to him about it. Is he satisfied that we have efficient and effective ways of delivering justice in the overseas territories?

By and large, the administration of justice in the overseas territories is of a high standard, but one reason why we maintain governors is to ensure that we have an oversight of law and order and of due legal process; if we have concerns, we certainly air them. We will take up the point about which my hon. Friend has written to me and ensure that she gets a full reply. As a general principle, I would not want the House to believe that it should not have faith in the judicial system in the overseas territories.

I understand that, now that Hong Kong is no longer a colony, the White Paper, the publication of which I welcome, refers to about 150,000 people. Did the Foreign Secretary consider or discuss with any of the people with whom he was negotiating in the dependent territories whether they would want any representation, not in the European Union, as has been suggested, but here in the House of Commons? Was there any suggestion that they would like representation, perhaps by only two or three Members of Parliament, which would give some legitimacy to our issuing them with Orders in Council?

Although I am confident that, after today's White Paper, we could expect strong support from the overseas territories, I believe the Government's majority to be sufficiently strong without such a gesture. There is no demand from the overseas territories for the change that the hon. Gentleman proposes. It would mean that they would have had to accept a much greater integration with our government system than they have at present. The overseas territories have wide autonomy and self-government and that is more precious and important to them than any risk of compromising it to gain representation here.

Iraq

4.15 pm

On a point of order, Madam Speaker. Your antennae, ever sensitive to the mood of the House of Commons, will have registered yesterday—not least through the eloquence of the right hon. and learned Member for North-East Fife (Mr. Campbell), both in The Independent and on the Floor of the House, and of the hon. Member for Mid-Sussex (Mr. Soames), the former Minister for the Armed Forces—the growing cross-party unease at the daily bombing in Iraq. Have you had any requests from the Ministry of Defence for a statement to give an explanation of why the Syriac Christian community at Aniwa, near Erdbil, was bombed? There is evidence to suggest that there were civilian casualties, although we do not know how many. The House deserves some explanation for the constant bombing, bombing, bombing. To what end?

I regret to inform the hon. Gentleman that I have not been informed by any Cabinet Ministers that they are seeking to make a statement on that issue. I have noted the hon. Gentleman's keen interest in the subject over a long time and he has been fortunate in obtaining Adjournment debates on the subject. All credit is due to him for his assiduity in seeking those debates on the issue, and I hope that he will continue to do so.

Leasehold Reform

4.17 pm

I beg to move,

That leave be given to bring in a Bill to amend the law with regard to leaseholds in relation to housing for older people; and for connected purposes.

The case for reform of leasehold law is overwhelming and is recognised by many, not least the Government. Leasehold law embraces a feudal system and is a relic of the past. It creates a gross imbalance in terms of power and control between the rights and responsibilities of leaseholders and landlords. It is a system which is susceptible to grave abuse, and many hon. Members will be familiar with the many examples of exploitation, especially of older people in leasehold accommodation. Such abuse includes excessive management charges, poor-quality services and spiralling costs.

I remind the House that, in England and Wales—it is an English and Welsh problem—some 2 million homes are held under leasehold tenure. It is not just a London issue. A reform process has been under way in the House for many years, and many hon. Members, especially from Wales, have been involved. The Government have acknowledged the need for comprehensive reform of leasehold law, and their consultation paper has been widely welcomed. I also welcome the presence of the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford). He is an acknowledged expert in this area and I hope to have a constructive discussion with him on the issues that I shall raise.

The consultation paper does not go far enough in one vital area—the provision of leasehold retirement housing for older people. That area is capable of statutory definition. Leasehold retirement housing consists of blocks of purpose-built flats with communal facilities sold on long leases with age-restrictive covenants.

There are about 100,000 such housing units, many in retirement areas such as north Wales, including my own constituency. The hardship caused to holders of long leases by the defects of the present system justify special legislative consideration. I shall enumerate some of my reasons for believing that to be so.

Older people are vulnerable to financial abuse. Many live on fixed incomes and are less able financially to move elsewhere. Many move into purpose-built homes to escape the headaches and hassles of keeping larger homes. Many are unwilling to rock the boat. The average age of people who live in retirement leasehold properties is about 78.

There has been rapid growth in this sector of the housing market. Elderly people are particularly reliant on services provided by landlords or management agents, which are one attraction of this form of housing. Particular problems arise from spiralling service charges and lack of accountability, especially for the management fee element of the service charge. Despite glossy brochures and sophisticated promotional devices that help them to decide to move into such properties, people often feel that they do not ultimately get what they had bargained for. That causes great concern, particularly among older people who find services deteriorating.

Elderly people find leasehold valuation tribunals, which were meant to provide some redress in cases of dispute with landlords, inaccessible and unaffordable. I know of numerous examples of hardship. One of my constituents has encountered a string of problems over many years with the quality of service: rooms have been left dirty; house managers' hours have been cut; and there has been no cover at weekends. Much distress has been caused to residents, and my constituent feels powerless to do anything about it.

My Bill will address that mischief in three ways: first, by putting a cap on the management fee element of service charges; secondly, by enacting the right-to-manage provisions contained in the consultation paper to which I have referred; and, thirdly, by making leasehold valuation tribunals more accessible.

I propose that the cap on the management fee element should apply to all public and private retirement leasehold homes. I intend to incorporate the formula for leasehold schemes for the elderly, which applies to no less than 25 per cent. of retirement leaseholders. I disagree with the preliminary view in the White Paper that the leasehold schemes for the elderly formula should be scrapped. Many leaseholder organisations believe that it is an important yardstick, and that it should be extended, not curtailed.

Average service charges amount to £1,400 a year, a large element of which is the management fee paid above staff costs and other disbursements capable of verification. The problem is that the management fee is not provable by receipts or paperwork, which creates a temptation for hard-headed landlords to increase it willy-nilly.

The Bill will enact the right-to-manage provisions contained in the consultation paper. That will give substantial extra leverage to tenants. That right should apply across the board, to both registered social landlords and private landlords. I remind the House that no less than 50 per cent. of retirement leaseholds are run by housing associations or their subsidiaries. Housing associations have moved on from the early days. Their work is to be welcomed. Of course, they are charitable organisations with charitable objectives, but they have become more hard-headed businesses, and there is no reason why there should not be a level playing field between the private and the public sectors.

The Bill would also give the right of first refusal to registered social landlord tenants, as well as the right to appoint a new manager. Those are lacunae in the present system as it relates to leaseholders of registered social landlords.

Finally, the Bill would make the leasehold valuation tribunal system, which tends to be rule bound, more accessible. I would eliminate the fee of £500, make representation available and facilitate alternative dispute resolution.

The form of housing to which I have referred presents an attractive and viable option for those who want to be independent for as long as possible. Better regulation would improve confidence in this sector of the housing market. It would also provide valuable protection for the elderly. I commend it to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. Gareth Thomas, Mr. Barry Gardiner, Mr. Adrian Sanders, Jacqui Smith, Mrs. Ann Winterton, Mr. Austin Mitchell and Dr. Doug Naysmith.

Leasehold Reform

Mr. Gareth Thomas accordingly presented a Bill to amend the law with regard to leaseholds in relation to housing for older people; and for connected purposes: And the same was read the First time: and ordered to be read a Second time on Friday 23 April, and to be printed [Bill 65].

Tax Credits Bill Money No 2

Queen's recommendation having been signified—

Resolved,

That, for the purposes of any Act resulting from the Tax Credits Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenses incurred by the Secretary of State in consequence of the Act.—[Mr. Clelland.]

Orders Of The Day

Tax Credits Bill

As amended in the Standing Committee, considered.

4.28 pm

I must inform the House that, when we reach Third Reading, I have selected the amendment that stands in the name of the leader of the Liberal Democrats.

New Clause 5

New Category Of Child Care Providers For Tax Credit Purposes

'.—(1) the Secretary of State may by regulations make a scheme for establishing a new category of persons whose charges for providing child care are to be taken into account for the purpose of determining—

(a) the appropriate maximum working families' tax credit for the purposes of section 128(5) of the Social Security Contributions and Benefits Act 1992 or section 127(5) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992; or

(b) the appropriate maximum disabled person's tax credit for the purposes of section 129(8) of the Social Security Contributions and Benefits Act 1992 or section 128(8) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

(2) A scheme so made shall—

(a) provide that a person shall not fall within the new category unless he is approved by an accredited organisation in accordance with such criteria as may be determined by or under the scheme;

(b) authorise the making of grants or loans to, and the charging of reasonable fees by, accredited organisations; and

(3) In subsection (2) above "accredited", in relation to an organisation, means accredited by the Secretary of State in accordance with such criteria as may be determined by or under the scheme.

(4) Regulations under this section—

(a) may make different provision for different cases or circumstances or for different areas;

(b) may make such incidental, supplemental, consequential and transitional provision as appears to the Secretary of State to be necessary or expedient; and

(c) shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.'.—[Dawn Primarolo.]

Brought up, and read the First time.

With this, it will be convenient to discuss the following: New clause 2—Eligibility criteria for childcare tax credit—

'.—In respect of the childcare tax credit component of working families' tax credit and disabled person's tax credit the Treasury shall, before this Act comes into effect, publish eligibility criteria as to what constitutes qualifying expenditure on childcare and the conditions that must be fulfilled for a childminder to be registrable for this purpose.'.

New clause 3— Eligibility of relatives and guardians as childcare providers—

'.—In respect of the childcare tax credit component of working families' tax credit and disabled person's tax credit, the Treasury shall publish guidelines as to whether a person who is
(a) the parent or relative of a child;
(b) has parental responsibility for a child; or
(c) is a foster parent of a child
may, for the purposes of this Act, qualify as a provider of eligible childcare for which relevant childcare charges are payable.'.

Government amendment No. 14.

I beg to move, That the clause be read a Second time.

I am delighted to be able to move the new clause, which will extend the range of eligible child care for the child care tax credit. There was much discussion in Committee about the eligibility of child care and it is the subject of the other new clauses grouped with new clause 5.

The current rules on eligible child care focus almost entirely on child care for the under-eights, but we have raised the children's age limit to help with child care costs for children up to 14 years, in line with the national child care strategy, and to 16 years for disabled children.

There is little in the current rules to cater for child care for the older age group, whose needs are different from those of younger children. That older group need breakfast clubs, after-school clubs and holiday clubs. Such child care is increasingly available, but the clubs are no longer limited to those run by schools or on their premises, which is what the current rules envisage. They can be organised by commercial organisations or voluntary groups, by voluntary management committees of parents and teachers, or independently from any school. The diversity of the ways in which child care is provided for those older children means that there is currently no common feature that would distinguish the appropriate good-quality providers from the inappropriate ones.

The clause enables us to create such a category of good-quality providers. That category can then be used in the tax credit rules as a definition of eligible child care. The clause is the joint work of the Inland Revenue, which administers the tax credits, and the Department for Education and Employment, which is responsible for the regulation of child care in England; it was drawn up in consultation with the Scottish Office, the Welsh Office and the Northern Ireland Office, which are responsible for child care in their areas.

The clause enables the Secretary of State to set up a two-tier approval scheme. the Secretary of State would accredit appropriate organisations to administer an approval system for child care providers. The details of the scheme would be contained in regulations made by the Secretary of State, as would the criteria for organisations to become accredited so that they can be approved providers.

Subsection (1) sets out the general principle, purpose and limits of the clause. It enables the Secretary of State to make regulations for a scheme to establish a new category of child care provider, the costs of which would be taken into account in calculating the maximum working families tax credit and disabled persons tax credit.

I am grateful to the hon. Lady and to the Government for taking up one of the points that I raised in Committee about provision for children aged between eight and 14, or between eight and 16 if they are disabled. Are the draft regulations available for perusal? If not, will the hon. Lady give me some idea of what definition of organisation will be used? For example, will it be registered companies—whether closed companies, limited companies or plcs—partnerships, or companies owned by only one person? What sort of organisations are we talking about?

The hon. Lady asks a number of questions and I shall do my best to reply. If I miss one out, I shall be happy to give way to her again on this important matter.

The draft regulations will be available at about the same time as the clause is considered in detail in the other place; a memorandum is now available in the Vote Office. There will be an opportunity to comment on those draft regulations and we shall seek views, especially from the child care sector, and from others who have an interest in these matters, before the draft regulations are laid before the House.

Will the right hon. Lady give way?

If the hon. Gentleman can hold on, I shall finish answering the questions of the hon. Member for Beckenham (Mrs. Lait) and then give way to him.

The hon. Lady asked who the providers would be. We shall be looking to existing recognised child care providers. It would be invidious for me to give a long list, but one current provider is the Kids Club Network, which I shall talk about later in my speech. We shall require that such providers meet a quality threshold and there will be an assessment before accreditation is granted. The child care provider will have to fall within the definitions that I mentioned—for example, breakfast, after-school or holiday clubs. I hope that that has answered all the hon. Lady's questions.

Does the right hon. Lady agree that the regulations should be as succinct and intelligible as possible? If she does agree, will she take account of the fact that the president of the CBI, Sir Clive Thompson, has referred to the creeping paralysis of regulation currently afflicting this country? In the light of that statement, will she give a pledge to the House this afternoon that the final form of the regulations will be shorter than the 72 pages of the working time regulations and the 112 pages of the regulations relating to the implementation of the national minimum wage?

I assure the hon. Gentleman that we will endeavour, through the consultation process, to ensure that the regulations are clear and precise and assist those who seek to provide this type of child care. As to the length of the regulations, I am sure he accepts that it is crucial that the quality of the providers is set at a high standard. The regulations must provide guidance in that area, and the providers will be assessed according to that criterion. We are talking about people who will care for children, and parents have a right to expect that tight provisions will apply.

We do not seek to write regulations that are of no use—that do not help people and do not achieve their objective. We intend to ensure, through consultation, that the regulations in this important area of child care are as clear as possible.

We have just passed the money resolution that pays for the implementation of the new clause. As is the nature of such things, it provides a blank cheque. Can the Minister give the House an idea of the sorts of sums the Secretary of State might spend? How many clubs are we talking about—is it tens, hundreds or thousands? How much money will be spent on accrediting them?

The hon. Gentleman is always keen to encourage Ministers to cite figures in the House. I do not wish to say that X number of organisations will qualify under the regulations. Many organisations may apply, but the test will be whether they reach the quality threshold. I cannot make an assessment of the numbers at this stage. However, child care provision in many sectors—for instance, Kids Club—is of a high standard, and I am sure that the number of accreditations will reflect demand.

The Secretary of State for Education and Employment will draft and lay before the House the final regulations governing assessment. An assessor appointed by the organisation seeking accreditation will undertake the assessment and then report to the Secretary of State. As to whether there will be any extra burden, I think it is fair to say that we are talking about tiny amounts of money.

I am sorry to pursue the right hon. Lady on this narrow point, but it is best to clarify the matter. Did she say that only current providers will be able to bid for accreditation? Will new firms that pass the quality threshold be able to enter the market?

I do not wish to mislead the hon. Lady. It is a question whether a provider satisfies the assessor. Accreditation will not be limited only to current providers. I said earlier that there are a huge number of existing providers, but their accreditation is a matter for the assessor. That decision will be made on the basis of the quality threshold. The hon. Lady tried in Committee to ensure that payment for child care could not circulate within family units. Such arrangements should not be viewed as providing quality child care as defined in the eligibility criteria of the regulations.

Will the hon. Lady give way?

Yes, but I shall then try to make progress.

Will the hon. Lady explain why, at this late stage, when the Bill is on Report and is to receive a Third Reading later this evening, the Government have tabled a new clause? Why are the regulations not available to be examined before we debate and vote on the new clause? It is intolerable that we will not be receiving those regulations before the Bill receives its Third Reading tonight. Is that not a sign that the Government are in complete disarray over the Bill? It is a sign of an ill-thought-through Bill and clear incompetence.

I would expect no less a comment from the hon. Gentleman, who could not recognise the purpose of quality child care if it were staring him in the face. We debated that issue in Committee several times, and the Government have responded positively because good points were made. Two Departments have had to work together closely to draft the regulations and ensure that they can be placed before the House when the proper consultation has taken place. I answered the question of the hon. Member for Beckenham about when the regulations would be available and about the consultation process when the regulations were in draft form. If the hon. Gentleman had been paying a little more attention, he might have caught that.

I return to the new clause. Subsection (1) sets out the general principle, purpose and limits of the new clause. It will enable the Secretary of State to make regulations for a scheme to establish a new category of child care provider, the costs of which will be taken into account in calculating the working families tax credit and the disabled persons tax credit.

Subsection (2) says that the scheme will enable accredited organisations—this returns to the point made by the hon. Member for Beckenham—to approve the new type of child care provider within the regulations. It will enable grants or loans to be made to the accredited organisations, and them to charge prospective providers reasonable fees for that assessment. It will also allow the Secretary of State to make such provision as is necessary.

Subsection (3) confirms that the accredited organisations will be those accredited by the Secretary of State under the rules set out in the scheme.

On a point of detail, which is not clear from my reading of the new clause, am I correct in believing that the registered organisations will be registered under education Acts by the Department for Education and Employment, not by local authorities?

Yes, the power to confer the accreditation will lie with the Secretary of State.

Subsection (4) sets out the powers to make the rules for the scheme in regulations and states that they are to be made by statutory instrument under the negative procedure, under which either House can make a resolution or annul them.

Amendment No. 14 is consequential on the new clause and will enable the Secretary of State to incur the costs of administering the new child care scheme. It will amend the Bill's financial provisions to authorise the Secretary of State to use the moneys provided by the vote of Parliament, a point about which the hon. Member for Northavon (Mr. Webb) asked me earlier.

We have placed a memorandum explaining the details of how the scheme will work in the House of Commons Library, and copies were made available.

This is a technical point. I may have misheard the hon. Lady. Did she say that the registration will be the responsibility of the Secretary of State? As she knows, local authorities have that responsibility for child care providers for children under eight. Will there be two sets of people responsible for registration—local authorities and, for children over eight, the Secretary of State?

4.45 pm

Yes, for the purposes of eligibility and tax credit, the Secretary of State sets the regulations for children over eight years of age. The hon. Gentleman will know that consultation has been completed and that the details concerning the regulations that apply generally to child care and all child care providers are being considered by my right hon. Friend the Secretary of State. When he arrives at final decisions, the provisions that are before us will fit in with the regulations, whatever they may be.

I have a simple question on new clause 5 and the hon. Lady's answer will assist me and, perhaps, the House. Has it passed the plain English test?

I do not know. Is the hon. Lady about to tell me that it has not? We do our best, but if she feels that the clause needs some correction, I should be more than happy to take note of what she has to say. She echoes the point that the hon. Member for Beckenham was pressing earlier about the need for the regulations to be simple, while being clear and precise in their intention.

Broadly, the proposal will allow the Secretary of State to establish a scheme that will accredit organisations that have an appropriate quality assurance scheme for child care providers. Quality assurance schemes will need to cover the way in which the providers ensure the safety and welfare of the children in their care, look at the quality of the activities offered to the children and ensure that they are cared for equally.

Accreditation can be conditional and organisations may be required to supply to the Inland Revenue information about approved providers and monitor the operation of their quality assurance schemes. Once accredited, organisations will be able to approve child care providers who reach the appropriate agreed standard, and the tax credit rules will then enable the costs of child care by these approved providers to be eligible for help.

Will the hon. Lady explain to me what a quality assurance scheme is? Who will define what such a scheme is? Will it be uniformly applied throughout the United Kingdom?

Quality assurance will be laid out in detail in the regulations. It will cover the period of accreditation; the agreement of the organisation to be monitored and evaluated and to keep and produce records when required; the establishment of an arbitration system by the organisation for the use of child care providers who are unhappy with the decision not to approve them; and the sort of information that organisations will need to provide to parents, child care providers, the Inland Revenue and relevant national authorities. As I said earlier, it would have to cover the health, safety and welfare of children, including the employment of suitable staff, quality of activities and programmes offered to children and, of course, the security of the children.

Earlier, we talked about simplicity and intelligibility. Perhaps I may press the hon. Lady on specificity, given that she said a few moments ago that the regulations would shortly be available. They are a Pandora's box, which we all wait to see opened. Can the hon. Lady be a little more precise and tell us exactly when we shall be able to focus our beady eyes on them?

I think I have answered that question—and once the draft regulations are available for scrutiny, I look forward to the hon. Gentleman casting his beady eyes over them and assisting us, both in achieving clarity and with plain English.

The regulations setting up the scheme will be made by the Secretary of State for Education and Employment, and they will be for the specific purpose of extending the range of child care eligible for the child care tax credits.

I am simply asking for information, as the proposals are so important and so new to us. Under which Act will the Secretary of State for Education and Employment make the regulations?

The power to make the regulations is conferred by the Bill. The Secretary of State for Education and Employment is the relevant Minister. The power to create the regulations is covered by the clause, and the Secretary of State has that power as part of his responsibility for education.

I am sorry to pursue the hon. Lady. Although the power to make the regulations is provided under the Bill, it must surely come under the Department for Education and Employment's own legislation, as does, for example, the legislation providing for the registration of private and state schools, and thereby allowing the Department to inspect. I am asking under which Act of the DfEE the clubs will be registered.

the Secretary of State has powers to set regulations relating to child care. Clearly, that is under review. I do not have the reference to hand, but I shall be happy to get the information that the hon. Lady seeks. She will understand that the Bill gives the power for the purpose only of tax credits, to extend eligibility for that purpose only, while the Secretary of State completes his consultation on the regulation of child care to fit in with the national child care strategy.

It would be helpful if hon. Lady would give an undertaking to confirm before Third Reading where the authorisation is provided for in statute. If it is any help to her, I think that it is in the Children Act 1989.

I am grateful for the hon. Gentleman's comment. I am not convinced that he is correct about the reference. He may well be, but, in any case, I am happy to give him the assurance that he seeks. I shall be speaking during the evening, and I shall give the reference to the House, as he requests.

The accreditation scheme will be United Kingdom-wide, just as the tax credits are United Kingdom-wide, but the regulations will be made after consultation with colleagues in Scotland, Wales and Northern Ireland. As is proper for issues relating to regulations for child care, the scheme will be administered separately in Scotland, Wales and Northern Ireland, using a common set of rules which, as the clause makes clear, can reflect specific national or regional needs.

We believe that that is an important extension of the categories of child care eligible for child care tax credit. It fills a practical gap in the current rules, as was clearly identified in Committee and elsewhere. I commend new clause 5 to the House.

New clauses 2 and 3 are grouped with new clause 5. The measures that new clause 2 calls for have already been taken. It calls for us to publish the eligibility criteria, which has been done in the regulations. It also calls on us to publish the conditions for registration as a child minder, which is not for the Treasury or the Inland Revenue to do, but is done by local authorities on the basis of published guidance from the Department for Education and Employment. Therefore, new clause 2 is not necessary.

With respect, new clause 3 looks at the problem from the wrong end. It asks us to publish guidance about the eligibility of people listed in the Children Act 1989 as those who do not need to register as child minders to care for their children, but our rules operate to consider the type of care that is provided and whether it is one of the types that will qualify.

If such people are registered child minders they get over the first hurdle, but further rules prevent the churning of payments within households, which has been referred to in Committee. That obviously stops the abuse, which has so concerned many members of the Committee, and I therefore ask the House to reject new clauses 2 and 3 and to vote for Government new clause 5.

What a pleasure it is to hear the Paymaster General in full voice. She was a little indisposed in Committee and lost her voice, which is a cruel and unusual punishment for a politician, so it is nice to hear her in good voice today.

It is a pleasure to sit opposite the hon. Gentleman, who always behaves as such. I am grateful for the kind views that he expressed in Committee, especially when he asked me to leave so that I did not give him the flu. That was said, however, with the best of intentions and my recovery was helped by knowing how much he wanted me to get well.

Order. This is all very touching, and I hope that we feel a great deal better for it, but may we return to discussing the Bill?

Indeed, but I am afraid that we are like that, Mr. Deputy Speaker; we are fairly chummy. I can recall—

This is the cuddly Conservative party.

I have no objection to that description.

On the day that the Bill was published, I remember waking to the melodious tones of the Paymaster General, who was on the BBC's "Today" programme. She said, "The really important element for women is the presence of the child care tax credit." So, with some enthusiasm, my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) and I reached for the Bill to look for the child care tax credit. Could we find a reference to child care rates? Sadly, we could not. The absence of any such reference was a matter of contention on Second Reading and remained a matter of contention in Committee. The child care tax credit is the tax credit which dare not speak its name.

We were told that it was not necessary to amend the Bill to include the child care tax credit and that everything would be taken care of through regulations, so it is not surprising that we regard the Government new clause as something of a victory, particularly for my hon. Friend the Member for Beckenham (Mrs. Lait), who raised the matter consistently in Committee.

How can we consider how the credit will operate when no regulations have been published and we have no real knowledge of what will happen? We are told that by the time the regulations are published, the Bill will have gone to the other place, which will have the benefit of considering the legislation. Although hon. Members voted yesterday to abolish certain people's membership of the other place, they place enormous trust in them in this respect.

I should have liked to have the opportunity to consider the regulations and to arrive at a conclusion, but I believe that the Conservative Opposition must take some of the blame for this new clause. I asked an official to explain the meaning of it because it was a little unclear, and was told that I should not be surprised that it was unclear as it was part of the panic reaction to our protracted probing in Committee.

5 pm

Many questions remain unanswered. Is it still the Government's contention that the measure will cost £200 million, as they have so optimistically suggested, or will it cost £4 billion, as the Institute for Fiscal Studies has suggested? It remains a question of eligibility and take-up. The new clause seeks to give more regulation-making powers to the Secretary of State to establish a new category of claimant, whose child care charges can be taken into account when calculating entitlement to working families tax credit and disabled persons tax credit.

I had an opportunity to read the memorandum produced by the Inland Revenue, which makes it clear that the Government intend to expand the definition of eligibility to child care for children over the age of eight. As is so often the case, we shall have to wait a long time for the regulations to understand exactly what will happen. We do not know about the new quality assurance measures for those concerned; nor are we clear who will carry out or pay for those inspections. We are told that the trained independent quality assessors mentioned in the memorandum will be the responsibility of the Department for Education and Employment.

We know that registration of child care for children under the age of eight comes under the Children Act 1989 and is the responsibility of local authorities. The Paymaster General said that there would now be two forms of registration: one for children over the age of eight, and another for children under the age of eight. It would be helpful if she would say whether the Government intend gradually to relieve local authorities of their responsibility in that regard. If not, this measure will be a further burden on those authorities.

There remains the question of eligibility and take-up. The current arrangement under family credit operates by way of disregard rather than cash payment. Cash payment is a much more attractive way to receive a credit. It is therefore not surprising that the House of Commons Library has said:

"The increased generosity of the tax will potentially create a situation in which parents will have a clear financial incentive to obtain registered child care rather than rely on informal networks, such as friends and relatives".

The Committee spent a lot of time discussing eligibility. The evidence was conflicting. We know the position with regard to section 71 of the Children Act 1989. In response to a question by my hon. Friend the Member for Bromsgrove (Miss Kirkbride) about whether a child's mother could become a registered child minder, the assistant director of the personal taxation division at the Inland Revenue stated before the Social Security Select Committee:

"there is nothing to stop anyone, if they can meet the conditions, and it is not for us to make a judgment on that, if they passed the conditions in previous years."

On 9 February, the Financial Secretary said:

"Parents and relatives, including grandparents, can register as child minders, but family credit legislation does not consider payment between partners to be a relevant child care charge. That provision will be incorporated into the rules governing the working families tax credit."

I asked the hon. Lady a simple question: was not the difference between what the Government were saying and what the Institute for Fiscal Studies was saying a question of human behaviour? She replied that it was. I have the quotation before me. Does she want me to read it out? I said:

"Would it be fair to say…that the difference between the IFS estimate and the Government's estimate is a difference in the understanding of the way in which human nature operates?"

She replied:

"I understand the point that the hon. Gentleman is making. I would have more regard for it if Opposition Members had made the same points about family credit legislation, but they did not."—[Official Report, Standing Committee D, 9 February 1999; c. 83–85.]

I accept the ticking off. She is right, but the point is nevertheless a good one.

The hon. Gentleman knows that I would never dare tick him off, but we had a number of exchanges in Committee on the subject. I said that, in relation to behaviour, the determining factor for parents choosing child care was the best interests of their child. That is the key underlying point. That is the message which was sent by Labour Members, not only on Second Reading, but throughout the Committee stage. I am sure that the hon. Gentleman will confirm that.

I still think that that is a yes to my original question. We need to have a look at the potential take-up rate. We know from 1996 Trades Union Congress general council survey that half the women with children below the age of four years work. We know that 16 per cent. are in full-time work and that 33 per cent. are in part-time work. We also know that 78 per cent. of pre-school children regularly spend some time being looked after by some person other than their mother.

It is not unreasonable to say that the IFS estimate of £4 billion is probably wrong—that suggests 100 per cent. take-up. However, the figure for the number of children in the informal care network is about 78 per cent and if we round that down to 75 per cent, the cost of the child care tax credit is probably £3 billion. If grandparents, as the Minister suggested, were used as child minders, 30 per cent. of children would be involved, so the cost would be £1 billion. No matter how we stack up the figures, the cost is considerably greater than the £200 million that the Government are suggesting. The point that the hon. Member for Northavon (Mr. Webb) rightly made is that we should have some suggestion of the sums involved.

There appears to be nothing in the Bill or the suggested regulations to prevent neighbours from mutually looking after each other's children, with both generating child care tax credit and working families tax credit. I cannot see how it is to the benefit of children or the families, or how it helps to get people into work, if we set up a scheme by which people can generate tax credit simply by splitting their child care among themselves.

The Minister must deal with that point and the others that I have raised. She must give an indication of cost. She must say when the various regulations will be ready; otherwise, we are writing more than a blank cheque because the money allocated for working families tax credit will simply be eaten away by a rapid expansion of child care tax credit, on a self-generating basis.

It is some weeks since we concluded the Committee stage of our deliberations. The feeling of walking through fog that persisted throughout those deliberations lifted briefly, but has suddenly returned this afternoon when the Paymaster General described the new clause. Throughout the Committee, we asked a series of simple, straightforward questions that were amenable to simple, straightforward answers, but straightforward answers came there none. I feel that we are getting the same thing this afternoon.

I find it incredible that the money resolution relating to new clause 5 has just gone through on the nod, but, when pressed, the Minister was unable to tell us—she could not even tell us the number of zeros—how much money would be spent by the Secretary of State under the new clause. I am astonished that there seems to be no indication of the number of organisations that the new accreditors will have to accredit—whether it is hundreds, thousands or tens of thousands. It is somewhat depressing that the Minister was unable to give any answer to that question.

I reiterate the concerns that have been expressed about the lack of scrutiny. The memorandum that we saw this week says:

"Draft regulations will be exposed shortly, while the Bill is being considered by Parliament"—

viz, not by the House of Commons.

I know that the Government do not have a lot of respect for parliamentary scrutiny of their legislation, but it is deeply distressing that they should table a new clause almost the day before the debate on Report and not produce draft regulations until afterwards. It does not encourage us to feel that the Bill will be properly scrutinised.

Can the hon. Gentleman give any instance of the Government's taking account of the scrutinising role of the House? He says that they do not take much account of it, but they do not seem to take any account of it.

There is an interesting contrast between this debate and what happened in Committee, when we were presented with draft regulations that helped our deliberations.

Let me now raise the issue of which form of child care should be subsidised by the state. My party wants to give parents—mothers, typically—choice in two regards. They should be able to choose whether to bring up their children themselves or pay someone else to do it, and if they decide to pay someone else they should be able to choose the most appropriate form of child care. The new clause provides neither of those choices. It offers no financial assistance to a mother who prefers to bring up her children herself, rather than taking paid employment and paying someone else. As the hon. Member for Brentwood and Ongar (Mr. Pickles) pointed out, that could lead to neighbours looking after each other's children, which would be bizarre in the extreme.

The new clause identifies yet another category of state-approved child care; but the second most popular category of child care is provided by nannies, who are no longer the preserve of the rich few but are widely employed, for example, to provide support for mothers who have flexible employment patterns—such as nurses—and who would not be catered for appropriately by registered forms of child care.

We do not think that child care should be subsidised only in the case of certain providers, as the new clause suggests. We want the money to be paid to mothers whether or not they choose to take paid employment, to be spent on the form of child care that they prefer. We want mothers to be able to choose whether to work, and to choose the child care that they want. Regrettably, new clause 5 allows them to do neither.

I hope that the Paymaster General did not think I was persecuting her; if she did, I apologise. I was merely trying to establish the precise meaning of new clause 5, given that, regrettably, there are no draft regulations—as the hon. Member for Northavon (Mr. Webb) and some of my hon. Friends have already pointed out.

At least the Government have finally recognised the problem posed by children aged between eight and 14, and I am grateful for that. Does the provision extend to disabled children of 16, thus plugging a gap in the Children Act 1989?

Yes.

I assumed that was the case, but it is as well to put it on the record.

Welcome though that is, some problems remain. The Paymaster General said that only organisations that currently exist, such as breakfast clubs, after-school clubs and holiday clubs, will be eligible to provide child care whose cost can be recovered. As some of my hon. Friends have pointed out, there are many other forms of care for children aged between eight and 14.

I thought I had made it clear that new providers would not be excluded. The point is that the quality assurance threshold must be reached, and an assessor would make that decision.

5.15 pm

I thank the Paymaster General, but that is not quite what I meant. I took on board her confirmation that there would be room for new entrants into the market. That is, in fact, almost inevitable, as large parts of the United Kingdom do not provide many clubs of the kind that the hon. Lady said would be most likely to be recognised.

We should think more about the provision that children between eight and 14 need. However unstructured breakfast, after-school and holiday clubs may seem, they nevertheless provide a structured set-up which not all children will fit into. Children of that age may want to do other things, but they may still require child care of some sort if their parents work. I may be castigated for saying this, but more and more children enjoy riding. Would pony clubs count as registered child minders, given that they would, in effect, be looking after the children during the day?

Many special interest groups provide child care in that sense, and the Government should consider enabling them to apply and be assessed for quality status. Children between eight and 14 do not want Tonka toys; they are at a crucial stage, when they are exploring possibilities and expanding their horizons. I understand that the Financial Secretary to the Treasury has a child of that age, and I am sure that she will back me up. Indeed, she may be able to advise her fellow Minister on the potential eligibility of other forms of child care.

Might a child minder, or a group of child minders, be a better option? I shall not go into the potential for families to provide child care, but children between eight and 14 may well want one-to-one child care, and their parents may want that as well. To rule out such provision would be short-sighted, and might not benefit children.

A school of thought is emerging in the world of education. As we all know, after a day at school children are tired and their blood sugar is low. In my day, children went home and had tea and sandwiches to raise their blood sugar levels, went out to play and then did their homework. [Interruption.] An interesting dispute is in progress on the Government Front Bench. I suggest that it is best for a child to work off excess energy, or perhaps build it up again, and then do homework before turning on the television. I agree with the Financial Secretary if that is what she thinks. There are different formats and formulae, however. The education world seems to be moving towards the view that a long day of continuous education is not the best way of enabling children to perform properly at school the next day, as well as getting the best from their homework. I completely accept the principle that we should emphasise homework, but I do not believe that the best way of educating our children is to send them straight from school to homework.

There is still a need for diversity in child care for children aged between eight and 14. I am concerned that the new clause would only force children between parallel lines—the last thing that they need is to be forced into one, narrow type of after-school care. As the Bill is being considered in the other place, I very much hope that the Government—who have already re-thought some issues, for which I am grateful, such as our original suggestion that they should broaden the scope of after-school care—will also re-think the different types of child care to which the provisions will apply, so that children aged between eight and 14 might benefit to the maximum from the care that best suits them.

Our amendments would deal with another concern expressed in Committee: who will be able to register as a child minder. The Government have not yet recognised that concern, which perhaps poses a conundrum for them. The issue arose initially from a question in the Social Security Committee from my hon. Friend the Member for Bromsgrove (Miss Kirkbride), who asked:

"There is nothing to stop mum becoming a registered child-minder?"

The Inland Revenue official replied:

"there is nothing to stop anyone, if they can meet the conditions, and it is not for us to make a judgment on that, if they passed the conditions in previous years."

The Inland Revenue is effectively saying that there is a loophole, as it would be possible for someone in the family circle to become a registered child minder if he or she meets the local authority's criteria. Although we dealt with the matter exhaustively in Committee, I am not satisfied that that loophole has been closed. One rather suspects that, should the loophole remain open after the Bill is passed, then, before long, test cases will be heard on it.

As I said in Committee, people will act in their own best economic interests. Many people may say, "My best economic interests are served by keeping my child in the family circle, but it would be economically better for us all if a member of my family circle could register as a child minder." The prohibition in the Children Act 1989 would therefore be got round.

Although I laud the Government's belief that people will not change their patterns of behaviour merely because of tax or benefit provisions, I deeply and fundamentally disagree that people will not change their behaviour for those reasons. People will act to maximise their income—which is one of the reasons why the poverty trap exists: some people feel that they will receive more income by staying on benefit, rather than going out to work.

I accept and appreciate that the Government are trying very hard to end the poverty trap, as they have defined it. However, with the very generous benefits that they are providing—we can argue about whether the benefits are too generous—Ministers are effectively encouraging people to organise their affairs so that they maximise their income. I therefore most strongly urge the Government to clear up the confusion over whether a family member may register to provide child care.

I am most grateful that we have made some progress on some of the issues, but hope that the Government will take into account the other issues that I have raised.

My hon. Friend the Member for Beckenham (Mrs. Lait) very generously mentioned in her speech the contributions made by me and other hon. Members in Committee. She also eloquently raised issues about what is still wrong with new clause 5 and the Bill. I should like to do the same.

My hon. Friend made a good point about whether the Government proposals on carers for eight to 14-year-olds are appropriate. Sadly, it is a long time since I was eight or 14. Nevertheless, I believe that being shoved into an institution may not be the most appropriate form of child care. Many mothers who will be able to claim the working families tax credit will have an incentive to do just that, rather than to let their child stay at home, with gran or with anyone else, although that might have been the most appropriate form of care. My hon. Friend made an interesting point on the fact that an incentive-based system of help with child care will create different priorities for families.

Provision for eight to 14-year-olds will be different from that for other age groups precisely because—as Opposition Members pointed out to the Minister and other Labour Members in Committee—there will be an open-ended public expenditure commitment on the child care tax credit. In the sum required for the credit, there is a vast gap between the Government's figure of £200 million—I think that that is their figure, which was so low that I should be forgiven for adding or omitting a zero—and the £4 billion figure that, as my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) said, was provided by the Institute for Fiscal Studies as the credit's potential take-up. The Chancellor cannot be very pleased with that £4 billion figure.

Even if new clause 5 is added to the Bill, it is still possible that younger children may be eligible to have a child minder—rather than being pushed into institutionalised care, in the kids' clubs envisaged by the Government. It will be a problem if current informal family child care arrangements are affected.

Has the hon. Lady ever been to a nursery or a kids' club, which she consistently calls "an institution"? Does she agree that mothers in her constituency, like those in my constituency, make their choices solely on the basis of what is best for their children?

I have been to many of those organisations in my constituency, including pre-schools—which, under the current Government, are closing down in droves, as they can no longer afford to operate. I am very well aware of the arrangements—

The hon. Lady calls them institutions.

I used the word in its wider definition. The fact is that they are based not in the home, but somewhere else. If the hon. Lady wishes to dispute semantics, Mr. Deputy Speaker will only call us to order. Children would not be at home, but in another building, which—using a wide definition—could be called an institutionalised form of care. It may be more appropriate—[Interruption.] Forgive me, but there seems to be an awful lot of interruptions by Ministers.

Order. I simply tell the hon. Lady that if she does not wish to be distracted by sedentary comments, she should ignore them.

It might be even more appropriate if Ministers were to refrain from making sedentary comments. However, as I was saying before the hon. Lady interrupted me—

Will the hon. Lady give way?

No, I shall not. The hon. Lady has already intervened.

On a point of order, Mr. Deputy Speaker. I did not make any comment across the Chamber to the hon. Lady except for the one that she—

Order. The Minister knows perfectly well that that is not a point of order but a point of argument. I suggest that the debate settles down and gets back to the substance of the new clause.

5.30 pm

I was about to close my remarks on the open-ended financial commitment that the Government appear to be making. There is still a problem that the child-minding arrangements for younger children could undermine existing child care arrangements that do not involve the taxpayer. Situations could be created in which people will seek to become registered child minders, creating a commitment and a huge expense for the taxpayer. However much the new clause may be an attempt to reduce the potential financial commitment, we feel that it is not good enough.

I have nothing to add to my earlier comments. I have laid out clearly the proposals for the undertakings in the accreditation. Perhaps this is an appropriate time to answer the question of the hon. Member for Brentwood and Ongar (Mr. Pickles) about regulation for eight to 14-year-olds and eight to 16-year-olds. Powers are provided for in the Bill. There are no other powers. The Children Act 1989 provides regulation for those up to eight years old. This is the first time that the older age range will be regulated.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 1

Housing Costs

'.—In section 135 of the Social Security Contributions and Benefits Act 1992, there shall be inserted—

"(1A) The applicable amount prescribed for a working families' tax credit and a disabled person's tax credit shall include an amount for prescribed housing costs".'.—[Mr. Webb.]

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

The previous new clause was hailed as a victory for the hon. Member for Beckenham (Mrs. Lait). I believe that this one is about to be hailed as a victory for the hon. Member for Northavon. When I opened The Guardian on Monday morning, I saw the headline "Housing benefit to become a tax credit". That is the subject of the new clause, which says that an amount for housing costs should be included in the applicable amounts for the working families tax credit and the disabled persons tax credit. I am confident that the Minister will tell us that the Government accept the new clause and that we can move on.

In case the Minister does not accept the new clause, I should like to explain the purpose of the new clause further. I thank her for giving me access to her officials, with whom I have been able to talk through the ideas. I shall not attribute any views to those officials, but the fact that I saw the story in the newspaper some days later makes me think that my ideas were well received.

The new clause addresses two problems with the existing regime. First, there is an inequity between renters and home buyers, because whereas low-income renters can receive help with the cost of their rent, low-income home buyers receive no such help. The second problem is the overlap between the working families tax credit and housing benefit. We still have the absurd situation in which some people—admittedly fewer—can lose up to 90p in the pound through the combined withdrawal of working families tax credit and housing benefit. The Government could have minimised that absurd overlap through a new clause such as this.

We propose that an amount in the working families tax credit should relate to household size and composition, meeting some proportion of an individual's rent—or imputed rent, in the case of home buyers. It would not relate to their specific rent. There would not be all the bureaucracy of finding out precisely how much rent the person concerned was paying, or how much their mortgage was and how much it changed when interest rates changed. The aim would be to make a contribution towards the typical housing consumption of a household of a given size and composition.

That strategy has two advantages. First, it would provide a work incentive. The Government talk endlessly about welfare to work. The new clause would give unemployed home buyers an improved incentive to take a low-paid job. In my constituency, where unemployment is at only about 1.5 per cent., the only people who tell me that they cannot afford to take a job are those with mortgages, because they would lose all help with their mortgage interest. My proposal would not cover the whole mortgage. We are not trying to help people to acquire valuable assets; all that we are trying to do is meet the cost of housing services at a minimal level. The new clause would give an improved work incentive to one of the groups still in the unemployment trap. For that reason, I hope that the Government will look sympathetically at it.

Secondly, the new clause would minimise the absurd overlap with housing benefit. It is extraordinary that someone could be given the working families tax credit with one hand, but find that the council reduced their housing benefit with the other. Rent levels are already extraordinarily high. If the working families tax credit could be used to make a contribution towards rent, the housing benefit system would not have to cover that portion of the rent. That would float tens of thousands of people off housing benefit, saving on bureaucracy and making the system simpler for the claimant and for the authorities.

We probably differ from the Government in not seeing the inclusion of housing in the working families tax credit as a means of cutting overall housing benefit support. We do not want to leave people without enough money to pay their rent. We do not want to leave them having to engage in mythical shopping around for smaller rented accommodation, because for social tenants in particular there is often no opportunity to shop around. The Government might be thinking of using the proposals as a way of leaving people short on their rent assistance. That is what I infer from the newspaper reports. If that is not the case, I hope that the Minister will contradict it. We are talking about giving a slice of money, varying only according to household size and composition, to reflect the consumption of housing services and help to float some people off housing benefit.

In its briefing on the Bill, the Chartered Institute of Housing urges the Government to make clear their intentions on housing benefit. I am concerned about the rush in which the Government brought forward the Bill—a rush which we have seen from this afternoon's child care proposals and the fact that there was no mention of housing in the Bill. I am offering the Government a chance to redeem themselves and bring housing into the Bill, as the Prime Minister apparently wants. If we put the measure in this afternoon, when the Government get round to working out exactly what they want, we shall have done them a favour by giving them the provision in primary legislation, so they will be able to get on with the matter without the need for extra primary legislation. This is a long-overdue reform.

How a proposal might be paid for is always a subject close to my heart. I would not dream of making a suggestion that did not have a price tag attached. The Government are spending money through the working families tax credit on reducing the taper from 70 to 55 per cent. On the face of it, that looks good for work incentives. Surely taking a lower rate from people is good. However, as the Government know, although fewer people face 80 per cent. or so, more people face 50 or 60 per cent., which is still a substantial chunk. It is not clear that bringing more people into such marginal rates is good for incentives overall. As with so many elements of the Bill, the Government have produced no evidence to show that their proposals would be better overall. There are simulation models that could be used to assess that, but I am not aware that the Government have used them. My suggestion to pay for my proposal is to keep the taper relatively high. Putting assistance in with housing would equalise the position between tenures and would reduce the overlap with housing benefit.

The proposal is costed and we have provided the means of paying for it. It would reduce distortions and work disincentives, while doing the Government a favour, because they propose to do something similar anyway. I warmly commend the new clause to the House.

It is a pleasure to follow the hon. Member for Northavon (Mr. Webb). His arguments were persuasive, although I do not think that they will affect our vote this evening.

At times, the three weeks that we spent going through the Bill felt like performing "Hamlet" without the Prince of Denmark. We cannot come to a reasonable decision about the effect of tax credits without a good understanding of how housing costs will be affected. The success of the tax credit system—the declared aim of which is to ease the gap from dependency to work—will largely depend on the relationship between housing costs, working families tax credit and disabled persons tax credit.

We are fortunate to have the guidance of the Select Committee on Social Security in its report "Tax and Benefits: Implementation of Tax Credits". We see from the report that a succession of groups pointed out that marginal tax rates are likely to be fairly limited in respect of people who claim housing benefits. The Institute for Fiscal Studies has calculated that, following the introduction of working families tax credit, people subject to tax and national insurance reductions and receiving family credit, housing benefit and council tax benefit will see their marginal tax rate reduced by only about 1.5 per cent., to around 95.3 per cent.

Under the Bill, working families tax credit will be treated as income for housing benefit and council tax benefit. As the hon. Member for Northavon said, there is no in-work benefit to help housing costs for those with mortgages, and about half of those entitled to working families tax credit will be owner-occupiers.

Professor Stephen Wilcox, of the centre for housing policy at York university, told the Select Committee that only those with a very small mortgage will be better off as a result of working families tax credit or disabled persons tax credit. He added that the great weakness of the proposed reform was that, for many households, the higher rents and confusing overlap of the different in-work benefits will remain in place. Such households, as a result, will be no more likely to take account of the potential for housing benefits to boost their in-work incomes than they are now. For high-cost households, the message will not be effective.

It is little wonder that the Select Committee thought it necessary to issue a stern warning that the Government's reform of tax and benefits would be jeopardised unless housing benefit was fully taken into account. We know from the Chancellor's statement last week that he is actively considering incorporating housing benefit into the working families tax credit to ensure that people in rented accommodation, and owner-occupiers, benefit.

The hon. Member for Northavon referred to leaks in The Guardian. He is a sensible chap, and I am sure that he ignores the Sunday newspapers. However, the leaks to which he referred were repeats of previous leaks in Sunday newspapers. The Independent on Sunday said:

"Poorest families to be forced to move".

The Sunday Telegraph said:

"Housing benefits to be axed and council rents raised".

We understand that a Cabinet Committee—involving the Prime Minister, the Deputy Prime Minister, the Chancellor of the Exchequer and the Secretary of State for Social Security—is determined to cut the £12 billion housing benefit bill. If the Government are sufficiently ready to leak in advance their plans to national newspapers on a Sunday—and to repeat those leaks to other newspapers on a Monday—surely they should have sufficient confidence to bring those proposals to the House today so that we can assess them.

Is it the Government's intention to impose a monthly limit on the amount of rent funded by the Government? Is it their intention to bring in regional levels for housing assistance? Is it their intention to ensure that all tenants contribute towards the cost of their rent? Is it their intention to force tenants out of their homes to find cheaper accommodation? That is controversial. Does that mean that widows who have lived in their homes for many years are to be forced out by the Government?

5.45 pm

Is it the Government's intention to offer cash incentives to attract younger people? It was suggested in the newspapers that nurses and young professionals could move to run-down estates. We might find the yuppies moving into a badly run Labour authority. That will not bring redemption. Is this the final break with the past and with the Labour municipal housing policies that have characterised post-war Labour Governments? The Government have a duty to explain themselves. I am giving the Financial Secretary an opportunity—I know she is a decent person—to come clean, to bare all and to tell us the truth.

It is a pleasure—I use the word advisedly—to appear with the hon. Member for Brentwood and Ongar (Mr. Pickles) again. In future, appearing in Committee or a debate will, for me, be like seeing a performance of "Hamlet" without Rosencrantz and Guildenstern.

They are dead.

Only at the end of the play—unless one has seen the shortened version.

I am clearly going to disappoint the hon. Member for Northavon (Mr. Webb), although I think that he tabled his new clause merely to probe our intentions. He referred to a discussion with my officials on the subject. It was a useful and helpful discussion, and we thank him for coming in. We understand his expertise, and he is responsible for some of the academic work in the area.

The House will appreciate that the interaction of benefit tapers with the two tax credits produces high marginal deduction rates. That is borne out by some of the work done by the hon. Member for Northavon. However, the new tax credits do two things to help in this area. First, the more generous help that the credits give will help float more people off housing benefit—to use the words of the hon. Gentleman—as a direct result of the measures announced in the Budget. Secondly, the lower taper within the working families tax credit and the disabled persons tax credit will mean that fewer people will see high marginal deduction rates.

As the economic and fiscal strategy report made clear, the Government believe that Britain's current housing system is failing those in need. Our ambition is to modernise housing policy to make the housing market and the labour market fairer to all concerned. In his Budget statement, my right hon. Friend the Chancellor indicated that, over time, he wants the Government's better deal for work to include help with housing costs for renters and home owners going back to work.

The House will realise that personal housing support will need to be reformed gradually. The current system of housing benefit is too complicated to be integrated with the working families tax credit and the disabled persons tax credit. Even if personal housing support were simplified, the systems for administering an element for housing costs in the new tax credits would take the Inland Revenue many years to install. Furthermore, the current structure of social rent would need to be reformed before we could move in that direction.

The Government have begun working in partnership with local authorities to develop proposals for the simplification and improvement of the existing system of housing benefit. For the future, the Government are looking at options for strengthening the link between social rents and the size, location and condition of properties. The Government will consider further reforms over the coming months, and will announce details in a Green Paper on housing policy later in the year. Of course there will be extensive consultation with all concerned.

I hope that, given what I have said, the motion will be withdrawn, but if it is pressed to a vote, I ask the House to reject it.

I am grateful to the Financial Secretary for her generous comments, but I am not convinced that she responded to what I said. I pointed out the discrepancy between renters and home buyers, and she did not suggest anything to remedy that. In fact, the Budget took mortgage tax relief away from buyers, so the Government missed an opportunity to give low-income buyers some assistance.

The Financial Secretary said nothing to reassure me about the continuing and absurd overlap between housing benefit and the working families tax credit, to which the hon. Member for Brentwood and Ongar (Mr. Pickles) referred. She said that the structure of social rents did not allow the Government to do as we suggested, because it was a mess. I accept that it is a mess, but my proposal is that not actual rents, but an average amount for a family of a particular size and composition be matched with the working families tax credit. If people were paying over the odds, the system would not have to subsidise that.

For all those reasons, my colleagues and I feel that the new clause has merit, and we want to press the motion to a vote.

Question put, That the clause be read a Second time:—

The House divided: Ayes 39, Noes 303.

Division No. 112]	[5.51 pm
AYES
Allan, Richard	Michie, Mrs Ray (Argyll & Bute)
Ashdown, Rt Hon Paddy	Moore, Michael
Baker, Norman	Morgan, Alasdair (Galloway)
Beggs, Roy	Oaten, Mark
Brake, Tom	Öpik, Lembit
Breed, Colin	Rendel, David
Burstow, Paul	Ross, William (E Lond'y)
Chidgey, David	Russell, Bob (Colchester)
Cotter, Brian	Sanders, Adrian
Donaldson, Jeffrey	Smith, Sir Robert (W Ab'd'ns)
Ewing, Mrs Margaret	Smyth, Rev Martin (Belfast S)
Fearn, Ronnie	Taylor, Rt Hon John D (Strangford)
Forsythe, Clifford	Taylor, Matthew (Truro)
Foster, Don (Bath)	Thompson, William
George, Andrew (St Ives)	Tonge, Dr Jenny
Hughes, Simon (Southwark N)	Tyler, Paul
	Wallace, James
Keetch, Paul	Webb, Steve
Kennedy, Charles (Ross Skye)
Kirkwood, Archy	Tellers for the Ayes:
Livsey, Richard	Mr. Donald Gorrie and Mr. Phil Willis.
Maclennan, Rt Hon Robert

NOES
Abbott, Ms Diane	Cummings, John
Adams, Mrs Irene (Paisley N)	Cunliffe, Lawrence
Ainger, Nick	Cunningham, Jim (Cov'try S)
Ainsworth, Robert (Cov'try NE)	Dalyell, Tam
Allen, Graham	Darling, Rt Hon Alistair
Ashton, Joe	Darvill, Keith
Atherton, Ms Candy	Davidson, Ian
Atkins, Charlotte	Davies, Rt Hon Denzil (Llanelli)
Austin, John	Davis, Terry (B'ham Hodge H)
Banks, Tony	Dawson, Hilton
Barnes, Harry	Dean, Mrs Janet
Barron, Kevin	Denham, John
Battle, John	Dobbin, Jim
Bayley, Hugh	Donohoe, Brian H
Beard, Nigel	Doran, Frank
Beckett, Rt Hon Mrs Margaret	Dowd, Jim
Begg, Miss Anne	Eagle, Angela (Wallasey)
Bell, Stuart (Middlesbrough)	Edwards, Huw
Benn, Rt Hon Tony	Efford, Clive
Bennett, Andrew F	Ellman, Mrs Louise
Benton, Joe	Ennis, Jeff
Bermingham, Gerald	Etherington, Bill
Berry, Roger	Fatchett, Rt Hon Derek
Best, Harold	Field, Rt Hon Frank
Betts, Clive	Fisher, Mark
Blackman, Liz	Fitzpatrick, Jim
Blears, Ms Hazel	Fitzsimons, Lorna
Blizzard, Bob	Flint, Caroline
Blunkett, Rt Hon David	Flynn, Paul
Borrow, David	Follett, Barbara
Bradley, Keith (Withington)	Foster, Rt Hon Derek
Bradley, Peter (The Wrekin)	Foster, Michael Jabez (Hastings)
Bradshaw, Ben	Foster, Michael J (Worcester)
Brinton, Mrs Helen	Foulkes, George
Brown, Rt Hon Gordon (Dunfermline E)	Fyfe, Maria
	Galloway, George
Brown, Rt Hon Nick (Newcastle E)	Gerrard, Neil
Brown, Russell (Dumfries)	Gibson, Dr Ian
Browne, Desmond	Gilroy, Mrs Linda
Buck, Ms Karen	Goggins, Paul
Burgon, Colin	Golding, Mrs Llin
Butler, Mrs Christine	Griffiths, Jane (Reading E)
Caborn, Richard	Griffiths, Nigel (Edinburgh S)
Campbell, Alan (Tynemouth)	Griffiths, Win (Bridgend)
Campbell, Mrs Anne (C'bridge)	Grocott, Bruce
Campbell, Ronnie (Blyth V)	Grogan, John
Canavan, Dennis	Hall, Patrick (Bedford)
Caplin, Ivor	Hanson, David
Casale, Roger	Healey, John
Caton, Martin	Henderson, Ivan (Harwich)
Chapman, Ben (Wirral S)	Hepburn, Stephen
Chaytor, David	Heppell, John
Chisholm, Malcolm	Hewitt, Ms Patricia
Clapham, Michael	Hill, Keith
Clark, Rt Hon Dr David (S Shields)	Hoey, Kate
Clark, Dr Lynda (Edinburgh Pentlands)	Home Robertson, John
	Hoon, Geoffrey
Clark, Paul (Gillingham)	Hope, Phil
Clarke, Rt Hon Tom (Coatbridge)	Hopkins, Kelvin
Clarke, Tony (Northampton S)	Howarth, George (Knowsley N)
Clelland, David	Hoyle, Lindsay
Clwyd, Ann	Hughes, Kevin (Doncaster N)
Coaker, Vernon	Humble, Mrs Joan
Coffey, Ms Ann	Hurst, Alan
Coleman, Iain	Iddon, Dr Brian
Connarty, Michael	Jackson, Ms Glenda (Hampstead)
Cook, Frank (Stockton N)	Jackson, Helen (Hillsborough)
Cooper, Yvette	Jamieson, David
Corbett, Robin	Jenkins, Brian
Corston, Ms Jean	Johnson, Alan (Hull W & Hessle)
Cousins, Jim	Johnson, Miss Melanie (Welwyn Hatfield)
Cox, Tom
Cranston, Ross	Jones, Helen (Warrington N)
Crausby, David	Jones, Jon Owen (Cardiff C)
Cryer, Mrs Ann (Keighley)	Jones, Dr Lynne (Selly Oak)

Jones, Martyn (Clwyd S)	Pickthall, Colin
Kaufman, Rt Hon Gerald	Pike, Peter L
Keeble, Ms Sally	Plaskitt, James
Keen, Alan (Feltham & Heston)	Pollard, Kerry
Keen, Ann (Brentford & Isleworth)	Pond, Chris
Kelly, Ms Ruth	Powell, Sir Raymond
Kemp, Fraser	Prentice, Ms Bridget (Lewisham E)
Kennedy, Jane (Wavertree)	Prentice, Gordon (Pendle)
Khabra, Piara S	Prescott, Rt Hon John
Kidney, David	Primarolo, Dawn
Kilfoyle, Peter	Prosser, Gwyn
King, Andy (Rugby & Kenilworth)	Quin, Rt Hon Ms Joyce
King, Ms Oona (Bethnal Green)	Rapson, Syd
Kingham, Ms Tess	Raynsford, Nick
Ladyman, Dr Stephen	Reid, Rt Hon Dr John (Hamilton N)
Lawrence, Ms Jackie	Roche, Mrs Barbara
Laxton, Bob	Rooker, Jeff
Leslie, Christopher	Rooney, Terry
Levitt, Tom	Ross, Ernie (Dundee W)
Lewis, Terry (Worsley)	Roy, Frank
Linton, Martin	Ruane, Chris
Livingstone, Ken	Ruddock, Joan
Lloyd, Tony (Manchester C)	Russell, Ms Christine (Chester)
Lock, David	Savidge, Malcolm
Love, Andrew	Sawford, Phil
McAllion, John	Sedgemore, Brian
McAvoy, Thomas	Sheerman, Barry
McCabe, Steve	Sheldon, Rt Hon Robert
McCafferty, Ms Chris	Shipley, Ms Debra
McDonagh, Siobhain	Simpson, Alan (Nottingham S)
Macdonald, Calum	Singh, Marsha
McDonnell, John	Skinner, Dennis
McFall, John	Smith, Rt Hon Andrew (Oxford E)
McIsaac, Shona	Smith, Angela (Basildon)
McKenna, Mrs Rosemary	Smith, Miss Geraldine (Morecambe & Lunesdale)
McNamara, Kevin
McNulty, Tony	Smith, Jacqui (Redditch)
MacShane, Denis	Smith, Llew (Blaenau Gwent)
Mactaggart, Fiona	Soley, Clive
McWalter, Tony	Southworth, Ms Helen
Mahon, Mrs Alice	Spellar, John
Mallaber, Judy	Squire, Ms Rachel
Mandelson, Rt Hon Peter	Starkey, Dr Phyllis
Marsden, Gordon (Blackpool S)	Steinberg, Gerry
Marsden, Paul (Shrewsbury)	Stevenson, George
Marshall, David (Shettleston)	Stewart, David (Inverness E)
Marshall, Jim (Leicester S)	Stewart, Ian (Eccles)
Marshall—Andrews, Robert	Stinchcombe, Paul
Martlew, Eric	Stoate, Dr Howard
Maxton, John	Stringer, Graham
Meacher, Rt Hon Michael	Stuart, Ms Gisela
Meale, Alan	Sutcliffe, Gerry
Merron, Gillian	Taylor, Rt Hon Mrs Ann (Dewsbury)
Michie, Bill (Shef'ld Heeley)
Mitchell, Austin	Temple-Morris, Peter
Moonie, Dr Lewis	Thomas, Gareth (Clwyd W)
Moran, Ms Margaret	Thomas, Gareth R (Harrow W)
Morgan, Ms Julie (Cardiff N)	Timms, Stephen
Morgan, Rhodri (Cardiff W)	Todd, Mark
Morley, Elliot	Touhig, Don
Mountford, Kali	Trickett, Jon
Mullin, Chris	Turner, Dennis (Wolverh'ton SE)
Murphy, Denis (Wansbeck)	Turner, Dr Desmond (Kemptown)
Murphy, Jim (Eastwood)	Turner, Dr George (NW Norfolk)
Murphy, Rt Hon Paul (Torfaen)	Twigg, Derek (Halton)
Naysmith, Dr Doug	Vaz, Keith
Norris, Dan	Vis, Dr Rudi
O'Brien, Bill (Normanton)	Walley, Ms Joan
O'Brien, Mike (N Warks)	Ward, Ms Claire
O'Hara, Eddie	Wareing, Robert N
Olner, Bill	Watts, David
O'Neill, Martin	White, Brian
Organ, Mrs Diana	Wicks, Malcolm
Osborne, Ms Sandra	Williams, Alan W (E Carmarthen)
Palmer, Dr Nick	Wills, Michael
Pearson, Ian	Winnick, David

Winterton, Ms Rosie (Doncaster C)	Wyatt, Derek
Wood, Mike
Worthington, Tony	Tellers for the Noes:
Wright, Anthony D (Gt Yarmouth)	Mrs. Anne McGuire and Mr. Greg Pope.
Wright, Dr Tony (Cannock)

Question accordingly negatived.

New Clause 4

Payment Of Tax Credits To Agricultural Employees

'.—(1) Section 6 above shall not apply to the payment of tax credits to employees of agricultural trades or businesses.

(2) The Board shall make payments of tax credits directly to employees of agricultural trades or businesses who are entitled to receive such payments.'.—[Mr. Pickles.]

Brought up, and read the First time.

I beg to move, That the clause be read a Second time.

With this, it will be convenient to discuss the following amendments: No. 9, in clause 6, page 3, line 34, after 'section,', insert

'and subject to the exception provided for in section (Payment of tax credits to agricultural employees) below,'.

No. 10, in clause 17, page 8, line 23, at end insert

'"agricultural" has the same meaning as in the Agriculture Act 1947;'

If there is a common thread running through our deliberations, it is that the loyal Opposition are here to help the Government. This new clause is no different. In many ways, we are making parliamentary history today. I recall that the Modernisation Committee received some interesting ideas on how a modern, thrusting, young Member of Parliament might offer alternative work patterns as we approach the millennium, and I recall the suggestion by a Labour Member of a job-share system. The new clause, as well as helping agriculture, is an attempt to move towards a job share for the Minister of Agriculture, Fisheries and Food. We know, via The Sunday Telegraph on 25 February, that he was deeply concerned about the introduction of the working families tax credit. According to the newspaper, he felt that the Chancellor of the Exchequer had gone too far and had not gone through the proper channels, which is something that we often feel about the Chancellor. The Minister of Agriculture did not feel that there had been enough consultation and he felt that it would be deeply damaging to impose additional regulatory burdens on small farmers and food shops.

We understand that the Secretary of State for Trade and Industry is also concerned by the growing revolt among all businesses at the cost of the new regulations. We have even been told that Downing street is concerned about the effects on middle England and the rural economy. There were plans afoot, apparently, among various Secretaries of State to ambush the Chancellor and try to scrap the Bill in the Budget. Perhaps that is why Report and Third Reading have been so delayed.

As we all know, the Chancellor was triumphant. He beat off all opposition and his flagship continues to sail. However, the problems that will face agriculture and small businesses remain, and that is why we have tabled new clause 4 which would help to rectify the problem. We know that the problems facing farming in Britain today are severe. Farmers face a downturn that is affecting their short-term incomes and their long-term prospects. We know from figures from the Ministry of Agriculture, Fisheries and Food that all sectors of farming are experiencing a sharp decline.

Some 37 per cent. of farm incomes fell in real terms last year, and if this year and last year are taken together, it is projected that farm incomes will drop by 80 per cent. Farm incomes traditionally fluctuate, but this is the first time that all sectors of farming have faced that problem.

Many sectors of farming have now fallen well below the growth in average earnings. We know from our constituents that farm-gate prices are significantly below the retail prices index. The amount of borrowing by farmers has gone up dramatically, to the tune of £1,000 million since this Government came to power. Agriculture faces compliance costs of an estimated extra £30 million a year in higher regulatory burdens. Farmers face the additional costs of the national minimum wage and the working time directive, both introduced without a full cost assessment from the industry. The Library has suggested that the fuel escalator is hitting rural communities especially hard, and the farming community even harder.

Farmers in my constituency have briefed me on three specific new burdens that agriculture will face this year. Some relate to measures that are welcome in the interests of farming, the environment and good husbandry, but they will all impose an additional regulatory and financial burden on farms. My constituents tell me that the ban on the three main antibiotics, the ground water regulations and the new regulations on stalls and tethers will cost the industry an extra £766 million a year.

The National Farmers Union has expressed several concerns about the working families tax credit and the huge administrative burden that it will place on farmers. It is a matter of common sense that farmers employ mostly seasonal and casual workers, so their workers come and go throughout the year. Paying the working families tax credit through the pay packet will mean that employers will have to keep signing their workers on and off the payroll and, in the words of the NFU, will create "an administrative nightmare".

There are also cash flow problems for farmers. The NFU feels that there is no guarantee that employers will receive an advance payment from the Government to ease their financial burdens. The NFU supports the new clause and the consequential amendments. We know that a substantial proportion of the Cabinet support it, too.

I urge Ministers—I have repeatedly said that they are reasonable people—to spare us the sight of Cabinet Ministers whose hearts are in the right place being mercilessly dragooned through the No Lobby by a Treasury Bench that is deaf to their pleas. We should stand up for the Minister of Agriculture, Fisheries and Food and the Secretary of State for Trade and Industry by giving them a chance to vote yes, but I hope that the Financial Secretary to the Treasury will accept our amendment.

New clause 4 and amendments Nos. 9 and 10 would exempt employers in agricultural trades and businesses from paying tax credits to their employees through the payroll. Employees would therefore receive their tax credits direct from the Inland Revenue.

I note that the hon. Member for Brentwood and Ongar (Mr. Pickles) is making yet another attempt to help the Government. It pains me to be cynical, but I believe that the new clause is yet another attempt by the Opposition to chip away at the principle of employer payment of tax credits by eliminating certain groups of employers from the scheme.

The Minister should be aware that during the Committee stage of the Welfare Reform and Pensions Bill, her colleague, the Minister of State, Department of Social Security, suggested that there should be some exemption for stakeholder pension regimes for small employers. Most farms are relatively small employers, so why does not the hon. Lady follow that lead?

If the hon. Gentleman will be a little patient, I shall come to that point. As Scarlett O'Hara said in "Gone with the Wind", tomorrow is another day.

I must repeat the arguments for employer payment of tax credits, which go to the heart of the Bill. The scheme will reinforce the message that tax credits are a reward for work. It will emphasise tax credits as part of the tax system, and it will help break the links with benefits, thus reducing the stigma of claiming in-work support.

We want all employees—in large and small firms—to enjoy these advantages and we see no reason to exclude agricultural workers, many of whom are on low incomes and particularly in need of encouragement to increase their earnings rather than relying on out-of-work benefits. Tax credits received in the wage packet will show that work pays.

I recognise that the agriculture industry work force tends to include a large proportion of casual, part-time and seasonal workers on fluctuating earnings and short-term contracts. However, that is not in itself a good reason for abandoning the general rule of employer payment of tax credits. As the hon. Gentleman will know from his own constituency, all farmers employing labourers have to operate a pay-as-you-earn scheme for their employees and deduct tax and national insurance contributions from their workers' pay. The same is true of so-called gangmasters, who hire labour for general agricultural work such as planting, picking and packing agricultural produce. Like all other employers required to pay tax credits, employers in the agricultural industry will be able to set off the tax credits against PAYE tax and national insurance contributions deducted.

6.15 pm

It may be helpful if I remind the House of the conditions that must apply before any employer, large or small, will be asked to pay tax credits through the payroll. First, the Inland Revenue will give all employers adequate time to adjust their payrolls before the first tax credit payment is due in the pay packet. The notice period will be 14 days in respect of employees paid weekly and 42 days in all other cases.

Secondly, the Inland Revenue will notify employers to start paying tax credits only if there is enough time before the end of the employee's contract of employment—or the end of the employee's tax credit award period if that is earlier—for the employer to make at least three tax credit payments. In other words, no employer will be asked to pay tax credits and make the necessary payroll adjustments for a shorter time than three pay periods.

The hon. Lady is helpfully outlining the way in which the system will be administered through employers. Will she clarify paragraph 35 of the draft regulatory impact assessment, however? It states:

"The Government has decided to exclude those very small employers who do not operate PAYE/NICs schemes because all their employees are below the NICs threshold."

Can she confirm that I am right to understand that payment will not happen through the pay packet for employers, such as agricultural employers, for whom every employee is paid lower than the prospective lower earnings limit of £81 or so?

The hon. Gentleman is right, and I shall probably say something more about that.

The new arrangements are set out in the Inland Revenue booklet, "Working Families Tax Credit and Disabled Person's Tax Credit", and they mean that, wherever practical, even employees on short-term contracts will be able to receive tax credits with their pay, rather than from the Inland Revenue. However, our overriding aim will, of course, be to ensure that tax credits are delivered to people efficiently and on time. Although payment by employers will be the predominant method of delivery after April 2000, it will not be attempted if it would put that aim at risk.

I hope that I have reassured right hon. and hon. Members that employers, including those in the agriculture sector, are not being asked to do the impossible. In practice, because of working patterns in the industry, a fairly high proportion of tax credit recipients may well receive their tax credits direct from the Inland Revenue, because the conditions for employer payment are not met. However, there is no need for a blanket exemption of all employers in that or any other sector. All employers will be treated in the same way.

I hope that my explanation will persuade the hon. Gentleman to withdraw the motion. If he does not, I must ask my hon. Friends to reject it.

I am sad to say that the hon. Lady has uncharacteristically failed to satisfy me on this point. She has tried to palm me off with a concession. I want what the Minister of Agriculture, Fisheries and Food wants. In order to stand up for his rights, and for those of his Cabinet colleagues who oppose this part of the Bill, I shall press the matter to a Division.

Question put, That the clause be read a Second Time:—

The House divided: Ayes 167, Noes 300.

Division No. 113]	[6.18 pm
AYES
Allan, Richard	Beresford, Sir Paul
Ancram, Rt Hon Michael	Body, Sir Richard
Arbuthnot, Rt Hon James	Boswell, Tim
Ashdown, Rt Hon Paddy	Brake, Tom
Atkinson, David (Bour'mth E)	Breed, Colin
Baker, Norman	Brooke, Rt Hon Peter
Beggs, Roy	Browning, Mrs Angela
Bercow, John	Bruce, Ian (S Dorset)

Burstow, Paul	Lilley, Rt Hon Peter
Butterfill, John	Livsey, Richard
Cash, William	Lloyd, Rt Hon Sir Peter (Fareham)
Chapman, Sir Sydney (Chipping Barnet)	Loughton, Tim
	Luff, Peter
Chidgey, David	Lyell, Rt Hon Sir Nicholas
Chope, Christopher	MacGregor, Rt Hon John
Clappison, James	McIntosh, Miss Anne
Clark, Rt Hon Alan (Kensington)	MacKay, Rt Hon Andrew
Clark, Dr Michael (Rayleigh)	Maclean, Rt Hon David
Clarke, Rt Hon Kenneth (Rushcliffe)	Maclennan, Rt Hon Robert
	McLoughlin, Patrick
Clifton—Brown, Geoffrey	Madel, Sir David
Collins, Tim	Major, Rt Hon John
Colvin, Michael	Malins, Humfrey
Cormack, Sir Patrick	Maples, John
Cotter, Brian	Maude, Rt Hon Francis
Cran, James	Mawhinney, Rt Hon Sir Brian
Curry, Rt Hon David	May, Mrs Theresa
Davis, Rt Hon David (Haltemprice & Howden)	Michie, Mrs Ray (Argyll & Bute)
	Moore, Michael
Day, Stephen	Moss, Malcolm
Donaldson, Jeffrey	Nicholls, Patrick
Dorrell, Rt Hon Stephen	Norman, Archie
Duncan, Alan	Oaten, Mark
Duncan Smith, Iain	Öpik, Lembit
Evans, Nigel	Page, Richard
Faber, David	Paice, James
Fabricant, Michael	Paterson, Owen
Fallon, Michael	Pickles, Eric
Fearn, Ronnie	Prior, David
Forsythe, Clifford	Randall, John
Forth, Rt Hon Eric	Redwood, Rt Hon John
Foster, Don (Bath)	Rendel, David
Fowler, Rt Hon Sir Norman	Robathan, Andrew
Fox, Dr Liam	Robertson, Laurence (Tewk'b'ry)
Fraser, Christopher	Roe, Mrs Marion (Broxbourne)
Garnier, Edward	Ross, William (E Lond'y)
George, Andrew (St Ives)	Rowe, Andrew (Faversham)
Gibb, Nick	Ruffley, David
Gill, Christopher	Russell, Bob (Colchester)
Goodlad, Rt Hon Sir Alastair	St Aubyn, Nick
Gorman, Mrs Teresa	Sanders, Adrian
Gorrie, Donald	Sayeed, Jonathan
Gray, James	Shephard, Rt Hon Mrs Gillian
Greenway, John	Smith, Sir Robert (W Ab'd'ns)
Grieve, Dominic	Smyth, Rev Martin (Belfast S)
Hague, Rt Hon William	Soames, Nicholas
Hamilton, Rt Hon Sir Archie	Spicer, Sir Michael
Hammond, Philip	Steen, Anthony
Harris, Dr Evan	Streeter, Gary
Hawkins, Nick	Swayne, Desmond
Hayes, John	Syms, Robert
Heald, Oliver	Tapsell, Sir Peter
Heathcoat—Amory, Rt Hon David	Taylor, Ian (Esher & Walton)
Horam, John	Taylor, Rt Hon John D (Strangford)
Howard, Rt Hon Michael	Taylor, John M (Solihull)
Howarth, Gerald (Aldershot)	Taylor, Matthew (Truro)
Hughes, Simon (Southwark N)	Taylor, Sir Teddy
Hunter, Andrew	Tonge, Dr Jenny
Jack, Rt Hon Michael	Tredinnick, David
Jackson, Robert (Wantage)	Trend, Michael
Jenkin, Bernard	Tyler, Paul
Johnson Smith, Rt Hon Sir Geoffrey	Tyrie, Andrew
	Wallace, James
Keetch, Paul	Wardle, Charles
Kennedy, Charles (Ross Skye)	Waterson, Nigel
Key, Robert	Webb, Steve
Kirkbride, Miss Julie	Whitney, Sir Raymond
Kirkwood, Archy	Whittingdale, John
Lait, Mrs Jacqui	Widdecombe, Rt Hon Miss Ann
Lansley, Andrew	Wilkinson, John
Leigh, Edward	Willetts, David
Letwin, Oliver	Willis, Phil
Lewis, Dr Julian (New Forest E)	Winterton, Mrs Ann (Congleton)
Lidington, David	Winterton, Nicholas (Macclesfield)

Woodward, Shaun	Tellers for the Ayes:
Yeo, Tim	Mrs. Eleanor Laing and Mrs. Caroline Spelman.
Young, Rt Hon Sir George
NOES
Abbott, Ms Diane	Crausby, David
Adams, Mrs Irene (Paisley N)	Cryer, Mrs Ann (Keighley)
Ainger, Nick	Cummings, John
Ainsworth, Robert (Cov'try NE)	Cunliffe, Lawrence
Allen, Graham	Cunningham, Jim (Cov'try S)
Ashton, Joe	Dalyell, Tam
Atherton, Ms Candy	Darling, Rt Hon Alistair
Atkins, Charlotte	Darvill, Keith
Austin, John	Davidson, Ian
Banks, Tony	Davies, Rt Hon Denzil (Llanelli)
Barnes, Harry	Davis, Terry (B'ham Hodge H)
Barron, Kevin	Dawson, Hilton
Bayley, Hugh	Dean, Mrs Janet
Beard, Nigel	Denham, John
Beckett, Rt Hon Mrs Margaret	Dismore, Andrew
Begg, Miss Anne	Dobbin, Jim
Bell, Stuart (Middlesbrough)	Donohoe, Brian H
Benn, Rt Hon Tony	Doran, Frank
Bennett, Andrew F	Dowd, Jim
Benton, Joe	Eagle, Angela (Wallasey)
Bermingham, Gerald	Edwards, Huw
Berry, Roger	Efford, Clive
Best, Harold	Ellman, Mrs Louise
Betts, Clive	Ennis, Jeff
Blackman, Liz	Etherington, Bill
Blears, Ms Hazel	Ewing, Mrs Margaret
Blizzard, Bob	Fatchett, Rt Hon Derek
Borrow, David	Field, Rt Hon Frank
Bradley, Keith (Withington)	Fisher, Mark
Bradley, Peter (The Wrekin)	Fitzpatrick, Jim
Bradshaw, Ben	Fitzsimons, Lorna
Brinton, Mrs Helen	Flint, Caroline
Brown, Rt Hon Gordon (Dunfermline E)	Flynn, Paul
	Follett, Barbara
Brown, Rt Hon Nick (Newcastle E)	Foster, Rt Hon Derek
Brown, Russell (Dumfries)	Foster, Michael Jabez (Hastings)
Browne, Desmond	Foster, Michael J (Worcester)
Buck, Ms Karen	Foulkes, George
Burgon, Colin	Fyfe, Maria
Butler, Mrs Christine	Galloway, George
Campbell, Alan (Tynemouth)	Gerrard, Neil
Campbell, Mrs Anne (C'bridge)	Gibson, Dr Ian
Campbell, Ronnie (Blyth V)	Gilroy, Mrs Linda
Canavan, Dennis	Goggins, Paul
Caplin, Ivor	Golding, Mrs Llin
Casale, Roger	Griffiths, Jane (Reading E)
Caton, Martin	Griffiths, Nigel (Edinburgh S)
Chapman, Ben (Wirral S)	Griffiths, Win (Bridgend)
Chaytor, David	Grocott, Bruce
Chisholm, Malcolm	Hall, Patrick (Bedford)
Clapham, Michael	Hanson, David
Clark, Rt Hon Dr David (S Shields)	Healey, John
Clark, Dr Lynda (Edinburgh Pentlands)	Henderson, Ivan (Harwich)
	Hepburn, Stephen
Clark, Paul (Gillingham)	Heppell, John
Clarke, Rt Hon Tom (Coatbridge)	Hewitt, Ms Patricia
Clarke, Tony (Northampton S)	Hill, Keith
Clelland, David	Hoey, Kate
Clwyd, Ann	Home Robertson, John
Coaker, Vernon	Hoon, Geoffrey
Coffey, Ms Ann	Hope, Phil
Coleman, Iain	Hopkins, Kelvin
Connarty, Michael	Howarth, George (Knowsley N)
Cook, Frank (Stockton N)	Hoyle, Lindsay
Cooper, Yvette	Hughes, Kevin (Doncaster N)
Corbett, Robin	Humble, Mrs Joan
Corston, Ms Jean	Hurst, Alan
Cousins, Jim	Hutton, John
Cox, Tom	Iddon, Dr Brian
Cranston, Ross	Jackson, Ms Glenda (Hampstead)

Jackson, Helen (Hillsborough)	O'Brien, Mike (N Warks)
Jamieson, David	O'Hara, Eddie
Jenkins, Brian	Olner, Bill
Johnson, Alan (Hull W & Hessle)	O'Neill, Martin
Johnson, Miss Melanie (Welwyn Hatfield)	Organ, Mrs Diana
	Osborne, Ms Sandra
Jones, Helen (Warrington N)	Pearson, Ian
Jones, Jon Owen (Cardiff C)	Pickthall, Colin
Jones, Dr Lynne (Selly Oak)	Pike, Peter L
Jones, Martyn (Clwyd S)	Plaskitt, James
Kaufman, Rt Hon Gerald	Pollard, Kerry
Keeble, Ms Sally	Pond, Chris
Keen, Alan (Feltham & Heston)	Powell, Sir Raymond
Keen, Ann (Brentford & Isleworth)	Prentice, Ms Bridget (Lewisham E)
Kemp, Fraser	Prentice, Gordon (Pendle)
Kennedy, Jane (Wavertree)	Primarolo, Dawn
Khabra, Piara S	Prosser, Gwyn
Kidney, David	Purchase, Ken
Kilfoyle, Peter	Quin, Rt Hon Ms Joyce
King, Andy (Rugby & Kenilworth)	Rapson, Syd
King, Ms Oona (Bethnal Green)	Raynsford, Nick
Kingham, Ms Tess	Reid, Rt Hon Dr John (Hamilton N)
Ladyman, Dr Stephen	Roche, Mrs Barbara
Lawrence, Ms Jackie	Rooney, Terry
Laxton, Bob	Ross, Ernie (Dundee W)
Leslie, Christopher	Roy, Frank
Levitt, Tom	Ruane, Chris
Lewis, Terry (Worsley)	Ruddock, Joan
Linton, Martin	Russell, Ms Christine (Chester)
Livingstone, Ken	Ryan, Ms Joan
Lloyd, Tony (Manchester C)	Savidge, Malcolm
Lock, David	Sawford, Phil
Love, Andrew	Sedgemore, Brian
McAllion, John	Sheerman, Barry
McAvoy, Thomas	Sheldon, Rt Hon Robert
McCabe, Steve	Simpson, Alan (Nottingham S)
McCafferty, Ms Chris	Singh, Marsha
McDonagh, Siobhain	Skinner, Dennis
Macdonald, Calum	Smith, Rt Hon Andrew (Oxford E)
McDonnell, John	Smith, Angela (Basildon)
McFall, John	Smith, Miss Geraldine (Morecambe & Lunesdale)
McIsaac, Shona
McKenna, Mrs Rosemary	Smith, Jacqui (Redditch)
McNamara, Kevin	Smith, Llew (Blaenau Gwent)
McNulty, Tony	Soley, Clive
MacShane, Denis	Southworth, Ms Helen
Mactaggart, Fiona	Squire, Ms Rachel
McWalter, Tony	Starkey, Dr Phyllis
Mahon, Mrs Alice	Steinberg, Gerry
Mallaber, Judy	Stevenson, George
Mandelson, Rt Hon Peter	Stewart, David (Inverness E)
Marsden, Gordon (Blackpool S)	Stewart, Ian (Eccles)
Marsden, Paul (Shrewsbury)	Stinchcombe, Paul
Marshall, David (Shettleston)	Stoate, Dr Howard
Marshall, Jim (Leicester S)	Stott, Roger
Martlew, Eric	Stringer, Graham
Maxton, John	Stuart, Ms Gisela
Meale, Alan	Sutcliffe, Gerry
Merron, Gillian	Taylor, Rt Hon Mrs Ann (Dewsbury)
Michie, Bill (Shef'ld Heeley)
Mitchell, Austin	Temple-Morris, Peter
Moonie, Dr Lewis	Thomas, Gareth (Clwyd W)
Moran, Ms Margaret	Thomas, Gareth R (Harrow W)
Morgan, Alasdair (Galloway)	Timms, Stephen
Morgan, Ms Julie (Cardiff N)	Todd, Mark
Morgan, Rhodri (Cardiff W)	Touhig, Don
Morley, Elliot	Trickett, Jon
Morris, Ms Estelle (B'ham Yardley)	Turner, Dennis (Wolverh'ton SE)
Mountford, Kali	Turner, Dr Desmond (Kemptown)
Mullin, Chris	Turner, Dr George (NW Norfolk)
Murphy, Denis (Wansbeck)	Twigg, Derek (Halton)
Murphy, Jim (Eastwood)	Twigg, Stephen (Enfield)
Murphy, Rt Hon Paul (Torfaen)	Vaz, Keith
Naysmith, Dr Doug	Vis, Dr Rudi
Norris, Dan	Walley, Ms Joan
O'Brien, Bill (Normanton)	Ward, Ms Claire

Wareing, Robert N	Wood, Mike
Watts, David	Worthington, Tony
White, Brian	Wright, Anthony D (Gt Yarmouth)
Wicks, Malcolm	Wright, Dr Tony (Cannock)
Williams, Alan W (E Carmarthen)	Wyatt, Derek
Wills, Michael	Tellers for the Noes:
Winnick, David	Mrs. Anne McGuire and Mr. Greg Pope.
Winterton, Ms Rosie (Doncaster C)

Question accordingly negatived.

Clause 6

Payment Of Tax Credit By Employers Etc

I beg to move amendment No. 7, in page 3, line 35, at end insert

'except that an employee shall be entitled to make an election to receive payment of the tax credit to which he is entitled directly from the Board.'.

With this, it will be convenient to discuss amendment No. 6, in page 4, line 10, at end insert—

'(2A) Regulations under this section shall allow any person who is entitled to a tax credit to elect to receive payment of that tax credit directly from the Board.'.

The purpose of amendment No. 7 is to enable those who are entitled to the working families tax credit to have the choice of whether the payments should be made to them through the payroll or directly to their home by cheque. The Government's proposals mean that a lone parent in work or a couple, both of whom work, have no choice. If they claim and are entitled to working families tax credit, the benefit will be paid through the payroll, whether they like it or not. The only recipients who will have a choice are couples of whom one is in work while the other remains at home to look after the children. The view of Conservative Members is that if that choice is available in those circumstances, it should be available in all other circumstances.

The Government's view is that if all potential claimants of working families tax credit were given the choice of direct payment, too many of them would take that choice, thus undermining the concept of having the benefit paid through the pay packet. Why are the Government so intent on having the payment made through the payroll? According to the Paymaster General on Second Reading, the whole point of the Bill was

"to remove the stigma associated with the current system".—[Official Report, 26 January 1999; Vol. 324, c. 153.]

That is odd, because what the Paymaster General means by "the current system" is the family credit benefit, which has a 72 per cent. take-up rate; it has an 85 per cent. take-up rate by expenditure and in the case of lone parents there is a 91 per cent. take-up rate. It is hard to believe that any stigma whatever is attached to a benefit with such a high take-up rate. That is why the Joseph Rowntree Foundation in York said:

"UK research has shown only limited reluctance to claim family credit on the grounds of stigma. Take-up of family credit among eligible families is high and continues to rise."

The main difference between family credit and the new working families tax credit is the delivery mechanism. The calculation of WFTC is almost identical to that of family credit, but with a slightly shallower taper. The real difference is that WFTC is paid through the payroll. The Government's reason for that change, and the explanation for their resolve not to allow couples and lone parents the choice of direct payment, are that the Government genuinely believe that the measure will reduce stigma. By reducing stigma, they no doubt expect that there will be a higher take-up rate, but to date no Minister has said what that take-up rate will be, or whether it will be higher than the very high take-up rates for family credit. If the Government have no confidence that take-up rates will increase, they clearly have no confidence that the working families tax credit will reduce stigma.

What evidence do the Government have for their contention that paying that benefit through the payroll will reduce stigma? Martin Taylor, the architect of the working families tax credit, was asked by the Select Committee on Social Security what evidence there was that paying that benefit through the payroll would reduce stigma. He replied:

"As far as I am concerned, it does not matter whether the body which determines whether or not you are entitled to the WFTC is situated in the DSS or the Inland Revenue. As far as stigma goes, the hard and fast evidence in all these non-financial and psychological matters is difficult to come by."

As I said in Committee, we must not traduce Martin Taylor and blame him for being the architect of the scheme. He was told that there would be a tax credit and therefore devoted most of his energies to national insurance reforms, many of which were sensible and welcome. I hope that the hon. Gentleman will agree that the fingerprints of the Treasury are all over that tax credit and that when it goes wrong, we shall know where the blame lies.

The hon. Gentleman is absolutely right. The Government had the advantage of seeing the transcript of the Social Security Committee report in which Martin Taylor makes the point that there is no academic evidence that there is less stigma when benefits are paid through the payroll. Despite that, the Government went ahead and produced the Bill.

It is not merely that there is no evidence that stigma would be reduced; it is even worse, because there is evidence that stigma will be increased by paying the benefit through the payroll. That is because, for the first time, there is a real risk that fellow workers will find out that an employee is in receipt of a state benefit. The payroll clerk will know and the finance director will know; in a small firm that is a special risk. That risk has been heightened by the fact that the working families tax credit will not—because it cannot—be paid through adjustments to the pay-as-you-earn code. Martin Taylor originally envisaged that that was how the credit would be paid, but when the Inland Revenue tried to implement that system, it failed and produced distorted results. As the hon. Member for Northavon (Mr. Webb) says, the Government knew that when they designed the scheme, yet they went ahead with the Bill.

The problem of delivering the tax credit through the pay packet, which is the subject of the amendment, will presumably be further compounded when the child credit is added. When I asked the Treasury whether the child credit would be delivered through the PAYE code, I was told that the Treasury would let me know when it had worked out the answer. Does that worry the hon. Gentleman?

Of course, it concerns me enormously. The hon. Gentleman makes a good point. If there are difficulties in putting the working families tax credit through the PAYE code without the child care tax credit, I am certain that there is no chance of the child care tax credit being put through the tax code as well. The new child care credit referred to in the Budget will almost certainly face the same problems.

As the payment cannot go through the PAYE code, it must be separately identified as a tax credit on the pay slip. It is now clear that paying working families tax credit through the payroll will increase stigma. That was the view of Bill Knox, of the Federation of Small Businesses, in his evidence to the Social Security Committee—[Interruption.] Labour Members should listen. Bill Knox said that

"there could be the added stigma of being an employee who receives, and knowingly receives, benefit within the workplace".

Is that all?

The hon. Gentleman should not worry; there is more.

The increased stigma that will inevitably arise is Conservative Members' most pressing concern about the Bill and the reason we have tabled amendment No. 7. If the amendment is not passed, it will be our principal reason for opposing the Bill. The Government believe that the working families tax credit will reduce stigma; we believe that it will increase stigma. The National Council for One Parent Families believes that the working families tax credit will increase stigma:

"Some lone parents may worry that their personal finances are becoming more visible to colleagues and employers causing a disincentive to take up benefit.

Is there more?

There is more. The Confederation of British Industry believes that working families tax credit will increase stigma and I shall quote its words for the benefit of the hon. Member for Hull, West and Hessle (Mr. Johnson). The CBI states:

"Many single parents will wish to have the option of direct payment in order to maintain confidentiality and avoid perceptions of stigma."

The Institute for Fiscal Studies, too, believes the WFTC will increase stigma:

"As employers and, potentially, work colleagues will observe the working families tax credit, it might increase the stigma associated with receiving transfer payments and so decrease take-up".

However, the Government believe—so too, it seems, does the hon. Member for Hull, West and Hessle—that all those groups are wrong. The Government contend that the IFS, the CBI and the National Council for One Parent Families are wrong because employers already know which of their employees receives family credit. The Government claim that the DSS must contact the employer before an employee can qualify for family credit. That is not true. In many cases, an employee can provide sufficient documentary evidence of pay and hours worked without approaching the employer. In any case, a "once and for all" approach is different from a week in, week out—or month in, month out—notification from the Inland Revenue that an employee is receiving working families tax credit. That is what will happen under the new payment system.

If the Government insist upon claiming that employers must be contacted, I simply refer them to the CBI's brief for this debate:

"At present a significant number of employers may never know that their employees are receiving Family Credit. Up to a third of employees claiming credit do so without their employer's knowledge—either because they provide enough information and their employer does not need to be contacted or because employers provide information without realising that their employees are claiming Family Credit."

This amendment gives the recipient the option of having the benefit paid directly. It is thus for him or her to decide whether having it paid through the payroll will increase the stigma. After all, it is recipients, not Ministers, who will suffer the embarrassment if the Government are wrong and the benefit increases stigma.

That view is shared by the TUC:

"The TUC … strongly recommends that choice of payment system should apply to all households, including those headed by lone parents."

The TUC has other concerns that could be alleviated by the amendment. In its Budget representations, the TUC says that family credit has

"by and large, enhanced job security for many people in low paid jobs by delivering financial assistance to them in a direct and timely fashion."

It continues:

"There is a real danger that the working families tax credit will fail to replicate this if the wage packet is to be the primary means of delivering the tax credit."

The concern is that payment may be interrupted if the benefit is paid through the payroll. That is the view of the Low Pay Unit, which says:

"The low paid are least able to afford interruptions or delays in payment of benefits."

When an employee envisages the possibility that his employer may interrupt benefit payment, he should be given the option of having the payments made to him directly by the Inland Revenue. That is a key concern of the TUC, which believes that working families tax credit is

"much more liable to disruption."

It is also the main concern of the National Council for One Parent Families:

"a default option is needed so lone parents can be paid direct rather than through the wage packet if there is a short-term contract, more than one employer, very low wages or the firm is too small to deal with the claim."

The problem of interrupted payments is particularly acute if there is a trade dispute. The glossy document from the Inland Revenue that explains the way the working families tax credit operates explains that if a trade dispute lasts for longer than one pay period, the employer will not be expected to continue to pay the working families tax credit. Instead, the employer should issue a certificate of payment to the employee who must then take it to the Inland Revenue, which will pay the working families tax credit directly.

That is the theory; the reality will be delays. There will be delays when the employer issues the certificate—assuming that he gets round to doing that, as he is in the middle of a trade dispute—delays at the Inland Revenue when the employee hands in the certificate, and delays in payment. Those on very low incomes cannot sustain such delays. That is another reason why we believe people should be given the option of having the working families tax credit paid directly.

6.45 pm

The amendment will also partially—but not fully—solve the problem raised in Committee with which the Government failed to deal. If there is a dispute between a couple, who should receive the benefit? In Committee, the Financial Secretary said that the presumption was that, in the case of a dispute, the money would go to the spouse or the partner with care. The Government also said that the benefit could be claimed with just one signature on the form and that payment would go to the signatory. So whoever grabs the form first will be the winner—and that will not necessarily be the spouse or partner with care.

It would be helpful if the Minister at last clarified the position. If there is a dispute between a couple, who should receive the working families tax credit? If the working spouse completes and signs the form and the non-earning partner does not sign, will the payment go to the working spouse or to the partner at home who takes care of the children?

I can assist the hon. Gentleman now. When there is a dispute and the form is not completed, the Inland Revenue will establish contact and ask why. That does not happen at present with family credit: if the form is not completed, no payment is made. The Inland Revenue would have to be satisfied that it was not a claim of the type the hon. Gentleman describes—one partner who does not have a caring responsibility is trying to secure payment of the tax credit. A situation in which someone—the man, I presume the hon. Gentleman means—grabs the form, fills it in and receives the tax credit without the mother's knowledge would not arise.

That may be the case during the transition from family credit to working families tax credit, but what about new claimants for working families tax credit? How will the Inland Revenue contact someone who has not returned a form? How will it know that there is a claim to be made? I do not understand how it will work.

The hon. Gentleman saw the forms in Committee. He will remember that they must be filled in by both parents—except in the case of a single parent—and the details must be included on the form. If the details do not appear, an inquiry will be triggered under the new and the transitional rules.

We shall see how the hon. Lady's explanation works in practice. We were told in Committee that the claim could be processed with just one signature and that payment would go to the person who signed the form—that is, whoever filled in the applicant box. The form states that the payment will be made to the person who completes the left-hand, not the right-hand, column on the form.

I am grateful to the hon. Gentleman for giving way again, because this is an important point. One signature will be accepted only in extremely exceptional circumstances, such as in the case of a violent relationship. For example, if the man refused to complete the form—that is, sign it—but his partner was able to supply the details of his earnings, that information could be cross-referenced in the Inland Revenue to confirm that the details were correct. The partner would be the only one to sign the form, but in those circumstances, the claim would be categorised as low risk. We would rule that the claim was correct and the benefit would be paid to the partner. That is what would occur if there was only one signature on the form but two parents in the family.

I am grateful to the hon. Lady for clarifying the situation.

The amendment will help the new benefit to be administered in a way that is responsive to the concerns of low income families. It will deal with the Bill's fundamental flaw: increased stigma. The hon. Lady did not address that issue in her comments. Increased stigma is a real concern, and I urge the House to support the amendment in an effort to remove the stigma that many low income families and lone parents, who are struggling to make ends meet and to bring up families while working, will face if the Bill reaches the statute book unamended.

Grouped with amendment No. 7, which the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) has just moved—I agreed with many of his comments—is amendment No. 6. As far as I can tell, it would have identical effects, but mysteriously, it relates to a few lines later. Both amendments are concerned with election to receive tax credits directly from the Inland Revenue.

The present proposal is that the Government will force lone parents to receive their benefit in a particular way—through the pay packet. Governments should force measures on people, possibly against their will—a lone parent might prefer to receive the money another way—only with very good reason, and we have been given no compelling evidence that lone parents should be forced to receive the money through the pay packet.

Paragraph 21 of the draft regulatory impact assessment states:

"The Government believes that employer payment of the tax credits is of crucial importance in helping to reinforce—and demonstrate—the link between receipt of the tax credits and the rewards of work."

One might paraphrase that as saying that the Government believe that lone parents are so stupid that they cannot grasp the fact that they receive family credit when they work, but not when they do not; and they must receive the credit through the pay packet so that they understand that it is something to do with them working. That is absurd, patronising and insulting.

There is no reason to demonstrate to lone parents the merits of work because, I assume, they are capable of adding up two numbers and, in any case, both payments—salary and tax credit—might come through giro credits, so that would demonstrate that both were coming from work. What, then, would be another argument for the proposal?

The hon. Member for Bognor Regis and Littlehampton has mentioned that there is apparently a need to reduce stigma. Yet as we have heard, the take-up rate on expenditure for lone parents was 91 per cent. in 1995–96. One can scarcely imagine a system with 100 per cent. take-up because there will always be people who have just fallen into the relevant circumstances for eligibility, but have not yet made a claim, so 91 per cent. is as near 100 per cent. as we are ever likely to get. That implies that there is virtually no stigma for lone parents who are the subject of the amendments. Almost all of them claim family credit, so why must they be forced to take the working families tax credit through the pay packet?

Another way of considering the issue is to ask whether there is any problem in forcing the payment through the pay packet. There are three main problems. The first is the administrative burden on business. That is the subject of the next group of amendments, so I shall not dwell on it. If half of all family credit recipients are lone parents, half of all tax credit recipients will be credited through the pay packet, and that is a large number of people whose employers will have to administer the scheme. If the amendments are made, and many lone parents opt for direct payment, there will be a greatly reduced burden on business.

Does the hon. Gentleman agree that if the employer has to set up any procedure at all for coping with payment, he will do most of the work anyway?

I am not sure that I understand the hon. Gentleman's question. Under the proposed regime, someone who employs a lone parent will be obliged by the Government to implement the scheme and deliver the credit. There will be a fixed charge for doing that for the first person and a variable charge for additional or subsequent employees. I certainly accept that there will be a fixed start-up cost, which is why there is no reason for employers to have to bear that cost in the first place, but there will also be a variable cost, as the regulatory impact assessment points out.

The second problem is that the palaver created by people who change jobs will be extraordinary. A lone parent who moves from welfare into work—he or she is the apple of the Government's eye—will start a job and notify the Inland Revenue, or their employer will do so. Initially, the money will be paid by the Inland Revenue to the employee, to give the employer time to make arrangements. The employer will then begin to pay the credit directly through the pay packet.

If the lone parent then changes jobs, the original employer must tell the Inland Revenue that the employee has stopped working for him. The Inland Revenue will tell the employer to stop paying the credit and begin to pay the lone parent directly until the new job starts. If the lone parent has been claiming for almost six months, the payment might go direct to the claimant or through the new employer—I am not sure which.

All that is unnecessary. At the moment, lone parents receive family credit monthly through an order book or direct into their bank account. That is not a problem. If they change jobs, the credit continues. Given that we are dealing with a section of the labour market where job turnover is common, why are the Government introducing all that complexity?

The final problem is the loss of privacy. There are two important aspects to that. If anything will stigmatise people, it is loss of privacy. The hon. Member for Bognor Regis and Littlehampton quoted the CBI's comment about employers' present lack of awareness about family credit. As the hon. Gentleman is no doubt aware, that is not only a CBI point but a Government point.

The Department of Social Security commissioned research into the effects of employer attitudes to family credit. DSS research report No. 32, "Employers and Family Credit", says:

"Only about two thirds of employers who employ Family Credit recipients know that they do so".

The employers of one third—hundreds of thousands—of family credit recipients do not know that they receive that benefit. When the Government force employers to deliver the credit through the pay packet, every employer will know. That may be damaging to the employee because employers might take such people on a short-term contract, but if they pose a serious administrative burden because of all the extra paperwork, they might think twice about renewing the contract. That would clearly be detrimental to the people whom the Government supposedly want to help.

There is a loss of privacy also because the employer will know how much credit the employee is receiving. Given that about one third of recipients will get the maximum credit, the number and age of their children will be fairly obvious. It is also apparent that when someone's circumstances change, the employer will know because he will be told to vary the amount of family credit and will know that the salary has not changed. It must follow that the domestic circumstances of the lone parent must have changed; for example, someone has moved into the home.

Is there not also an additional point—that when an employer knows that an employee receives family credit, he does not often receive information? A renewal claim for family credit, which lasts for six months before it changes, requires no contact with the employer, so employers will be contacted probably no more than once a year. There is a difference between that and the employer having monthly or weekly information from the Inland Revenue with the daily rates included.

The hon. Gentleman is right. The proposal is to force employers of lone parents to be intimately involved in their personal circumstances and changes to those circumstances. That is wholly unnecessary.

The measure tries to solve a problem that does not exist. It will force lone parents, against their will, to receive their benefits in a particular way. If the measure is not against their will, why do not the Government let them choose? If the Government are happy to let them choose and think that lone parents want that measure, the outcome will be the same. If lone parents do not want the measure, the Government are imposing it on them to teach them, as far as I can tell from the Government's rhetoric, that work pays and that they receive something when they are in work that they do not receive when they are out of work. They are doing so by delivering the credit through their pay packet instead of by a credit to their bank account.

That is patently absurd, unnecessary, bureaucratic for employers, patronising to lone parents and intrusive on their privacy. I therefore encourage the House to back amendments No. 7 or No. 6.

We get the same pleasure in the House as we do in Committee when we find ourselves agreeing with the Liberal Democrats. It is an unusual circumstance, but we are as one on the amendments.

We all find it difficult to understand the Government's insistence on the proposal. The Financial Secretary's mantra is that

"it reinforces the connection with work."—[Official Report, Standing Committee D, 9 February 1999; c. 111.]

I should have thought that anybody in work would know and appreciate the fact that they are in work, and would realise the benefits of that at the end of the week or the month. People who are out of work tend by and large not to have to deal with the Inland Revenue and fill in PAYE forms and other communications. It comes as a bit of a shock to some people when they have to fill in those forms. People know when they are in work, earning money and dealing with the Inland Revenue.

If people receive their tax credits from the Inland Revenue rather than through a pay packet, they will realise that it is an acknowledgement of the fact that they are in work. They do not need to have that fact acknowledged by the payment of tax credits through their pay packet. The more we have examined the proposal, in Committee and again today, the more we have realised that, although the Government think they have taken a simple line, the practical difficulties outweigh the pay packet argument and bring into play the role of the Inland Revenue.

Several hon. Members have outlined the issues clearly. I shall not repeat the arguments about stigma, with which I thoroughly agree. Nor shall I take up the arguments about privacy and confidentiality, which relate particularly to small businesses but are equally valid as they apply to larger businesses. With the best will in the world, and however many strictures are directed to employees in payroll departments to the effect that they should not talk or gossip, they are aware of other employees' circumstances. It is amazing how little bits of information can percolate, so that by the time the information has emerged, it is often too late to deal with the problem of confidentiality and privacy having been breached.

7 pm

I strongly support the argument about potential delay in payments of working families tax credits in certain circumstances. I accept that the efficiency of the Inland Revenue has improved over recent years, but various circumstances will have an impact on payments. Bankruptcy is the most extreme example, but there others, such as strikes, and circumstances where people work part-time for a number of different employers. Such people are not necessarily employed in agriculture; more and more people work in a number of part-time jobs, even during the course of a week.

The Government's faith in the speed with which the Inland Revenue can react is, to say the least, touching. Most of us who deal with the Inland Revenue—I imagine that most of us in the Chamber have had to come into contact with it at some stage—know that, however hard and efficiently the staff of the Revenue work these days, they cannot deliver money within a week, which is what many claimants of working families tax credit will need. I do not want to stray out of order, Mr. Deputy Speaker, but on a previous amendment we talked about child care tax credit—

My hon. Friend is talking about delays in payment, and people working in different jobs. Does she agree that privacy is an equally important point? Many people who have part-time jobs do not want their main employer to know. Employers will be interfering in every aspect of family life. They will know how many children their employees have and all their sources of income.

I can only agree with my hon. Friend. In certain circumstances it may be difficult for an employer to accept that his employee has a part-time job—even though that may be necessary to the employee given his or her family circumstances. If an employee's work requires a high level of concentration, for example, an employer may feel that when he is not working he should be taking time off rather than working elsewhere.

If the high-quality child care from which we all agree children will benefit is to be provided, child care tax credit will often have to be paid week by week. Child minders do not tend to have large incomes and will not have the savings or resources to allow them to cope with delayed payments through the Inland Revenue where an employee or parent suddenly experiences a break in the payment of working families tax credit.

We are talking about nurseries and after-school kids' clubs. Do I surmise that the Government are prepared to subsidise nurseries and all the various clubs so that they have a cash cushion and can sustain a parent who has fallen into cash-flow difficulties caused by an employer's difficulties?

Order. Perhaps it is me, but I am at a loss to understand what the hon. Lady's remarks have to do with the amendments.

The Bill indicates that the Revenue should pay into the pay packet except in exceptional circumstances. I am saying that, however efficient we believe the Inland Revenue to be, it cannot guarantee to get the money into an employee's pay packet. We believe that an employee should be able to opt for the Inland Revenue paying him week by week or month by month so that he can maintain his cash flow. There is a difficulty with the interaction between employment and the Inland Revenue when it comes to the payment of working families tax credit.

The payment of the tax credit is a burden on employers. The compliance cost assessment is about £37 for a company employing up to four people. By definition, large employers will probably pay a smaller sum proportionally. However, those figures indicate the drain on the national economy overall. If the Revenue were able to pay more people, it would probably reduce the cost to the overall economy. Given that, within the Budget, the Government have offered the new Small Business Service specifically to help small employers with compliance with regulations, it would seem that the cost could be cheaper if the Revenue were to make the payments.

I ask the Government to accept the amendment, which would allow employees more readily to elect for the Inland Revenue to pay working families tax credit. It would make life easier for them and their employers and would reduce stigma and problems of privacy and confidentiality. That is extremely important when people are trying to regain their self-esteem after it has been battered because they have been out of the work market for so long.

In a way, it is a pity that there is a convention in the House that Back-Bench Members have to speak before the Minister intervenes. Such a devastating case has been made in favour of the amendments—not least by the hon. Member for Northavon (Mr. Webb), who always speaks very well on these matters, and by my hon. Friends the Members for Bognor Regis and Littlehampton (Mr. Gibb) and for Beckenham (Mrs. Lait)—that it is difficult to know what possible argument the Minister can advance against them. Anyone would think that we were trying to drive a coach and horses through the concept of working families tax credit.

That is what the Opposition are doing.

That is an interesting admission. The Minister says that we are doing that. Why does she take that view? Surely we are only saying that people should be given a choice. If the Government are saying that the family credit system does not work; that it entails enormous stigma; and that they want to move on to a much more modern system, so be it. If I am in receipt of family credit, I can agree with the Minister and choose, if I am a lone parent, to receive the money through my pay packet. But why should I be forced to do so?

Why do we legislate in this place? Do we legislate as part of the Government's programme to make the Government look good in the national press, to tell the country that they are taking people off social security, reducing the social security bill and getting people back into work? Is that why we are legislating in the Chamber? Or are we trying to legislate to help ordinary people in low-paid jobs, who, for their own reasons—for reasons of privacy or convenience or for any other reason, such as the fact that they are changing their job or have several jobs, or because they do not trust the people in the accounts department not to talk—want to choose to receive payments at home as they have always done? Some of those reasons may seem trivial, but they are important to the people involved.

I serve on the Select Committee on Social Security, which has taken a considerable amount of evidence on these matters. We have taken evidence, as we heard, from Martin Taylor, the Federation of Small Businesses and others; written evidence from the Trades Union Congress; and evidence from the National Council for One Parent Families. If the Committee had had an overwhelming sense from the evidence that family credit did not work—that people did not want to make use of it, or felt ashamed, or felt that they were living off the state if they drew it—our all-party Committee, which generally tries to approach such matters in a non-partisan spirit, would have included that in our report. Our report would have made it clear that family credit had failed.

We studied working families tax credit in other countries, including the United States. I went up to Preston. In the DSS office I stood behind the assessment officer as she was going through the simple forms to work out whether family credit should be paid in a particular case. She was a conscientious civil servant, going through the mechanics and working out the figures quickly and easily, ensuring that for someone who had a family and was in a low-paid job, it was made worth his while to work.

I can speak only from my practical experience. We have heard many statistics cited tonight, but speaking to people on the ground is equally important. Practical experience could be wrong, however. If I am wrong, why is the take-up rate of family credit so high? A figure of 91 per cent. was bandied across the Chamber. If there is such a stigma attached to family credit, why is the take-up rate so high—and why not give people the choice?

What is the hidden agenda? Are the Government genuinely concerned about ordinary people, or is there another agenda? I believe that there is. If people could choose to receive working families tax credit at home, what would be the effective difference between working families tax credit and family credit? Virtually none. A great part of the Government's propaganda machine would be demolished at a stroke. People would say that the only difference was the change of name. That is what this debate is about.

The Government are trying to convince the country that, by a series of schemes, they have reduced the welfare bill, got people off benefit and back into work, and got the economy moving. The truth is that if people are getting back into work, they are doing so because the economy is growing, not because of the working families tax credit, the minimum income guarantee or anything else. Of course, if the Government made that admission, and if people were allowed to receive benefit at home, the Government's great fabric would fall apart.

That is why I support the amendments. I support them also because of the burdens on business, especially on small companies, about which we have heard. I hope that the Minister can convince us that all our arguments are wrong.

7.15 pm

The hon. Member for Gainsborough (Mr. Leigh) complimented the staff at the family credit unit in Preston. He commented that they were excellent civil servants, as indeed they are. He should be confident of the work that will be undertaken to introduce the working families tax credit, because it will be done by the same diligent, hard-working, precise civil servants as the family credit unit transfers to the Inland Revenue. The hon. Gentleman spoke on the same themes as other Opposition Members—stigma and privacy.

I should say at the outset that I shall disappoint the Opposition again by asking the House to reject the amendment—although, as the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) gained a concession in Committee when the position of the apostrophe in the word "families" was corrected, we will be even stevens after this.

Although I shall deal with the issues relating to stigma, I should remind hon. Members that the benefit is intended to reinforce work incentives and to reward work. The hon. Member for Gainsborough said that there was no evidence of stigma, but he went on to say that he had evidence. That consisted of what various organisations believed might happen.

rose—

I want to quote some research findings, because the hon. Member for Gainsborough asked about that. I refer him to a paper by Jeffrey Liebman for the Rowntree Trust, who quotes a study undertaken by McKay and Marsh entitled "Why didn't they claim?," carried out on behalf of the Department of Social Security. Liebman states:

"McKay and Marsh's interview study of family credit claimants reports that few families were entirely comfortable with the idea of claiming income-related in-work benefits."

The hon. Gentleman conflates take-up and stigma. Take-up is determined by need. Stigma is a feeling imposed on people when they make their applications.

In a paper entitled "Lessons about tax-benefit integration from the US earned income tax credit experience", which was also published by Rowntree, Liebman states in relation to credit administered through the tax system:

"The advantages of such a reform … are that workers would be freed from the stigma of the welfare system".

He goes on to say that

"removing stigma could be an important advantage of integrating in-work benefits into the tax system—in particular, workers who see themselves as self-sufficient and free of Government handouts may be less likely to go back on welfare in the future."

That deals with the Opposition's comments about stigma.

rose—

I must make progress. The hon. Gentleman had a note passed to him about sitting down, so he will understand that progress needs to be made this evening.

We also heard about privacy and the fears that people's private concerns would be disclosed. The hon. Member for Northavon (Mr. Webb) said that two thirds of employers verify the earnings of family credit claimants.

Employers are already under a common law duty to maintain the trust and confidentiality of their employees. That is potentially a wide duty, and the Data Protection Act 1998 will extend the protection of personal information. Itemised pay statements are already prepared by some employers, and they are treated as confidential matters between the employer and the employee. There is no reason, and none was advanced, why that tried and trusted system would fall apart as a result of the working families tax credit.

Opposition Members have a perverse view of the world. They believe that employers will do their utmost to frustrate the payment of benefit, to undermine their employees, to disregard instructions from the Inland Revenue and to make the lives of lone parents a misery and their workers' lives impossible. I do not dispute that there are some employers who may behave in that way, but the overwhelming majority do not. There is no reason to believe that they will do so in future, because that would be bad for their relationships with their employees, on which their firms depend.

Under the working families tax credit provisions—this goes to the heart of the amendments—the major payment will be made through the pay packet. The application forms are straightforward. I know that Conservative Members have seen those forms and I have to tell them that anyone who thinks that a family credit form is easy to fill in has clearly never attempted to complete one—they are complex and very long. To the credit of Inland Revenue officials, the new forms are more straightforward and open.

A lone parent in paid employment will receive the payment through the wage packet. If both parents are working, one will receive the payment through the wage packet, and they will be able to choose which. When one parent is working and one is not, they will be able to choose which receives the payment. The form makes it clear that there is no pressure about who should receive the payment; it will be up to the couple to decide. I have every confidence in the maturity of couples; they will be able to take that decision about managing their household finances.

It is nonsense to use strong language about lone parents being forced into doing something when the working families tax credit will give them such enormous benefit. Conservative Members describe the system as impossible to operate, but they have failed to read and understand the Bill and they have failed to understand the powers that will protect the employee and ensure that the employer delivers the tax credit.

I ask the House to reject the amendment and support the Government in introducing the Bill.

The Minister forgets that the overwhelming majority of employers in this country are small employers. More than half the employees in this country are employed by people who employ fewer than 50 people. In small companies information spreads by word of mouth. Conservative Members have tried to explain that problem to the Government, but it seems that what we have said has landed on deaf ears.

The Minister asked what evidence we have that the working families tax credit will increase stigma. I cited in evidence a number of organizations—the National Council for One Parent Families, which represents lone parents; the CBI, which represents employers; and the TUC, which represents a large number of employees. If they do not know whether people will be stigmatised under the Minister's scheme, who does? I believe that the views of those organisations provide ample evidence to show that stigma will increase.

The Minister talked about take-up being a measure not of stigma but of need, but what measure would she use to determine whether stigma had increased or decreased under the new working families tax credit system? A 91 per cent. take-up rate is, to anyone with any common sense, a clear indication that people do not mind claiming family credit. If she has a better measure for judging whether the working families tax credit will increase or decrease stigma, let us have it. Let us have target rates for take-up and other objectives that the Government could set out to determine whether stigma has increased.

The Minister's response will disappoint not only me. It will disappoint many thousands of lone parents and working people on low incomes who have to work hard and struggle to make ends meet as they bring up a family. The hon. Lady will inflict on them embarrassment and stigma because she misunderstands the real world of work.

Question put, That the amendment be made —

The House divided: Ayes 164, Noes 296.

Division No. 114]	[7.24 pm
AYES
Ancram, Rt Hon Michael	Goodlad, Rt Hon Sir Alastair
Arbuthnot, Rt Hon James	Gorman, Mrs Teresa
Ashdown, Rt Hon Paddy	Gorrie, Donald
Atkinson, David (Bour'mth E)	Gray, James
Baker, Norman	Greenway, John
Ballard, Jackie	Grieve, Dominic
Bercow, John	Hamilton, Rt Hon Sir Archie
Beresford, Sir Paul	Hammond, Philip
Body, Sir Richard	Harris, Dr Evan
Boswell, Tim	Harvey, Nick
Bottomley, Rt Hon Mrs Virginia	Hayes, John
Brake, Tom	Heald, Oliver
Breed, Colin	Heathcoat—Amory, Rt Hon David
Brooke, Rt Hon Peter	Horam, John
Browning, Mrs Angela	Howard, Rt Hon Michael
Bruce, Ian (S Dorset)	Howarth, Gerald (Aldershot)
Burnett, John	Hughes, Simon (Southwark N)
Burns, Simon	Hunter, Andrew
Burstow, Paul	Jack, Rt Hon Michael
Butterfill, John	Jackson, Robert (Wantage)
Cash, William	Jenkin, Bernard
Chapman, Sir Sydney (Chipping Barnet)	Johnson Smith,
	Rt Hon Sir Geoffrey
Chidgey, David	Keetch, Paul
Chope, Christopher	Kennedy, Charles (Ross Skye)
Clark, Dr Michael (Rayleigh)	Key, Robert
Clarke, Rt Hon Kenneth (Rushcliffe)	Kirkbride, Miss Julie
	Kirkwood, Archy
Clifton—Brown, Geoffrey	Laing, Mrs Eleanor
Collins, Tim	Lait, Mrs Jacqui
Colvin, Michael	Lansley, Andrew
Cormack, Sir Patrick	Leigh, Edward
Cotter, Brian	Letwin, Oliver
Cran, James	Lewis, Dr Julian (New Forest E)
Curry, Rt Hon David	Lidington, David
Davis, Rt Hon David (Haltemprice & Howden)	Lilley, Rt Hon Peter
	Lloyd, Rt Hon Sir Peter (Fareham)
Day, Stephen	Loughton, Tim
Donaldson, Jeffrey	Luff, Peter
Dorrell, Rt Hon Stephen	Lyell, Rt Hon Sir Nicholas
Duncan, Alan	MacGregor, Rt Hon John
Duncan Smith, Iain	McIntosh, Miss Anne
Evans, Nigel	Maclean, Rt Hon David
Ewing, Mrs Margaret	McLoughlin, Patrick
Faber, David	Maginnis, Ken
Fabricant, Michael	Major, Rt Hon John
Fallon, Michael	Malins, Humfrey
Feam, Ronnie	Maples, John
Forsythe, Clifford	Maude, Rt Hon Francis
Forth, Rt Hon Eric	Mawhinney, Rt Hon Sir Brian
Foster, Don (Bath)	May, Mrs Theresa
Fowler, Rt Hon Sir Norman	Michie, Mrs Ray (Argyll & Bute)
Fraser, Christopher	Moore, Michael
Garnier, Edward	Morgan, Alasdair (Galloway)
George, Andrew (St Ives)	Moss, Malcolm
Gibb, Nick	Nicholls, Patrick
Gill, Christopher	Norman, Archie

Oaten, Mark	Taylor, Ian (Esher & Walton)
Öpik, Lembit	Taylor, Rt Hon John D (Strangford)
Page, Richard	Taylor, John M (Solihull)
Paice, James	Taylor, Matthew (Truro)
Paterson, Owen	Taylor, Sir Teddy
Pickles, Eric	Thompson, William
Prior, David	Tonge, Dr Jenny
Randall, John	Tredinnick, David
Redwood, Rt Hon John	Trend, Michael
Rendel, David	Tyler, Paul
Robathan, Andrew	Tyrie, Andrew
Robertson, Laurence (Tewk'b'ry)	Wallace, James
Roe, Mrs Marion (Broxbourne)	Wardle, Charles
Rowe, Andrew (Faversham)	Waterson, Nigel
Ruffley, David	Webb, Steve
Russell, Bob (Colchester)	Whitney, Sir Raymond
St Aubyn, Nick	Whittingdale, John
Sanders, Adrian	Wilkinson, John
Sayeed, Jonathan	Willetts, David
Shephard, Rt Hon Mrs Gillian	Willis, Phil
Smith, Sir Robert (W Ab'd'ns)	Winterton, Mrs Ann (Congleton)
Smyth, Rev Martin (Belfast S)	Winterton, Nicholas (Macclesfield)
Soames, Nicholas	Woodward, Shaun
Spicer, Sir Michael	Yeo, Tim
Steen, Anthony	Young, Rt Hon Sir George
Streeter, Gary
Swayne, Desmond	Tellers for the Ayes:
Syms, Robert	Sir David Madel and Mrs. Caroline Spelman.
Tapsell, Sir Peter
NOES
Abbott, Ms Diane	Campbell, Mrs Anne (C'bridge)
Adams, Mrs Irene (Paisley N)	Campbell, Ronnie (Blyth V)
Ainger, Nick	Canavan, Dennis
Ainsworth, Robert (Cov'try NE)	Caplin, Ivor
Allen, Graham	Casale, Roger
Armstrong, Ms Hilary	Caton, Martin
Ashton, Joe	Chapman, Ben (Wirral S)
Atherton, Ms Candy	Chaytor, David
Atkins, Charlotte	Chisholm, Malcolm
Austin, John	Clapham, Michael
Banks, Tony	Clark, Rt Hon Dr David (S Shields)
Barnes, Harry	Clark, Dr Lynda (Edinburgh Pentlands)
Barron, Kevin
Battle, John	Clark, Paul (Gillingham)
Bayley, Hugh	Clarke, Charles (Norwich S)
Beard, Nigel	Clarke, Rt Hon Tom (Coatbridge)
Beckett, Rt Hon Mrs Margaret	Clarke, Tony (Northampton S)
Begg, Miss Anne	Clelland, David
Bell, Stuart (Middlesbrough)	Clwyd, Ann
Benn, Rt Hon Tony	Coaker, Vernon
Bennett, Andrew F	Coffey, Ms Ann
Benton, Joe	Coleman, Iain
Bermingham, Gerald	Connarty, Michael
Berry, Roger	Cook, Frank (Stockton N)
Best, Harold	Cooper, Yvette
Betts, Clive	Corbett, Robin
Blackman, Liz	Corston, Ms Jean
Blears, Ms Hazel	Cousins, Jim
Blizzard, Bob	Cox, Tom
Blunkett, Rt Hon David	Cranston, Ross
Borrow, David	Crausby, David
Bradley, Keith (Withington)	Cryer, Mrs Ann (Keighley)
Bradley, Peter (The Wrekin)	Cummings, John
Bradshaw, Ben	Cunliffe, Lawrence
Brinton, Mrs Helen	Cunningham, Jim (Cov'try S)
Brown, Rt Hon Gordon (Dunfermline E)	Dalyell, Tam
	Darling, Rt Hon Alistair
Brown, Rt Hon Nick (Newcastle E)	Darvill, Keith
Brown, Russell (Dumfries)	Davidson, Ian
Browne, Desmond	Davies, Rt Hon Denzil (Llanelli)
Buck, Ms Karen	Davis, Terry (B'ham Hodge H)
Burgon, Colin	Dawson, Hilton
Butler, Mrs Christine	Dean, Mrs Janet
Caborn, Richard	Denham, John
Campbell, Alan (Tynemouth)	Dismore, Andrew

Dobbin, Jim	Lewis, Terry (Worsley)
Donohoe, Brian H	Linton, Martin
Doran, Frank	Livingstone, Ken
Eagle, Angela (Wallasey)	Lloyd, Tony (Manchester C)
Edwards, Huw	Lock, David
Efford, Clive	Love, Andrew
Ellman, Mrs Louise	McAllion, John
Ennis, Jeff	McAvoy, Thomas
Etherington, Bill	McCabe, Steve
Fisher, Mark	McCafferty, Ms Chris
Fitzpatrick, Jim	McDonagh, Siobhain
Fitzsimons, Lorna	Macdonald, Calum
Flint, Caroline	McDonnell, John
Flynn, Paul	McFall, John
Follett, Barbara	McGuire, Mrs Anne
Foster, Rt Hon Derek	McIsaac, Shona
Foster, Michael Jabez (Hastings)	McKenna, Mrs Rosemary
Foster, Michael J (Worcester)	McNamara, Kevin
Fyfe, Maria	McNulty, Tony
Galloway, George	MacShane, Denis
Gerrard, Neil	Mactaggart, Fiona
Gibson, Dr Ian	McWalter, Tony
Gilroy, Mrs Linda	Mahon, Mrs Alice
Goggins, Paul	Mallaber, Judy
Golding, Mrs Llin	Mandelson, Rt Hon Peter
Griffiths, Jane (Reading E)	Marsden, Gordon (Blackpool S)
Griffiths, Nigel (Edinburgh S)	Marsden, Paul (Shrewsbury)
Griffiths, Win (Bridgend)	Marshall, David (Shettleston)
Grocott, Bruce	Marshall, Jim (Leicester S)
Grogan, John	Martlew, Eric
Hall, Patrick (Bedford)	Maxton, John
Hanson, David	Meacher, Rt Hon Michael
Healey, John	Meale, Alan
Henderson, Ivan (Harwich)	Merron, Gillian
Hepburn, Stephen	Michie, Bill (Shef'ld Heeley)
Heppell, John	Moonie, Dr Lewis
Hewitt, Ms Patricia	Moran, Ms Margaret
Hill, Keith	Morgan, Ms Julie (Cardiff N)
Hoey, Kate	Morgan, Rhodri (Cardiff W)
Home Robertson, John	Morley, Elliot
Hoon, Geoffrey	Morris, Ms Estelle (B'ham Yardley)
Hope, Phil	Mountford, Kali
Hopkins, Kelvin	Mullin, Chris
Howarth, George (Knowsley N)	Murphy, Denis (Wansbeck)
Hoyle, Lindsay	Murphy, Jim (Eastwood)
Hughes, Kevin (Doncaster N)	Murphy, Rt Hon Paul (Torfaen)
Humble, Mrs Joan	Naysmith, Dr Doug
Hurst, Alan	Norris, Dan
Hutton, John	O'Brien, Mike (N Warks)
Iddon, Dr Brian	O'Hara, Eddie
Jackson, Ms Glenda (Hampstead)	Olner, Bill
Jackson, Helen (Hillsborough)	O'Neill, Martin
Jamieson, David	Organ, Mrs Diana
Jenkins, Brian	Osborne, Ms Sandra
Johnson, Alan (Hull W & Hessle)	Palmer, Dr Nick
Johnson, Miss Melanie (Welwyn Hatfield)	Pearson, Ian
	Pickthall, Colin
Jones, Helen (Warrington N)	Pike, Peter L
Jones, Jon Owen (Cardiff C)	Plaskitt, James
Jones, Dr Lynne (Selly Oak)	Pollard, Kerry
Jones, Martyn (Clwyd S)	Pope, Greg
Kaufman, Rt Hon Gerald	Powell, Sir Raymond
Keeble, Ms Sally	Prentice, Ms Bridget (Lewisham E)
Keen, Alan (Feltham & Heston)	Prentice, Gordon (Pendle)
Keen, Ann (Brentford & Isleworth)	Prescott, Rt Hon John
Kemp, Fraser	Primarolo, Dawn
Kidney, David	Prosser, Gwyn
Kilfoyle, Peter	Purchase, Ken
King, Andy (Rugby & Kenilworth)	Quin, Rt Hon Ms Joyce
King, Ms Oona (Bethnal Green)	Rapson, Syd
Kingham, Ms Tess	Reid, Rt Hon Dr John (Hamilton N)
Ladyman, Dr Stephen	Roche, Mrs Barbara
Lawrence, Ms Jackie	Rooker, Jeff
Laxton, Bob	Rooney, Terry
Leslie, Christopher	Ross, Ernie (Dundee W)
Levitt, Tom	Roy, Frank (Dewsbury)

Ruane, Chris
Ruddock, Joan	Temple-Morris, Peter
Russell, Ms Christine (Chester)	Thomas, Gareth (Clwyd W)
Ryan, Ms Joan	Thomas, Gareth R (Harrow W)
Savidge, Malcolm	Todd, Mark
Sawford, Phil	Touhig, Don
Sedgemore, Brian	Trickett, Jon
Sheerman, Barry	Turner, Dennis (Wolverh'ton SE)
Sheldon, Rt Hon Robert	Turner, Dr Desmond (Kemptown)
Simpson, Alan (Nottingham S)	Turner, Dr George (NW Norfolk)
Singh, Marsha	Twigg, Derek (Halton)
Skinner, Dennis	Twigg, Stephen (Enfield)
Smith, Rt Hon Andrew (Oxford E)	Vaz, Keith
Smith, Angela (Basildon)	Vis, Dr Rudi
Smith, Miss Geraldine (Morecambe & Lunesdale)	Walley, Ms Joan
	Ward, Ms Claire
Smith, Jacqui (Redditch)	Wareing, Robert N
Smith, Llew (Blaenau Gwent)	Watts, David
Soley, Clive	White, Brian
Southworth, Ms Helen	Wicks, Malcolm
Squire, Ms Rachel	Williams, Alan W (E Carmarthen)
Starkey, Dr Phyllis	Winnick, David
Steinberg, Gerry	Winterton, Ms Rosie (Doncaster C)
Stevenson, George	Wood, Mike
Stewart, David (Inverness E)	Worthington, Tony
Stewart, Ian (Eccles)	Wright, Anthony D (Gt Yarmouth)
Stinchcombe, Paul	Wright, Dr Tony (Cannock)
Stoate, Dr Howard	Wyatt, Derek
Stringer, Graham
Stuart, Ms Gisela	Tellers for the Noes:
Sutcliffe, Gerry	Mr. Jim Dowd and Jane Kennedy.
Taylor, Rt Hon Mrs Ann

Question accordingly negatived.

I beg to move amendment No. 8, in page 3, line 35, at end insert

'provided that the employer has more than 9 employees'.

With this, it will be convenient to discuss the following amendments: No. 1, in page 3, line 37, after 'employers', insert

'who employ at least 21 workers'.

No. 5, in clause 17, page 8, line 30, after 'employer', insert

'shall be construed in accordance with section 6 above but excluding employers with fewer than ten employees'.

The amendment would exempt employers who employ fewer than 10 people from having to administer the working families tax credit. Thus, employees in such businesses could have their tax credit paid directly to them at home.

Businesses in this country have accumulated a huge regulatory burden. Although any regulation on its own tends to add just a small burden—20 minutes a week, an hour, a month, or a few minutes here and there—when it is added to the hundreds of regulations already on the statute book, it soon becomes clear that regulation is stifling business and strangling small businesses.

The administrative burdens that the Bill imposes on business, and the raft of regulations that are spawned by it, are an unwelcome exception to that principle because the regulations, by themselves, impose a significant burden on business. The regulatory impact assessment estimates that £103 million a year of recurrent administrative costs will be imposed on business. That is in addition to £43 million in one-off set-up costs arising from the Bill.

It is clear from the draft regulations on tax credits payment by employers how burdensome the rules are. First, employers must calculate the amount of working families tax credit or disabled persons tax credit to be paid by multiplying the daily rate, which is notified to them by the Inland Revenue, by the number of days in the period. That must then be added to the employee's net pay, after deducting PAYE and national insurance contributions. Next, the employer must enter that figure on the employee's pay slip and record it separately as an item entitled "tax credit". That must then be totalled, and a separate tax credit figure recorded on yet another form. Total tax credits paid to each employee must be entered on Inland Revenue forms P14 and P60. At the end of the tax year, another form—a P35—must be filled for all employees, including the total amount of any Inland Revenue funding for the year. Finally, the employer must produce certificates of payments for leavers.

All that places a huge extra burden on small businesses. Most of the work is carried out by the boss at the kitchen table, using up time and energy—[HON. MEMBERS: "On-message."] Absolutely on-message: kitchen-table conservatism. That uses up time and energy which should have been devoted to running and developing the business.

The amendment specifically excludes employers with fewer than 10 employees. The regulatory impact assessment says that there are 835,000 such businesses in Britain out of about 1.2 million. However, they employ only about 100,000 individuals, out of a total of 730,000 people who will eligible for working families tax credit which will be paid through the payroll. Therefore, the amendment would take out of the system just 14 per cent. of the total number of people who are eligible for working families tax credit.

The regulatory impact assessment says that employers of fewer than 10 employees will incur costs of £35 million a year, out of total costs of £103 million. That is equivalent to some 35 per cent., so exempting all businesses with fewer than 10 employees would lift a huge administrative burden from 60 per cent. of employers. Such an exemption would save 35 per cent. of the estimated costs by removing all relevant costs from the employers, yet it would mean just 14 per cent. of employees who were likely to receive working families tax credit through the payroll, would not do so.

Despite the exemption, the Government would still be able to pursue their policy—however misguided—to pay through the payroll the majority of the recipients of the working families tax credit—86 per cent. would still be eligible under our amendment—but a huge burden would be lifted from 835,000 employers, who represent some 60 per cent of all employers.

In my experience, many small businesses, particularly those trying to get started, are husband-and-wife teams. In many instances, one or other partner works for nothing to get the business going. Will not all those regulations add another burden to that business?

My hon. Friend makes? a valid point. Many Ministers do not realise that running a new business is a dangerous, difficult and risky operation. The difference between success and failure is very fine. One extra regulation, particularly the burdensome regulation of paying tax credits to employees, could be the final straw that prevents the business from getting off the ground, or sinks it into bankruptcy.

The Government seek to change the behaviour of employees and potential employees, not employers. Therefore, the fact that the amendment takes 60 per cent. of employers out of the ambit of the Bill should be a good thing, and should not be a reason for Government opposition to the amendment.

The amendment has the support to the Confederation of British Industry, which has said in a briefing that was prepared specifically for the debate:

"Payment of WFTC via the wage packet will entail additional costs for all employers but particularly for small firms who are particularly adversely affected by compliance costs. The CBI therefore supports those amendments that propose an exemption for very small firms from administering the credit."

Mr. Brian Prime of the Federation of Small Businesses has said that the working families tax credit

"would mean another administrative burden placed upon small business owners, who are already the unpaid tax collectors on behalf of Government for income tax, NICs and VAT, and who also fund such benefits as Statutory Sick Pay, Maternity Pay and redundancy pay."

That is why the federation opposes the whole Bill.

7.45 pm

Similar concerns have been raised by Taxaid, a charity which helps individuals who cannot afford an accountant to guide them through the minefield that has become our tax legislation. It is concerned that the

"implementation of an untested and unfamiliar scheme will impose considerable stresses on employers and we have serious concerns about the ability and willingness of smaller firms to deliver the new tax credits, because of the additional compliance burdens that will be imposed upon them."

The Institute of Taxation has said:

"We are concerned that overall the extra burden on employers may end up as disproportionate to the benefits gained."

Conservative Members fear how small businesses will cope with a regulation that is particularly difficult and cumbersome, and so important to their employees. As my hon. Friend the Member for Bromsgrove (Miss Kirkbride) said in Committee, most small businesses, like the small jeweller's shop in Bromsgrove, are simply unaware of the impending additional burden. When it hits them, they will be angry and for many small businesses, it will simply be the final straw.

I draw to the House's attention the deceptive way in which part of the draft regulatory impact assessment has been worded. I am grateful to Roger Cockfield, a reader in taxation at De Montfort university, for drawing that to the attention of hon. Members.

Paragraph 56 of that assessment refers to the fact that the administrative cost to employers with fewer than five employees will be £24 million. A total of 70,000 employers of that size of work force are likely to administer working families tax credit and about 70,000 employees will receive the benefit. That would work out at an average administrative cost of about £342 per year per employer. Paragraph 56, however, has averaged the £24 million over all 670,000 employers with fewer than five employees, giving an administrative cost of just £35 per employer per year.

That is just not on. Government-funded documents must not be used deliberately to mislead. I urge Ministers to amend the draft regulatory impact assessment before it is finalised. If the Government are confident that their policy on working families tax credit is right, they should not need to manipulate the evidence.

The amendment will save some 835,000 small businesses from a huge and intolerable administrative burden. It will not have an impact on the thrust of the Government's policy plans because 86 per cent. of those employees who the Government estimate will be paid working families tax credit through the payroll will continue to be so paid. Therefore, I urge the House to support the amendment.

Amendment No. 1 would exempt firms that employ fewer than 20 people from the requirement to pay the tax credit. Many of the arguments that have been eloquently expressed in favour of amendments Nos. 8 and 5, which would limit the measure to firms employing 10 or more, apply to firms with 20 or more employees. The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) made a convincing case for the modesty of his proposal. The Government could still force payroll payment on most of the employers at whom the measure is directed, with minimal impact on small firms, so I have much sympathy with his point.

How might one seek to alleviate the burdens on small businesses? There are alternative models to those proposed in the amendments. One is the statutory maternity pay route, where employers are asked to deliver cash from the state to the employee. In return, small firms are given reimbursement and a contribution towards costs.

One would have welcomed the Government's saying that the working families tax credit was exactly analogous to statutory maternity pay. The measure is a request by the state for employers to deliver cash to their employees. Therefore, employers should be compensated for doing so. We would have welcomed such a measure, but regrettably the Government have not gone down that route. I would be interested to hear from the Minister why they have rejected that approach. Because they have rejected it, we have had to look at exempting small firms.

As the hon. Member for Bognor Regis and Littlehampton has pointed out, the total administrative burden of delivering the tax credit will be £100 million. That is a £100 million bet on a hunch. The Government have a hunch that payment through the pay packet will be more effective than payment direct to recipients, but it is not just a Government bet of £100 million; it is a Government bet of £100 million of other people's money. It might almost be described as a £100 million bet on a non-runner. The Government are saying that businesses will have to find the money to back the Government's hypothesis—their social experiment, of whose success, depressingly, we have seen no evidence. Indeed, the hallmark of our debates on the Bill has been the lack of evidence to support the Government's case.

Inevitably, small firms—the subject of the amendment—will be hardest hit. Larger firms may be able to absorb the costs, but, as the regulatory impact assessment points out, firms that employ one or two people and have manual payroll systems will suffer. The Inland Revenue itself says that smaller firms are more likely to pay low wages, and are therefore disproportionately likely to be affected.

Things could get worse for small firms. If they do not pay much employer or employee national insurance or income tax in the first place, they could end up having to give their employees more in the form of working families tax credit than they take from them in tax and pay to the Government. They could be out of pocket. Moreover, it seems to me that the Chancellor's announcement in the Budget last Tuesday of a child tax credit will make matters even worse: presumably employers will have to deliver that as well, and will therefore be even more out of pocket.

Either small firms will have to sub the Government if they do not spot this coming, or they will have to plan a month early, work out that they will have to pay their employees more than they have to pay the Government and apply for a sub from the Government—which, of course, will mean extra bureaucracy. Whatever happens, they will lose the benefit that they currently gain from the PAYE income tax and national insurance that sits in their bank accounts until they have to hand it over. If they have to hand it over at the point in the month when they pay employees' salaries, they will lose interest. All that is part of the £100 million cost to which the Inland Revenue has admitted.

Clause 6 will impose costs on businesses, and will impose particularly acute costs on small businesses. The Government have not chosen the statutory maternity pay route of refunding employers for their costs, which would have been perfectly reasonable. That is why we need amendments to exempt small firms with 10 or 20 employees. I would prefer 20, but I am more than happy with 10. The Government have produced no justification for imposing such a burden on employers.

My speech will be short, but I hope Ministers will accept that it is heartfelt. I have been a small business man for nearly 25 years, and some Governments—even those whom I have supported—have not been sufficiently aware of the burdens that law-making places on small businesses.

Inevitably, the administration and employment costs of running a small business will be high. I am not talking about large businesses with personnel departments and, perhaps, professional managers; I am talking about small firms dealing with a small number of people, while also dealing with a range of problems, trying to acquire customers, trying to get the money in and trying to keep going. The most difficult bit, I think, is getting the money in. Some of the administrative burdens placed on small businesses cause a real problem, distracting those who run such businesses from the important process of doing the work, getting the money in and ensuring that they stay in business.

I have always believed that the future of this country lies in nurturing and supporting small business. If every business employing five, 10 or 15 workers could take on one or two more, our chances of lower unemployment would be immeasurably greater, and we would have a dynamic impetus in the economy. As a matter of policy, we as a country ought to do what we can to support, sustain and encourage small business. If anything, however, the Bill will increase the number of burdens that we already have in the form of the working time directive and many other European regulations. It will make it far more difficult for small businesses to remain a profitable entity, continuing to employ people, to grow and to provide services for the community.

My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) made a convincing case for the amendment, to which I listened carefully. I also listened carefully to the hon. Member for Northavon (Mr. Webb), who expressed a preference for 20 employees. I would like the figure to be even higher. I am not sure that it is fair to shift the burden from the state to private companies, and to allow those companies to cover the cost. No doubt the private companies could do it a little more efficiently, but it would involve a tremendous burden of work.

I made an important point in an intervention on my hon. Friend the Member for Bognor Regis and Littlehampton. Many people who set up small businesses are husband-and-wife teams, or partners. The business may be run by a husband or wife who may, while doing another job, have to come in and deal with the books and the administration. That imposes an extra burden—a burden, perhaps, on the marriage.

This measure will cost £103 million, which is a huge amount. It will impose a terrific burden on small businesses. It is unacceptable for a Government who are currently enjoying surpluses because of what is happening in the economy to shift the burden of state regulation on to small businesses.

The Federation of Small Businesses says that the Bill

"would mean another administrative burden placed upon small business owners".

The federation would know. Here is another view:

"The result of any new burden, combined with the impact of the minimum wage, could be to discourage companies from taking on low-skilled or semi-skilled employees … It is not the job of employers to administer the benefits system".

That is what was said by Tim Melville-Ross, director general of the Institute of Directors, and reported in the Financial Times on 14 January 1998.

"I wonder whether government advisers have any real concept of what it is like to run a small business. It's a recipe for disaster".

That was said by Michael Snyder of Kingston Smith management consultants, and quoted in The Sunday Telegraph on 25 January. 1998.

Those people run businesses. They know business. A Government who are supposed to be business friendly ought to take their advice. I hope that the Government will consider the amendment very carefully.

"From a purely business standpoint there are major administrative concerns about the complexity of the administration, especially if, in order to pay the credit, employers have to inquire into employees' family circumstances in much more detail than is needed today. This will be especially burdensome for small firms".

That was said by the CBI, and reported in the Financial Times on 14 January 1998.

I have run a small business, and I know that those who run such businesses have a close relationship with those who work with them. They are employees, but many are also friends. Inquiring into their personal background is difficult: it changes the relationship. I do not want employers whose businesses have five, seven or 10 employees to have to sit outside people's homes to see who they are sleeping with, but the Bill may well mean that. I do not think that such matters are the legitimate concern of employers. They might be a legitimate concern if they conferred a benefit, but small business men should not have to take on that task when they should be going out to find custom, ensuring that the money comes in, keeping the business going and creating wealth.

I sympathise with what the hon. Gentleman is saying. A moment ago, we discussed privacy. Does that not apply in spades to small businesses? The Minister has said that privacy is not a problem, because employers are under a common-law duty of secrecy which prevents them from telling everyone else in the firm certain facts, but, in small firms, the employer is everyone else in the firm, and the employer will know. Is that not undesirable?

It is a slippery slope. There must be a proper relationship between employer and employee. Some years ago, if an employer had started asking whom his employees were sleeping with, he would have been told to mind his own business. I thought that we had left behind the old days when landowners lorded it over the people and told them how to live their lives. I do not want employers to be peeking into their employees' bedrooms. Ministers may laugh, but this is a serious point. I think that the amendments would improve the relationship between small businesses and the dynamics that are so important to our economy.

8 pm

At the end of his speech, the hon. Member for Poole (Mr. Syms) had the good grace to laugh himself—because his comments were plainly ridiculous. It would be a different matter if the previous Government, whom I am sure he would have supported, had not landed regulation upon regulation on small businesses. Opposition Members failed also—because of a fundamental misunderstanding of the advantages of employer payment of tax credits—to recognise the provision's positive aspects for small business.

I should give a little credit to the hon. Member for Brentwood and Ongar (Mr. Pickles). Just a few weeks ago, in our debates on the Bill in Committee, he came up with the phrase "the kitchen table". Clearly, the Leader of the Opposition listened to him and developed a new policy. It was all due to the hon. Gentleman, and my hon. Friends and I were there when it happened.

The Government firmly believe that payment of tax credits by employers—which, from April 2000, will be the predominant method of delivering tax credits—will unambiguously demonstrate to employees that tax credits are a reward for work. Businesses themselves—small, large and medium-sized businesses—will have the advantage not only of reinforcing that fact, but of adding to the loyalty that employees feel towards a firm, thereby aiding productivity.

Showing credits on the pay slip, as an increase in net take-home pay, will emphasise the place of tax credits in the tax system, thereby helping to break any perceived link with benefits and to reduce the stigma of claiming in-work support. My hon. Friend the Paymaster General quite rightly referred to the academic work on the subject.

For those reasons, we should not be looking for ways of excluding large numbers of employers from the scheme—as this group of amendments would do—and thereby depriving many thousands of employees of their right to receive their tax credits through the payroll.

About 925,000 employers—more than 80 per cent. of all employers—employ fewer than 21 people. Excluding them would be wholly inconsistent with our objectives. Excluding employers with fewer than 10 employees would not be much better, as 825,000 employers—about 70 per cent. of the total—would be outside the scheme.

I mention the precedent of statutory maternity pay. A previous Government said, "We shall ask employers to handle the administrative burden of paying money from the state to the employee. However, as it is a cost on them, we shall reimburse them for that cost and for the statutory maternity pay itself." Why do the Government reject reimbursement in the one case but not in the other?

I understand the hon. Gentleman's point. Although I do not blame him for making it, it is exactly the same one that he made in Committee. The difference is that maternity pay is a benefit, and this is a tax credit, which is being made using a different system. I think that his question exposes the fundamental political and philosophical differences between the attitude of the Liberal Democrats and that of Labour Members.

indicated assent.

He agrees.

Will the Minister, having read the Committee proceedings, again confirm that the Government recognise that, with the Bill's passage, they will be placing another burden on small businesses?

If one considers everything that the Government are doing to help small businesses—in the Budget, by establishing the Small Business Service and setting the lowest-ever corporation tax levels, with our better regulation task force and unit, and in the positive help that will be provided in the Bill's provisions—one cannot accept the hon. Gentleman's comment.

I wonder whether Opposition Members have thought through the practical difficulties of implementing their amendment No. 8 or any other provision that would exempt employers by reference to their number of employees.

In making assessments for tax credits and deciding whether payment through the payroll is appropriate in a specific case, the Inland Revenue will have to rely on information given on the application form. The only other possible source of information is the annual returns provided by employers who operate the PAYE scheme. It would not be a simple matter to identify from an employee's application form the total number of employees working for the same employer, and trying to do so would cause real difficulty—possibly causing delay for applicants and requiring further involvement by employers. Therefore, all the burdens described by Opposition Members would increase if their amendment were passed. In all doubtful cases, the Revenue would have to check the facts with employers.

As we have repeatedly stressed in debates on the Bill, we are committed to keeping to an absolute minimum any additional burdens on employers. With that mind, we have given careful thought to the position of employers who do not deduct PAYE or national insurance contributions from the wages they pay because none of their employees earns above the threshold for national insurance contribution. Those employers currently have no dealings with the Inland Revenue in their role as employers. Without an exemption, they would be brought into the Revenue's employer database, simply because they have an employee who receives tax credit. As they have no PAYE tax or national insurance contributions out of which to pay tax credits, they will always have to be funded by the Inland Revenue—in many cases, on a weekly basis.

For all those reasons, we have decided that employers who do not deduct PAYE tax or national insurance contributions from the pay of any of their employees will be exempt from paying tax credit through the payroll. The exemption will remove from the scheme about 80,000 employers. That is absolutely targeted action. I hope that that answers the question of the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith)—or is he right hon.?

indicated dissent.

I am always anxious to assist the promotion prospects of Opposition Members—[Interruption.] No, I should not go as far as that; just wait and see.

The provision is clear, targeted and makes absolutely good sense. The exemption is also clearly stated in published regulations.

I am sure that the hon. Members who tabled this group of amendments are genuinely concerned about the matter. However, they have not mentioned all the steps that the Government are taking to design a scheme that is as employer friendly as possible—which is why we have been consulting, and continue to consult, representatives of employers and payroll software suppliers, many of whom have provided valuable contributions to designing the scheme. I am very grateful to all those employers organisations who have assisted us in the matter.

We have also started an education programme for all employers that will operate both before and after April 2000. We shall pay very close attention to providing information. The plan is that employers' information packs will be issued next January and will include detailed tax credit examples, showing employers exactly what they have to do.

I am glad to see that Opposition Members are paying attention to the important information that I am giving them. [HoN. MEMBERS: "We are."] I just wanted to ensure that they were still with us.

The Revenue is planning, from July 1999, to hold seminars for employers, which will be backed up by trade press advertisements and feature link promotions in the regional press. I would have thought that Conservative Members would be interested in measures for business. They claim to support business, but their conduct this evening shows why they lost the small business vote at the general election.

The amendments clearly do not make sense and I urge my hon. Friends to reject them.

The hon. Lady has just accepted that 70,000 employers with employees who are paid less than the national insurance threshold can easily be taken out of the system. She accepts that the system will be a burden for them. Why will she not extend the exemption to all employers who employ fewer than 10 employees? If she can do it for one group, why not for the other?

The hon. Gentleman clearly has not read all the material properly. If he had, he would understand. How could the tax credits system be implemented without a PAYE system through which it could operate?

The hon. Lady is right to exempt those 70,000 employers from the system, because it would be an intolerable burden on them. It will also be an intolerable burden on the 630,000 employers who employ fewer than 10 employees. She has just admitted that. She has talked about the proportion of businesses that would be taken out of the working families tax credit system if our amendment was accepted—70 per cent. if the threshold was 10 employees. That is a plus point, because the purpose of the Bill is not to change the behaviour of employers, but, in her words, to change the behaviour of employees. The amendment would take only 14 per cent. of eligible employees out of the system, leaving 86 per cent.

In view of the hon. Lady's inadequate answer, I shall press the amendment to a vote.

Question put, That the amendment be made:—

The House divided: Ayes 150, Noes 291.

Division No. 115]	[8.12 pm
AYES
Allan, Richard	Clark, Dr Michael (Rayleigh)
Ancram, Rt Hon Michael	Clifton—Brown, Geoffrey
Arbuthnot, Rt Hon James	Colvin, Michael
Ashdown, Rt Hon Paddy	Cormack, Sir Patrick
Atkinson, David (Bour'mth E)	Cotter, Brian
Baker, Norman	Cran, James
Ballard, Jackie	Curry, Rt Hon David
Beggs, Roy	Davis, Rt Hon David (Haltemprice & Howden)
Bercow, John
Beresford, Sir Paul	Day, Stephen
Body, Sir Richard	Donaldson, Jeffrey
Boswell, Tim	Dorrell, Rt Hon Stephen
Bottomley, Rt Hon Mrs Virginia	Duncan Smith, Iain
Brake, Tom	Evans, Nigel
Breed, Colin	Faber, David
Brooke, Rt Hon Peter	Fabricant, Michael
Browning, Mrs Angela	Fallon, Michael
Bruce, Ian (S Dorset)	Fearn, Ronnie
Burnett, John	Forth, Rt Hon Eric
Burns, Simon	Foster, Don (Bath)
Burstow, Paul	Fowler, Rt Hon Sir Norman
Butterfill, John	Fox, Dr Liam
Cash, William	Fraser, Christopher
Chapman, Sir Sydney (Chipping Barnet)	Garnier, Edward
	George, Andrew (St Ives)
Chidgey, David	Gibb, Nick
Chope, Christopher	Gill, Christopher

Gorman, Mrs Teresa	Öpik, Lembit
Gorrie, Donald	Page, Richard
Gray, James	Paice, James
Greenway, John	Paterson, Owen
Grieve, Dominic	Pickles, Eric
Hamilton, Rt Hon Sir Archie	Randall, John
Hammond, Philip	Redwood, Rt Hon John
Harris, Dr Evan	Rendel, David
Hayes, John	Robathan, Andrew
Heald, Oliver	Robertson, Laurence (Tewk'b'ry)
Heathcoat—Amory, Rt Hon David	Roe, Mrs Marion (Broxbourne)
Horam, John	Rowe, Andrew (Faversham)
Howard, Rt Hon Michael	Ruffley, David
Howarth, Gerald (Aldershot)	Russell, Bob (Colchester)
Hughes, Simon (Southwark N)	St Aubyn, Nick
Hunter, Andrew	Sanders, Adrian
Jack, Rt Hon Michael	Sayeed, Jonathan
Jackson, Robert (Wantage)	Shephard, Rt Hon Mrs Gillian
Jenkin, Bernard	Smith, Sir Robert (W Ab'd'ns)
Johnson Smith, Rt Hon Sir Geoffrey	Smyth, Rev Martin (Belfast S)
	Spelman, Mrs Caroline
Keetch, Paul	Spicer, Sir Michael
Key, Robert	Steen, Anthony
Kirkbride, Miss Julie	Streeter, Gary
Kirkwood, Archy	Swayne, Desmond
Lait, Mrs Jacqui	Syms, Robert
Lansley, Andrew	Tapsell, Sir Peter
Leigh, Edward	Taylor, Ian (Esher & Walton)
Letwin, Oliver	Taylor, Rt Hon John D (Strangford)
Lewis, Dr Julian (New Forest E)	Taylor, John M (Solihull)
Lidington, David	Taylor, Sir Teddy
Lilley, Rt Hon Peter	Tonge, Dr Jenny
	Tredinnick, David
Lloyd, Rt Hon Sir Peter (Fareham)	Trend, Michael
Loughton, Tim	Tyler, Paul
Luff, Peter	Tyrie, Andrew
Lyell, Rt Hon Sir Nicholas	Wallace, James
MacGregor, Rt Hon John	Wardle, Charles
McIntosh, Miss Anne	Waterson, Nigel
McLoughlin, Patrick	Webb, Steve
Madel, Sir David	Whitney, Sir Raymond
Maginnis, Ken	Whittingdale, John
Malins, Humfrey	Wilkinson, John
Maples, John	Willetts, David
Maude, Rt Hon Francis	Willis, Phil
Mawhinney, Rt Hon Sir Brian	Winterton, Mrs Ann (Congleton)
May, Mrs Theresa	Woodward, Shaun
Michie, Mrs Ray (Argyll & Bute)	Young, Rt Hon Sir George
Moore, Michael
Moss, Malcolm	Tellers for the Ayes:
Norman, Archie	Mrs. Eleanor Laing and Mr. Tim Collins.
Oaten, Mark
NOES
Abbott, Ms Diane	Berry, Roger
Adams, Mrs Irene (Paisley N)	Best, Harold
Ainger, Nick	Betts, Clive
Ainsworth, Robert (Cov'try NE)	Blackman, Liz
Allen, Graham	Blears, Ms Hazel
Armstrong, Ms Hilary	Blizzard, Bob
Ashton, Joe	Borrow, David
Atherton, Ms Candy	Bradley, Keith (Withington)
Atkins, Charlotte	Bradley, Peter (The Wrekin)
Austin, John	Bradshaw, Ben
Barnes, Harry	Brinton, Mrs Helen
Barron, Kevin	Brown, Rt Hon Nick (Newcastle E)
Battle, John	Brown, Russell (Dumfries)
Bayley, Hugh	Browne, Desmond
Beard, Nigel	Buck, Ms Karen
Beckett, Rt Hon Mrs Margaret	Burgon, Colin
Begg, Miss Anne	Butler, Mrs Christine
Bell, Stuart (Middlesbrough)	Caborn, Richard
Benn, Rt Hon Tony	Campbell, Alan (Tynemouth)
Bennett, Andrew F	Campbell, Mrs Anne (C'bridge)
Benton, Joe	Campbell, Ronnie (Blyth V)
Bermingham, Gerald	Canavan, Dennis

Caplin, Ivor	Henderson, Ivan (Harwich)
Casale, Roger	Hepburn, Stephen
Caton, Martin	Heppell, John
Chapman, Ben (Wirral S)	Hewitt, Ms Patricia
Chaytor, David	Hill, Keith
Chisholm, Malcolm	Hoey, Kate
Clapham, Michael	Home Robertson, John
Clark, Rt Hon Dr David (S Shields)	Hoon, Geoffrey
Clark, Dr Lynda (Edinburgh Pentlands)	Hope, Phil
	Hopkins, Kelvin
Clark, Paul (Gillingham)	Hoyle, Lindsay
Clarke, Charles (Norwich S)	Hughes, Kevin (Doncaster N)
Clarke, Rt Hon Tom (Coatbridge)	Humble, Mrs Joan
Clarke, Tony (Northampton S)	Hurst, Alan
Clelland, David	Hutton, John
Clwyd, Ann	Iddon, Dr Brian
Coaker, Vernon	Jackson, Ms Glenda (Hampstead)
Coffey, Ms Ann	Jackson, Helen (Hillsborough)
Coleman, Iain	Jamieson, David
Connarty, Michael	Jenkins, Brian
Cook, Frank (Stockton N)	Johnson, Alan (Hull W & Hessle)
Cooper, Yvette	Johnson, Miss Melanie(Welwyn Hatfield)
Corbett, Robin
Corston, Ms Jean	Jones, Helen (Warrington N)
Cousins, Jim	Jones, Jon Owen (Cardiff C)
Cox, Tom	Jones, Dr Lynne (Selly Oak)
Cranston, Ross	Jones, Martyn (Clwyd S)
Crausby, David	Keeble, Ms Sally
Cryer, Mrs Ann (Keighley)	Keen, Alan (Feltham & Heston)
Cummings, John	Keen, Ann (Brentford & Isleworth)
Cunliffe, Lawrence	Kemp, Fraser
Cunningham, Jim (Cov'try S)	Kidney, David
Dalyell, Tam	Kilfoyle, Peter
Darling, Rt Hon Alistair	King, Andy (Rugby & Kenilworth)
Darvill, Keith	King, Ms Oona (Bethnal Green)
Davies, Rt Hon Denzil (Llanelli)	Kingham, Ms Tess
Davis, Terry (B'ham Hodge H)	Ladyman, Dr Stephen
Dawson, Hilton	Lawrence, Ms Jackie
Dean, Mrs Janet	Laxton, Bob
Denham, John	Leslie, Christopher
Dismore, Andrew	Levitt, Tom
Dobbin, Jim	Lewis, Terry (Worsley)
Donohoe, Brian H	Linton, Martin
Doran, Frank	Lloyd, Tony (Manchester C)
Eagle, Angela (Wallasey)	Lock, David
Edwards, Huw	Love, Andrew
Efford, Clive	McAllion, John
Ellman, Mrs Louise	McAvoy, Thomas
Ennis, Jeff	McCabe, Steve
Etherington, Bill	McCafferty, Ms Chris
Ewing, Mrs Margaret	McDonagh, Siobhain
Fisher, Mark	Macdonald, Calum
Fitzpatrick, Jim	McDonnell, John
Fitzsimons, Lorna	McFall, John
Flint, Caroline	McGuire, Mrs Anne
Flynn, Paul	McIsaac, Shona
Follett, Barbara	McKenna, Mrs Rosemary
Foster, Rt Hon Derek	McNamara, Kevin
Foster, Michael Jabez (Hastings)	McNulty, Tony
Foster, Michael J (Worcester)	MacShane, Denis
Foulkes, George	Mactaggart, Fiona
Fyfe, Maria	McWalter, Tony
Galloway, George	Mahon, Mrs Alice
Gerrard, Neil	Mallaber, Judy
Gibson, Dr Ian	Marsden, Gordon (Blackpool S)
Gilroy, Mrs Linda	Marsden, Paul (Shrewsbury)
Goggins, Paul	Marshall, David (Shettleston)
Golding, Mrs Llin	Marshall, Jim (Leicester S)
Griffiths, Jane (Reading E)	Martlew, Eric
Griffiths, Nigel (Edinburgh S)	Maxton, John
Griffiths, Win (Bridgend)	Merron, Gillian
Grocott, Bruce	Michie, Bill (Shef'ld Heeley)
Grogan, John	Moonie, Dr Lewis
Hall, Patrick (Bedford)	Moran, Ms Margaret
Hanson, David	Morgan, Alasdair (Galloway)
Healey, John	Morgan, Ms Julie (Cardiff N)

Morgan, Rhodri (Cardiff W)	Smith, Angela (Basildon)
Morley, Elliot	Smith, Miss Geraldine(Morecambe & Lunesdale)
Morris, Ms Estelle (B'ham Yardley)
Mountford, Kali	Smith, Jacqui (Redditch)
Mullin, Chris	Smith, Llew (Blaenau Gwent)
Murphy, Denis (Wansbeck)	Soley, Clive
Murphy, Jim (Eastwood)	Southworth, Ms Helen
Murphy, Rt Hon Paul (Torfaen)	Squire, Ms Rachel
Norris, Dan	Starkey, Dr Phyllis
O'Brien, Bill (Normanton)	Steinberg, Gerry
O'Brien, Mike (N Warks)	Stevenson, George
O'Hara, Eddie	Stewart, David (Inverness E)
Olner, Bill	Stewart, Ian (Eccles)
O'Neill, Martin	Stinchcombe, Paul
Organ, Mrs Diana	Stoate, Dr Howard
Osborne, Ms Sandra	Stott, Roger
Palmer, Dr Nick	Stringer, Graham
Pearson, Ian	Stuart, Ms Gisela
Pickthall, Colin	Sutcliffe, Gerry
Pike, Peter L	Taylor, Rt Hon Mrs Ann(Dewsbury)
Plaskitt, James
Pollard, Kerry	Temple—Morris, Peter
Pond, Chris	Thomas, Gareth (Clwyd W)
Pope, Greg	Thomas, Gareth R (Harrow W)
Powell, Sir Raymond	Todd, Mark
Prentice, Ms Bridget (Lewisham E)	Touhig, Don
Prentice, Gordon (Pendle)	Trickett, Jon
Prescott, Rt Hon John	Turner, Dennis (Wolverh'ton SE)
Primarolo, Dawn	Turner, Dr Desmond (Kemptown)
Prosser, Gwyn	Turner, Dr George NW Norfolk
Purchase, Ken	Twigg, Derek Halton
Quin, Rt Hon Ms Joyce	Vaz, Keith
Rapson, Syd	Vis, Dr Rudi
Raynsford, Nick	Walley, Ms Joan
Reid, Rt Hon Dr John (Hamilton N)	Ward, Ms Clarie
Roche, Mrs Barbara	Wareing, Robert N
Rooney, Terry	Watts, David
Ross, Ernie (Dundee W)	White Brian
Roy Frank	Wicks, Malcolm
Ruane, Chris	Williams, Alan W (E Carmarthen)
Ruddock, Joan	Winnick, David
Russell, Ms Christine (Chester)	Winterton, Ms Rosie (Doncaster C)
Ryan, Ms Joan	Wood Mike
Savidge, Malcolm	Worthington, Tony
Sawford, Phil	Wright, Anthony D (Gt Yormouth)
Sheerman, Barry	Wright, Dr Tony (Cannock)
Sheldon, Rt Hon Robert	Wyatt, Derek
Simpson, Alan (Nottingham S)
Singh, Marsha	Tellers for the Noes:
Skinner, Dennis	Jane Kennedy and Mr. Jim Dowd.
Smith, Rt Hon Andrew (Oxford E)

Question accordingly negatived.

Clause 16

Financial Provisions

Amendment made: No. 14. in page 8, line 17, after 'Board', insert

'or the Secretary of State',—[Dawn Primarolo.]

Schedule 2

Transfer Of Functions

Amendments made: No.11, in page 16, line 26, leave out 'Paragraphs (a) and (b)' and insert

'sub-paragraphs (i) and (ii) of paragraph (a)'.

No. 12, in page 16, leave out lines 29 and 30.— [Dawn Primarolo]

Schedule 6

Repeals

Amendment made: No. 13, in page 26, line 12, leave out '165(1)(a)(i) and (b)' and insert '165(1)(a)(i) and (ii)'. — [Dawn Primarolo]

Order for Third Reading read.

I must remind the House that Madam Speaker has selected the reasoned amendment in the name of the leader of the Liberal Democrat party.

8.26 pm

I beg to move, That the Bill be now read the Third time.

I am pleased to open this debate on the Bill. I rise with some trepidation, in that my hon. Friend the Financial Secretary to the Treasury and the hon. Member for Brentwood and Ongar (Mr. Pickles) have managed to refer in their speeches to films, television programmes and to Shakespeare. I wait with bated breath to see what the hon. Gentleman will come up with in this debate.

We have had very interesting—and I think, on the whole, constructive—debates, both on Second Reading and in Committee. It was a wide-ranging discussion, covering a variety of issues of concern and interest to hon. Members. No doubt many of those points will be revisited during this debate.

Since those debates, the Chancellor has delivered his Budget statement, which builds on the foundations that the Bill puts in place. My right hon. Friend announced an increase in the value of the basic tax credit of £2.50 per week, and an increase in child tax credit of £4.70 from October, and another £1.10 from April 2000; a new fast-track gateway to the disabled persons tax credit from October 2000 to help people who become long-term sick or disabled while working to retain their jobs; and a new income support run-on for lone parents moving into work. Payments for lone parents will continue for the first two weeks at the out-of-work rate to help people bridge the difficult period when they first go back to work.

In the calculation of the figures that she has just quoted about the difference between being in work and out of work, has the hon. Lady assumed whether people have to drive to work?

There is no calculation for people receiving benefits anywhere in the tax system in respect of travel to work—however short or far the distance. I am sure that the hon. Gentleman is conversant with how the tax system deals with him as a Member of Parliament, and he will know that that cost is not tax-deductible.

From October 1999, the working families tax credit will provide a minimum income guarantee for families with a full-time earner of £200 per week—up from £190 per week—which is over £10,000 per year. It will mean that no family with children will pay net income tax until their earnings exceed £235 a week, or more than £12,000 a year. On average, the working families tax credit will give families an extra £24 a week, or £1,248 a year, as compared with family credit.

It may be helpful to all present if I describe formally what the Bill does. In doing so, I will be able to explain how the various concerns have been met. There are three major planks to the Bill: the conversion of family credit and disability working allowance to tax credits; the administration of the tax credits by the Inland Revenue; and the payment of the tax credits through the pay packet. Those three planks establish the fundamental policy and objectives of the introduction of the tax credits. As tax credits, within the tax system, administered by the Inland Revenue and paid through the pay packet, they will clearly demonstrate the rewards of work.

As I have already explained in earlier debates, the tax credits build on and replace two existing benefits: family credit and disability working allowance. To achieve that in the most efficient way, the Bill builds on existing social security legislation. It does that by providing that the main features of family credit and disability working allowance will apply to working families tax credit and disabled persons tax credit. The functions and responsibilities affecting the benefits being replaced will be transferred to the Inland Revenue and the Treasury.

Much of the detail of the existing system is in secondary legislation, which has been a point of contention for Opposition Members.

This may be a convenient point at which to ask a relatively technical and non-controversial question. The Paymaster General says that the credits have the principal characteristics of the benefits to be replaced. There is concern among disabled groups that no guarantee has yet been given that certain benefits—in particular, prescriptions, dentistry and eye tests—that were previously triggered by disability working allowance will be transferred to the disabled persons tax credit. Will they be passported across?

Discussions are still taking place about prescriptions, and the matter will need to be followed up. We are aware of the concerns that have been expressed.

There were some regulation-making powers associated with family credit, and we have followed that up in the working families tax credit. The Inland Revenue has published all the major regulations in draft, including those setting out the broad structure of the working families tax credit and how it is made up, with the important addition of the new child care tax credit.

The Inland Revenue has also published the regulations giving the details of payment through the wage packet. The full details of the scheme are available and can be clearly seen. I fully appreciate that some Opposition Members have fundamental disagreements with the principles in the regulations, but the details are there. Indeed, many organisations representing business and payroll managers, and individuals have already provided input and comment to the Inland Revenue as we developed the scheme, and consultation continues. The Inland Revenue also intends shortly to publish revised drafts of the regulations for comment, to give any interested parties who have not yet commented the opportunity to do so.

I have already highlighted the improvements announced by my right hon. Friend the Chancellor last week. Let me remind the House of those improvements already announced for working families tax credit. The new child care tax credit will give extra help with child care costs. Earlier today, we added new clause 5 to extend the range of child care for which help can be given, which will increase the affordability of child care and help to promote good-quality child care for eight to 14-year-olds, in line with our national child care strategy.

There will be a full disregard of maintenance payments in the calculation of income for working families tax credit. That is a significant contribution to tackling child poverty, as maintenance payments will be able to be used directly for the children. I know that the hon. Member for Northavon (Mr. Webb) welcomed that in Committee.

As we all know, the tax credits will be part of the tax system administered by the Revenue. The staff currently employed by the Benefits Agency dealing with family credit and disability working allowance will transfer to the Inland Revenue, building on their experience and expertise. The hon. Member for Gainsborough (Mr. Leigh), who visited the family credit unit in Preston, commented earlier today on the excellent standards and diligence of the staff. They are the people who will continue to administer the credit.

The Bill provides for those members of staff to become fully integrated into the Inland Revenue, and in particular to be subject to the same strict confidentiality rules that apply in the rest of the organisation. That is an important provision to protect the information.

From April 2000, the tax credits will normally be paid through the pay packet. That is a fundamental part of the tax credits system. I understand that Opposition Members reject that principle, but it is fundamental to the Government's strategy. The Bill contains the regulation-making powers to establish that part of the scheme.

We had numerous discussions in Committee on this part of the scheme, some of which were repeated on Report, and it became very clear that the Opposition did not fully understand it. I would like to take this opportunity to try to allay some of their fears and perhaps—dare I say it?—put right some of their misunderstandings.

Couples will be able to choose which of them receives the tax credit. I have tried to put that delicately so that I will not be accused of anything. It is important to remember that, in the majority of cases, purse to wallet transfers are not even an issue, because of the profile of those who claim family credit and who will form the majority of those who claim the working families tax credit. Some 50 per cent. of current family credit claimants are lone parents in any case, and of the other 50 per cent., 23 per cent. have a female main earner. It is clear that the money will continue to go to them and, in other cases, couples will be able to choose.

Employers will not have to assess working families tax credit awards. Time and again, Opposition Members have talked of the burden on businesses and the need for them to calculate the payments, but I hope that it is now accepted that the Inland Revenue will do that and inform employers how much to pay, when to start payment and when to stop.

Employers will be given only the information they need in order to pay the tax credit to the right person. The Inland Revenue will step in to pay the tax credit when a job comes to an end or there is a breakdown in the arrangement. The first priority—as hon. Members would expect—is to get the tax credit to the employee on time. The Bill provides powers to ensure that that happens.

During our debates, hon. Members have expressed some concern about fraud and its history in the payment of family credit. We are determined—as the House would expect—to fight fraud in the payment of the working families tax credit and to ensure that it does not develop. That is why we have included in the Bill several provisions that make up a package to deter fraud and encourage compliance. Those substantial measures include information powers to allow the Revenue to obtain the information it needs to verify claims. That power is not available for the payment of family credit, but it will apply to the new credit. Also included are powers to recover overpayments through the tax system directly and penalties to deter non-compliance and fraud. That package will help to secure the system, and will make it clear that applications for tax credits, and the operation of payments through the pay packet, must be carried out honestly, to ensure that the right amount of tax credit goes to the right people. The concerns expressed in reports by the Social Security Committee have been of great assistance to us and we have built on the experience of the family credit unit.

The working families tax credit is targeted at families with children, and on low to moderate earnings, for whom the unemployment and poverty traps are especially severe. We owe it to them to provide a system that genuinely helps them and they can trust. I am sure that given the concern expressed by Opposition Members about fraud, they will support those measures. The Inland Revenue will consult on a code of practice that will describe how it intends to use those powers, so that there are no mistakes by employers.

It is worth also reminding the House that all the penalties in the Bill can be appealed against to an independent tribunal. Appeals about tax credit claims will be heard by new unified appeal tribunals set up under the Social Security Act 1998. That is because those tribunals will have the experience to deal with the type of cases that will come to them. Applicants are likely to be more familiar with that process.

Appeals against a penalty charged in connection with an employer's obligations will be heard by the tax appeal commissioners. That is because employers' obligations in relation to tax credits are very similar to their obligations to operate the pay-as-you-earn scheme and appeals on those penalties are already heard by the tax appeal commissioners. In the long term, as the new tax credits evolve, we intend to pass jurisdiction on appeals on decisions on entitlement or award of tax credits to the tax commissioners so that they will hear all appeals on tax credits.

The Bill is a significant demonstration of the Government's real commitment to supporting families by making sure that work pays and encouraging people to move from welfare into work. That will not be compulsory, but the Bill will ensure that those who want to work will be better off in work and will be supported in their efforts. It shows that we do indeed believe that the value and dignity of work are all important, and that we are prepared to do something about it. Anybody who has had conversations with lone parents will know that many of them want to work, but find that the barriers of child care or the poverty trap mean that they are no better off in work.

Will the Minister help me on one point? She accepts that there will be a great administrative burden on businesses, particularly small businesses. Is there any way in which the Government could provide an exemption for very small businesses?

We had the debate on exemptions for small businesses earlier, and I do not intend to go over it again. We did not accept the idea outlined by the hon. Lady, and my hon. Friend the Financial Secretary made it clear that small businesses that do not collect on the PAYE system or collect NICs would not have to pay the tax credit. It is obvious that businesses that do not collect any money cannot deduct the tax credit in order to pay it to their employees.

When the hon. Lady has read Hansard, I shall be happy to write to her on any further points that she may wish to take up with me. I shall write back as quickly as I can, subject to the thousands of letters that I receive.

Working families tax credit delivers the promise that the Chancellor made to working families and to disabled people in the Budget of 1998. We are improving work incentives still further by increasing support for working families through the Budget measures that the Chancellor announced last week. The benefits, particularly to working parents, of access to a child care tax credit will ensure that many more parents are able to have quality child care and to receive support towards paying for it. I commend the Bill to the House.

8.47 pm

The Minister said that the Bill was built on the foundation laid by the Chancellor's move towards tax credits in the previous two Budgets. I have to agree with her. The Bill increases dependency, spreads income further down the economic scale and ensures that the lower paid will have to pay more.

My hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) has made the good point that people on lower incomes will have to shell out because they happen to own a car. In rural areas, cars are the only practical means that low-paid workers have of getting to work, and they will have to find an extra £183 a year so that they can go to work. The Minister suggested that the point is not relevant, and that that amount cannot be claimed in tax or benefit. In fact, my hon. Friend's point was precisely that: the Government give with one hand and take away with the other.

There was a perfect illustration of that point earlier. Does my hon. Friend recall that we are supposed to be grateful because people in rural areas will receive £20 million in rural transport initiatives, but the total taken from rural areas in increased petrol duties will be £1 billion?

I was not aware of that figure, but I know that my hon. Friend takes a close interest in the matter. Perhaps he will consider this point: there has been much moving around of the standard rates of income tax, but the increase in the fuel escalator, which directly affects people on low incomes, is worth slightly more than 1p on the standard rate. The Budget was merely about moving taxation around.

I am going to agree with the Paymaster General again.

Hey, wait a minute!

No, I must. The measure takes on the main features of family credit and disability working allowance—and makes them worse. It takes all the worst features and adds to them. The hon. Lady gave a pretty clear indication of that when I intervened. I thought that by now the issue would be non-controversial and that we would have had a view about passporting benefits. We are about to send the Bill to another place. Without the passports, people who are receiving family credit will be materially worse off under the new system. Unless their lordships know that, I cannot understand how they can come to a reasonable decision.

The Paymaster General says that the regulations are available—she says that she has produced them. That is true—we have had reams of them on a take it or leave it basis. My hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb) went without sleep two nights running to go through the regulations so that we would be on line with working the issues out. A new clause has been produced today, with no regulations. There is a promise of regulations to come: they will be in another place when the matter is considered there. Here we are, the people's representatives, trying to reach a reasonable decision when the details are in the regulations and the House has not even been shown the courtesy of being given the most cursory glance at those before this most important legislation is read the Third time.

The hon. Lady makes great play of the increase in the child care cost. She says that that will tackle child poverty, yet we have still not had answers to the basic question of how much is in the kitty for child care. When you can consult Hansard tomorrow, Mr. Deputy Speaker, you will notice the repeated attempts to find out exactly how much the child care element will be and the Government's repeated stonewalling, to prevent us from knowing that sum.

We have presented some conclusive arguments and evidence to suggest that, while we agree that the Institute for Fiscal Studies may be a little way out in its suggestion that the cost will be £4 billion, it is not that far out. Probably, the cost will be nearer £3 billion, but even if that estimate is wrong, it will certainly not be less than £2 billion. If that is the case, it will be £2.5 billion more than the Government have allowed for in the Bill. That additional sum of money—the £1.5 billion—will disappear in an escalation of the child care tax element, which will be available further up the income scale. We understand that people earning as much as £37,000 will be entitled to receive that element.

Before the hon. Lady reached her final peroration, we heard her say that payment through the pay system is fundamental—she used slightly sweeter words when we were discussing the matter a few moments ago on Report. That will involve a fundamental shift of resources from women to men. At the moment, the majority of such payments are made to women, but the Bill will result in a substantial shift towards men.

The hon. Member for Northavon (Mr. Webb), said on Second Reading—I am sure that we will have the opportunity of hearing his wise words in a moment—that roughly 300,000 couples receive family credit, where the man is the principal breadwinner.

indicated assent.

Under WFTC, that will mean that £900 million will be going to men rather than women, which is a fundamental shift.

We know from all the surveys and studies that if the money goes to the woman, there is a greater chance of its being spent on child care than if it goes to the man, because then it will merely be subsumed into family income. Some people might say that we are implying that the money will be spent on cigarettes, alcohol, lottery tickets and the like.

:Good.

We have just heard a most interesting intervention from the duty Whip, and I am sure that you, Mr. Deputy Speaker, heard the hon. Gentleman say, "Good." There is lots of tax paid on those items, after all.

He is the Government Whip.

I do not know what is happening—Whips are supposed to be silent, but they are breaking that silence. My hon. Friend is absolutely right.

Both the Bill and the Chancellor's Budget mean that we shall be paying people working families tax credit so that they can pay tax. Under the Chancellor's system, people will not be spending the money on their families, or on lottery tickets as the Government Whip wants them to, but on paying extra taxes. If the Chancellor really wants to do something to help families on lower incomes, he should simply take them out of tax altogether.

The Paymaster General spoke about fraud and how she would deal with it. It is only reasonable that we should judge the Government on their record; unfortunately, the Government's record on fraud since coming to office is abysmal. Across the board, the Government are winding down their benefit fraud prevention operations. The London organised fraud investigation team was mysteriously shut down in October for six weeks, despite having increased its success rate month on month. During that period, all operations were suspended and evidence pertaining to pending cases was corrupted, thus threatening the successful prosecution of those cases. The team is now to be wound up by the end of this month.

In September 1998, local authority fraud investigation units received internal Department of Social Security memorandum F12/98, which has the effect of making it much harder for local authorities to begin proceedings against fraudsters. It is no longer worth their while to make the attempt. The money lost to fraud being recouped has fallen by up to 60 per cent. in some local authority areas. Last year, the total savings derived from the activities of those local investigation units was £342 million; the savings lost by preventing their activities might be up to £200 million this year.

I could go on with a whole catalogue of examples of the Government failing on fraud. The Paymaster General says that we should trust the Government, because they are going to deal with fraud, but I have to tell her, despite my personal admiration for her, that we cannot trust the Government on fraud, because the Government's fraud has been abysmal.

Surely the Government have been very consistent in their fraud.

I got carried away, and the hon. Gentleman is quite right to pick me up. I am so disgusted by the Government's lack of attention to fraud and to recovering the money that is robbed from taxpayers that I got emotionally carried away. I am grateful to the hon. Gentleman for reminding me of that.

The reason why the Paymaster General suggests that the Liberal Democrats are on our side is that the Bill is such an appalling measure. The Government have simply taken the key elements of the previous Conservative Government's measures, made matters worse, put a spin on them, put them in a different package and then pretended that something has happened.

There can be no excuse for what has happened because we had the benefit of a Select Committee report. Select Committees have been the subject of much comment in the Chamber in recent weeks. I have in front of me the Select Committee report about tax and benefits and implementing tax credits. So far as I can see, it has not been nobbled: it seems to be a good, hard report. If the Government had taken heed of that document, we would not be faced with this mess.

There was a time when the Government could have pulled back. It is clear from the evidence that, until quite late in their deliberations, the Government thought that changes could be made through the tax code. If the Government had chosen that option, I do not think our opposition would be quite so strong. We would still have many problems with the legislation, but I suspect that we could be much more helpful. As soon as it became clear to the Select Committee that there could be no regulation through the tax code, the Government should have abandoned the whole idea. However, they could not abandon the measure because it is a flagship.

Hon. Members will remember that I referred to some concerns about the Bill expressed by the Minister of Agriculture, Fisheries and Food and the Secretary of State for Trade and Industry. An unnamed Minister talked about the Chancellor and his flagship in The Sunday Telegraph, and said:

"The trouble is Gordon has got to realise that even flagships have to obey the rules of the sea."

It is painful to me to hear the Chancellor referred to so discourteously behind his back, but it is a sentiment which I endorse entirely.

From that point on, tax credits became an administrative burden on business and embodied the pursuit of a social agenda through stealth. Thanks to the Chancellor, the low paid will receive extra benefits in their pay packets so that they can pay extra tax. The cost—an extra £1.5 billion—will be felt further up the income scale.

I do not believe that that was the Government's intention. I was not invited to the Labour party gathering at Church house—I did not need to be there as the Prime Minister's comments on that occasion have been well reported. He said:

"I have asked the Ministers at the Department of Social Security to look in detail at how we can make far-reaching reforms that will tackle insecurity and poverty as well as reducing social security bills."

Yet Treasury and Social Security Ministers are running amok and reneging on the Prime Minister's promise. The child care element will ensure that social security bills rocket. Who will benefit? It is likely that there will be no significant increase in the job market. That is the reported view of both the Bank of England and the Institute for Fiscal Studies—two very respected organisations. Julian McCrae, an analyst with the IFS, has said:

"in terms of cost per job it does not look very sensible."

I am sure that he is right.

The Bill is about an increase in dependency by pushing means testing further and by catching people firmly in the means test dependency straitjacket—a full metal jacket, if you like.

Perversely, the proposals' effect on marginal tax rates may create a disincentive to work. According to the Institute for Fiscal Studies, almost 1 million men and women in two-earner couples will find that their financial returns from employment will fall directly as a result of the working families tax credit.

We have dealt at length with stigma. We understand that family credit is popular and virtually stigma-free, and has a high take-up rate. It is viewed by many as an extension of child benefit. As interventions on the Paymaster General have demonstrated, there will be greater knowledge in the workplace about who is claiming tax credits. On Second Reading and in Committee, there seemed to be a misunderstanding of how family credit worked. We were repeatedly assured by Ministers that there would be no difference whatsoever between family credit and working families tax credit concerning confidentiality in the workplace.

As my hon. Friend the Member for Bognor Regis and Littlehampton will recall, we clearly demonstrated that once an employment record has been established, pay-slips are acceptable under family credit, but that will not be the case under working families tax credit. Every six months, employers will be reminded that their employees are beneficiaries of working families tax credit. That will undoubtedly increase stigma.

As we were beginning to realise during earlier consideration of amendments, the proposal will be intrusive. Employers will be placed, without wanting to be, in the same position of patronage as 19th-century mill owners in that they will know exactly what is going on in their employees' families. Employers and senior staff will know how many children there are in those families, who is sleeping with whom, who is about to get divorced, who is getting another job, who is engaged and who is moonlighting. The Chamber should not impose obligations on employers or invade the privacy of our citizens.

We know that the measure will impose on businesses set-up costs of £43 million a year, and recurring costs of £103 million a year. There are many reasons to oppose the Bill. Money will be frittered away further up the income scale. People on higher incomes will be pulled down into dependency. People will be stigmatised. There will be an enormous increase in the opportunity to commit fraud. The right hon. Member for Birkenhead (Mr. Field) said that the measure will offer a huge bonus to dishonesty. It will strengthen employers' hand over working people. It will draw employers into a web of dishonesty and corruption and reward those who pay low wages.

For all those reasons, we shall oppose the Third Reading. It is such a bad Bill that we shall support the reasoned amendment in the name of Liberal Democrat Members. We want to send a clear message to another place—which does not have the crowd of Back Benchers who will vote through any measure introduced by this Government—that this is a dangerous Bill which will cause problems for the liberty of our citizens and impose burdens on our businesses. It will require intense scrutiny and amendment, and we hope that it will not return from another place too soon.

9.10 pm

The Bill must be supported because it is a significant step towards alleviating poverty by giving help to working families on low incomes in a way that removes stigma. The first and foremost thing to note about the Bill is that it will assist more people. In fact, 400,000 additional families in need with children will be assisted by it.

The Bill is part of an important package of help which increases child benefit by record amounts and to record levels, and which introduces a national minimum wage. Taken together, that package means that there is now, or there will be, a guarantee of a minimum income to working families of at least £200 a week, and no family earning less than £235 a week will have to pay tax. The package is a significant move away from the disgrace of families working for low pay being required to pay tax.

Child care tax credit is an important part of the Bill. It delivers real and significant benefits of up to £100 a week for the first child and up to £150 for two children, and more than that. These elements put together—significant cash support for families with low income and significant assistance with child care—mean that the Bill will be delivering real and significant help to those who need it most. Indeed, it has been calculated that the average family receiving support through these measures will be about £17 a week better off. That is real assistance which will make a real difference.

According to the Library, it is estimated that there will be an increase in take-up by families of about 27 per cent., and for disabled people an increase of between 10 and 15 per cent. That is extremely important in terms of increased benefits for those already receiving them at a lower level, and important for those who are not receiving benefit now but who will be able to receive their credits through the new system.

The method of payment is also important and part of the new move by the Government to recognise support for those in need as a matter of right and to try to remove stigma as far as it is possible to do so. That is what lies behind the policy direction in favour of tax credits rather than benefit.

The suggestion that there should be tax credits comes from the report on tax and benefit systems by the tax and benefits task force, which was chaired by Martin Taylor and which considered these matters in depth. The decision to go ahead with tax credits in this instance stemmed from that report.

It is important that work be rewarded, that it be seen to pay and that it does pay. The linking of credit with work, particularly work that is lower paid, is extremely important. It is important, too, that the minimum wage is part of the package. I note that the Conservatives opposed the minimum wage as much as they oppose the tax credit system.

I have listened this evening, and before in Committee, to the views expressed by Opposition Members. I say to the Conservatives that I rather think that they protest too much. I feel that they shed crocodile tears when they express their concerns about how the scheme will be implemented and how they think it will make things worse, along with their concerns for business. That is rather hard to swallow from the Conservative party, which when in government cut the standard of living of those who needed help most and rewarded most those who needed help least.

Conservatives tell us that they have decided to repent of their past. Perhaps their statements now, and even those before their public pronouncements of repentance in Committee, are part of their effort to reconstruct the past and become new people and a new party. I doubt very much whether they will be successful in that effort.

The Conservatives should remember the Lawson Budget of 1988—the famous tax-cutting Budget—as a result of which 50 per cent. of the tax cuts went to the richest 10 per cent. of the population, and compare it with what has happened in the first three Budgets of the Labour Government. The main beneficiaries have been the bottom 5 per cent. of the population—a significant difference which, perhaps, marks out the two Governments.

The Liberal Democrats seem to have got caught up in their own cleverness. It was not long ago that the attempt to unify tax and benefit was a Liberal Democrat policy. It was seen as the way forward, by removing stigma from giving support to those who needed it. However, as soon as there is a proposal to move forward on tax credits, the Liberal Democrats, so anxious to find something wrong with almost everything that the Government do, align themselves with the Conservative party to vote against it. Not only are the Liberal Democrats not to be trusted; they cannot see where they are heading.

The Bill is greatly to be welcomed. It is part of a significant package of support for those who need it most, especially working families on low pay. It rewards work for low pay and provides support in a way that is stigma-free, will increase up-take and brings benefit in the form of credits that translate into cash. It provides support for child care in a way that will change people's lives for the better.

I hope that the Bill is the first in a series of measures that will be introduced in future years to show the Government's concern for those who are struggling, often against the odds, to earn their living and to build a good life for their family. We must support the families who struggle day by day in work to make life better for themselves and their children.

It is to the shame of the Conservatives that they oppose the Bill, just as they opposed the minimum wage. I wonder whether they also oppose the increase in child benefit, as it is so contrary to what they did when they were in office—but I notice that they are rather silent.

The Bill is part of the change of tone and the change in reality that the Government will bring about through help for those who need it most, support for those in work, support for families and support for children.

9.18 pm

I beg to move,

That this House, whilst welcoming additional money for lower paid workers and for disabled people, declines to give a Third Reading to the Tax Credits Bill because it considers the proposed Working Families' Tax Credit to represent a highly inefficient way of spending public money; believes that the Government has provided no evidence that paying the credit through the paypacket will bring benefits commensurate with the £100 million annual cost which will be imposed on businesses; believes that payment through the paypacket will adversely affect recipients at times of family or job change and will increase the scope for fraud; believes that the Bill represents a missed opportunity to tackle the particular incentive problems faced by low-paid homebuyers; and believes that the proposed childcare tax credit is poorly targeted.

I shall begin by responding to some of the points made by the hon. Member for Liverpool, Riverside (Mrs. Ellman). She said that in the past the Liberal Democrats and predecessor parties had supported tax credit schemes. Indeed we have, and if we were offered one, we might well support it.

However, the Government's proposal, far from being a tax credit, is not even integrated into the PAYE tax code. It is simply social security as a line on a pay slip. It is in no sense integration of the income tax and social security systems. It is not a genuine tax credit scheme at all. The Government are famous for using labels that bear no relation to reality. That is why we oppose the Bill.

The hon. Lady opposed the Lawson Budget of 1988. She seemed to object to a 40p top rate of income tax and a 25p standard rate of income tax. Are we to infer that she will vote against the Chancellor next year, when he cuts the standard rate to 22p? Are we to infer that she has had a private audience with him, in which she told him that 40 per cent. is too low and that she wants it raised to 60 per cent., as it was before the 1988 Budget? I think not. The hon. Lady makes a cheap point about 1988, but has no desire to return to it.

I am surprised that the hon. Gentleman thinks that it was a cheap point to emphasise that Conservative Budgets gave most to those who were already the best-off.

I think that the hon. Lady was saying that there is something wrong with giving large tax cuts to those on the highest incomes, which is what the 1988 Budget did, but she has no proposals to reverse those measures.

I had hoped that the reasoned amendment would get me off the hook with my colleagues, but I have had some complaints. They have asked, "Why do we have to keep voting with the Tories all the time?" I said, "You don't have to worry. At 10 o'clock I am sure that we will be able to sort that out for you." I was rather taken aback, therefore, when the hon. Member for Brentwood and Ongar (Mr. Pickles) said that we will renew that close companionship at 10 o'clock. None the less, it is very welcome.

We covered some specific areas on Report, but in this more general discussion of the Bill I want to raise no fewer than half a dozen issues that remain outstanding following our deliberations and on which the Bill falls down. First, and most important, are the Bill's effects on children. All the rhetoric assumes that the Bill is good for children, but it will take money away from mothers and give it to fathers.

The Government keep assuring us that, somehow, that does not matter, but they have blown the gaff, for two reasons. First, I knew that if I tabled a question to the Treasury, I would receive a holding answer and then a further, rather evasive answer about a month later. Instead, I tabled a question to the Department of Social Security, which tends to answer questions. I am sure that it will get into trouble for that and will soon change things.

I asked why there is a presumption that child benefit will be paid to mothers rather than to fathers. The answer was that

"where couples live at the same address a wife has priority over a husband".—[Official Report, 12 March 1999; Vol. 327, c. 392.]

Why does the Department of Social Security presume that, in a couple, the wife should have priority over the husband? Because it knows that money is more likely to get through to the child if it goes to the mother. If that Department thinks that it is better for money to go to mothers rather than to fathers, why does not the Treasury think that? There is some disagreement, I feel—but it gets worse.

Secondly, I was browsing through the Red Book, as one does. After browsing for some while and reaching page 68, I came across a rather astonishing diagnosis of where the Government are heading in the medium term with their tax credit strategy. They are moving from the rather messy system that they propose, involving child tax credits, child care tax credits, child benefit and the working families tax credit—no fewer than four different mechanisms for supporting low-paid families—to what they describe as a single, seamless system. That system is called—wait for it—an integrated child credit—but it gets worse.

The Red Book states:

"Such an integrated child credit, for those in and out of work, could be paid to the main carer, complemented by an employment tax credit paid through the wage packet to working households, with or without children."

In other words, the Government's big vision for the future is a world in which all the support for children goes not through the wage packet, but to the "main carer", which is as it should be. However, if that is where they are heading, and if that is desirable and for the benefit of children, why do we have to go through the messy business of taking the money from the mothers—and, hence, from the children—before giving it back to them?

The Government have revealed their long-term strategy—I have a lot of sympathy with it, because the logic is that children should get the benefit of the money—but if that is where they are heading, why do not we move directly to such a system? Why do we have to take the money from the children in the first place? The prejudicing of children—the purse to wallet issue—causes grave concern.

The hon. Member for Brentwood and Ongar saved me a few moments by repeating my argument about the £900 million that currently goes to those couples in which the man is the principal breadwinner. A large chunk of that money will go to men rather than to women. The Child Poverty Action Group has been cited as a defender of the tax credit, but it does not like the requirement for money to go to fathers. It has recognised that the Government will steamroller the measure through, but it has said that there should be three safeguards.

First, both partners should be notified of the award. If only one partner claims it, both partners should have been told what is going on so that the mother at least has some opportunity to see the money. Secondly, the application form should be explicit about the implications of the choice—a person who has not signed the form will not get the cash. Thirdly, there should be clear rules for arbitrating disputes; I am still not convinced that we have them.

Given that the new Labour Government have more than 100 women Members of Parliament, it is bizarre that they should introduce a policy that will take money from women and give it to men, which will prejudice children. I find that astonishing.

The second issue is that of passported benefits, which the hon. Member for Brentwood and Ongar mentioned. This matter gets more bizarre by the minute. The Government have clearly not thought it through. At present, family credit and disability working allowance recipients are "passported" various benefits—low income benefits, social fund grants, and so forth.

We tried to find out from the Government what their plans are on this issue, so I rather foolishly tabled a question to the Treasury. On 16 February, I asked the Chancellor of the Exchequer to which passported benefits recipients of working families tax credit and disabled person's tax credit would be entitled. A few days later, I received the answer, "Wait a bit; we'll let you know." Two days ago, I finally received an answer. This is a classic example of Sir Humphrey-ese at work. It said:

"The Government are committed to ensuring that Working Families Tax Credit … recipients who need it continue to receive the help provided by passported benefits".—[Official Report, 16 February 1999; Vol. 327, c.517.]

Thus it will be those who need it who get it. Who are they? We do not know. The Paymaster General could not tell us, and when the hon. Member for Brentwood and Ongar intervened to say that disabled people were particularly concerned about health benefits, she said that the Government did not know who would get the tax credit.

The Government have not decided—they are in discussion. When will they make up their minds? How long does it take them to decide those matters? They are embarrassed because in Committee I pointed out that if they passported everybody who was on family credit through to the working families tax credit, higher rate taxpayers would get social fund grants. That is absurd. The Government realise that it is absurd, but they have not thought of a way out of it. No doubt the benefit will cease to be automatic and there will be some sort of claims procedure which will wreck the take-up of those benefits. The whole business is a complete mess.

The third substantive problem is the reform's failure to link in with the other bits of the tax and benefits system. The hon. Member for Riverside picked us up on not supporting a tax credit scheme. We have pressed for an integrated scheme, bringing all the taxes and benefits together, but this reform is piecemeal, which is why we object to it. Eventually, the working families tax credit will be part of a streamlined system, and that may well be welcomed, but, as we heard on Report, at the moment there is no integration with housing benefit and the Budget has added yet more complexity, with the new child care tax credit.

If the Government had not been in such a hurry—the hallmark of this Bill is that it is hurried legislation—we could have had "the big vision". Why must we have bad interim policy? Why could not the Government have sat down and said, "It will take us another year to think this through, but we shall then go straight to a system that has uniform child support for those in and out of work, and in-work tax credits for adults"? Why do we have to go through bad legislation to get to a possibly better system?

The fourth issue is the disabled persons tax credit. I was going to call this the dog that did not bark, but if I may mix my metaphors, I shall call it the dog's breakfast that did not bark. The disabled persons tax credit is a laudable aim—helping disabled people who want to, to get back into work. How many extra people will be helped? The Government are fond of saying that a million disabled people want to get back to work, so how many extra people will the disabled person's tax credit help—500,000 or 100,000? No—6,000. That is pathetic.

I have a lot of respect for the Financial Secretary, but in Committee, she said:

"We anticipate that 6,000 more people will be able to take up the credit—a not inconsiderable figure."—[Official Report, Standing Committee D, 11 February 1999; c. 188.]

Dare I venture to suggest that it is a very inconsiderable figure?

May I explain to the House how that happened? The Government were obsessed with family credit—with working families without disabilities—and they thought that the tax credit idea would be a good wheeze. Then they suddenly noticed a funny little bit of the system called disability working allowance, which has been a complete flop. I used to be a social researcher and some of my colleagues researched disability working allowance. At that stage, so few people were claiming the benefit that they interviewed everyone who received it. That is how small scale and ineffective it has been. Even now, only some 16,000 people receive it.

Essentially, disabled persons tax credit is an afterthought. It was not discussed in Committee because nobody really cares about it. It is a waste of time. Until the Government have a serious strategy for helping the million disabled people whom they say want to work, little gestures like this will be largely irrelevant.

The fifth issue, which has been discussed briefly, is fraud. The right hon. Member for Birkenhead (Mr. Field) made some telling points about that on Second Reading which I shall not repeat. The Government should design fraud out of the tax and benefits system. They should not design it in. They should not let money go through employer systems. We have heard that good employers—small firms—will be penalised by an administrative burden, but that bad employers will have a blank cheque for fraud.

The final point in the litany involves married and cohabiting couples. It is not an issue that we have talked about much. The charity CARE—Christian Action, Research and Education—has written to hon. Members to raise one specific concern. I should be grateful if the Minister responded to the point when summing up. CARE has pointed out that a lone-parent family and a two-parent family on the same income and with the same child care costs receive the same amount of money, but that a two-parent family have an extra mouth to feed. There are additional costs.

The disabled persons tax credit recognises that. It has an additional credit for a second adult, but the working families tax credit does not. Why do the Government think that, of two families on exactly the same income and with the same costs, the one with an additional adult to feed has no need for additional working families tax credit? What is the rationale behind that?

I have a confession to make. Before we decided some weeks ago which way to vote on the whole Bill, the Liberal Democrats had a debate; I know that Labour Members may find that a strange concept. We had a difference of opinion and we had to reason it through. Some of my hon. Friends said, "We are vaguely in favour of such measures, so let us vote in favour." I said, "The measure is not what it seems. It is labelled a tax credit, but it is not." Payment through the pay packet, which is almost the only thing in the Bill, is the fundamental flaw and will do more damage than good.

During the many happy hours that we spent in Committee and in the House this afternoon, I have become more and more convinced that we did the right thing. So much of the good in the Bill, or at least so much of the good in the working families tax credit, which is all in regulations, could have been achieved by reforming family credit. For lower tapers, use family credit. For higher credits, use family credit. To reform child care subsidies, use family credit. What is the one thing that the Bill does?—payment of credits through the pay packet, which, as we have heard, causes many problems.

The low paid need additional help and support. Our reasoned amendment welcomes that, but the Bill is riddled with holes. It is the sign of a Bill which has been put together in a hurry. Bills that are put together in a hurry Governments repent of at their leisure.

9.32 pm

1 put on record my opposition to a bad Bill, which should be opposed. It is bad for families and for business and it could prove open to fraud.

I regret the tendency in the Bill and in other measures that the Government are seeking to put through to put details in secondary legislation, rather than primary legislation. That is a negative tendency. My hon. Friend the Member for Brentwood and Ongar (Mr. Pickles) referred to the specific burden on agriculture that will arise from the proposals. I regret that his plea for special consideration to be given to that industry appears to have fallen on deaf ears.

I regret, too, that the Government have rejected the proposed exemption for smaller firms. The administrative burden of paying credit and claiming funds in advance will be great. The Government recognise that and claim to be business friendly, but they have rejected the possibility of an exemption from administering the credit for very small firms.

The Government fail to realise that the working families tax credit on its own will be very bad for business, but the cumulative effect of the tax credit, the minimum wage and the working time directive will be especially bad for all British businesses. The burdens of all three will hit small businesses particularly hard.

In my constituency, the fact that those eligible for tax credits have to travel particularly long distances will be compounded by the hike in petrol and diesel prices. I refer to the remarks by my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) in an intervention. Constituencies such as Vale of York and Westmorland and Lonsdale are deeply rural, with sparsely populated areas for the most part. In many of those areas, there is virtually no public transport. How are my constituents supposed to welcome the tax credit, when most of the benefit will be soaked up by the fuel increase?

Yet again the Government seem incapable of considering how to deliver policies in rural areas. If I have touched a chord with the Financial Secretary, perhaps she will deal with that point, if no other.

I want to talk about fraud, and to associate myself particularly with the Liberal amendment. I congratulate the hon. Member for Northavon (Mr. Webb) on an eloquent, well-thought-out and well-researched speech. On the question of fraud, Ministers must balance the options: they must decide whether to place the emphasis on prompt payment or on rigorous checking of eligibility. Regrettably, the Paymaster General has failed to put my mind at rest, and to allay my fear that the potential for fraud will be greater under the working families tax credit than under family credit.

The proposed arrangement for payment of tax credits is highly complex, whereas the arrangement for family credit is relatively simple. As has been said, the question of passporting of various credits and benefits has not yet been clarified, which is particularly regrettable given that we are now on Third Reading. All that complexity will increase the likelihood of fraud in the administration of tax credits.

I still feel the concern that I expressed on Second Reading about the potential for breaches of confidentiality between employer and employee. The Bill could jeopardise previously good employer-employee relations. In numerous briefings to us, employees of large, medium-sized and small firms have expressed their opinions forcefully. Employers would prefer not to become too involved in employees' personal situations, as we have heard. Payments of tax credits through pay packets will reveal to employers exactly who on their payroll is receiving such credits. Previously, that information remained confidential.

For those and many other reasons, I oppose the Bill, and I hope that the House will reject it.

9.37 pm

It is a tribute to the Paymaster General that I overheard her saying earlier that she is a fan of "Star Trek". She must recognise, however, that the Bill is in no way logical, Captain.

My hon. Friends have explained the problem clearly, but it is important for us to understand exactly why the Government are introducing the changes. The reason is simple. The Government must fulfil a difficult pledge—to try to reduce the nation's welfare bill. The Bill will enable them to shift a chunk of social security spending from the Department of Social Security's budget to other measures, such as tax changes. As the hon. Member for Northavon (Mr. Webb) said, that does not mean that the money is suddenly a tax credit; it will still be social security expenditure, but it will not be social security expenditure honestly admitted and honestly declared.

The Bill also enables the Government to claim that they are making progress with their delivery of the Prime Minister's pledge not to increase taxes. They will try to say that this social security expenditure is a negative tax change, that it is therefore a tax reduction, and that they can offset it against all the tax increases that they have announced in successive Budgets. They will then be able to say that they have delivered on their pledge not to increase the overall tax burden. That is not a pledge on which they will deliver, even with these funny figures, but I must say that I admire their cheek in trying.

The Government made another key economic pledge: they promised faithfully that they would not seek to impose additional burdens on business. We were told that that was central to the new Labour project, that the Government had recognised the value of enterprise, and that they were now the pro-business party—the party in which British entrepreneurs of all sizes could place absolute confidence. But what is the one clear effect of the Bill? It will transfer a £100 million administrative burden on to British business. That is the Government's figure. It is their own assessment of the cost. However—on the basis of most of the Government's own assessments of the likely implications of their policies on British business—that figure is likely not to be accurate but to be a gross underestimate.

What do we know about the Bill? Ministers tell us that the staff—the current family credit unit—who will be working on the tax credit are extremely hard-working and dedicated. I agree with them on that. I have no doubt that those who are currently working on family credit and will seek to implement the working families tax credit are extremely hard-working officials, and that they will seek to accomplish their task in the best way possible. However, let us remember the time scale in which they are being asked to operate. As the Paymaster General said in her speech, the new system is to be fully up and running in April 2000.

I know that hon. Members, like the rest of the nation, are excited about the on-rush of the millennium. Nevertheless, it is only one day since the House had a statement on the implications of the millennium bug for all of British business and all of British public service. The bug is likely to kick in at the end of December 1999.

One does not have to be a master of mental arithmetic of such great dimensions—a day or so ago, one could have shown the Secretary of State for Education a thing or two on the "Today" programme—to work out that April 2000 is only three months after 31 December 1999. Yet that is precisely the time scale in which Ministers propose to move a huge, complicated system from one part of the civil service to another.

Is the system being moved from a part of the civil service in which there is a reputation for brilliance in computer management? No. The NIRS2 computer is not working very well.

Is my hon. Friend aware that, in the Standing Committee considering the Welfare Reform and Pensions Bill, the Minister of State, Department of Social Security was asked if he could give a cast-iron guarantee that the computer system would be sufficient to cope with stakeholder pensions—which are being introduced in a similar time frame—and refused to give such an undertaking?

I am shocked by that news, although—given what the Government have been up to—I am not surprised by it.

Today, another matter has caused me shock, surprise and not a little disappointment. Hon. Members have been told that the Bill is flagship legislation of which the Government are hugely proud and the Chancellor is the father. One might therefore have thought that the Bill would cause Labour Members to break down the doors of the Chamber in their eagerness to participate in our debates on it. For most of Third Reading, however, only two or three Labour Back Benchers have been in the Chamber—although I am delighted to see that that number has now rocketed to five.

For much of the debate, more Conservative Back Benchers, and even more Liberal Democrat Back Benchers, have been in the Chamber than Labour Back Benchers. There are 418 Labour Members—at least on the payroll. The Fees Office is paying 418 Labour Members of Parliament, but where have they all been during our consideration of this flagship Bill? We heard one speech by a Labour Back Bencher, and a handful of Labour Members wandered into the Chamber.

Could it be that Labour Members are embarrassed by the Bill? If so, they have many reasons to be embarrassed by it. It is a bad Bill which will impose burdens on business, although Ministers say that they do not want to do that. It will betray the interests of low-paid employees by flagrantly violating any possible interpretation of confidentiality. It will also break successive Labour pledges not to increase the tax burden, and to reduce genuine welfare bills. The Government are really only in the business of performing the odd accountancy fiddle.

I am sure that, at 10 o'clock, my hon. Friends—having listened carefully to the debate, and participated in it in much greater numbers than Labour Back Benchers, who call the Bill flagship legislation—will, with one heart and one mind, vote against the Bill.

9.45 pm

The Bill is an act of wanton vandalism that even the Klingons would be proud of, if I have to continue the wretched television analogy. The Government have replaced family credit, which is a highly successful benefit with a high take-up rate of 72 per cent., rising to 85 per cent. by expenditure and 91 per cent. for lone parents—a relatively simple benefit, as my hon. Friend the Member for Vale of York (Miss McIntosh) has said, which is paid promptly and usually to the mother—with the more complex working families tax credit. The disability working allowance is being replaced by the disabled persons tax credit.

The Government call it a tax credit, but it is nothing of the kind. It is simply a benefit paid through the payroll. Huge burdens will be imposed on businesses, which, from next April, will have to administer the benefit, as my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) has just said. It will cost business £103 million a year to run. It will increase the stigma for those claiming it, who will find that their work colleagues suddenly become aware of the fact that they are claiming a state benefit—a fact which most proud people wish to keep confidential. We believe that such matters should be confidential. Designing a system that is likely to undermine that principle is heartless, uncaring and, I believe, an example of new Labour dogma stamping on the feelings of people who are struggling hard to make ends meet.

The benefit is hugely costly. The Government's figures show that it will cost £1.5 billion a year. The Bank of England calculates that it will generate no more than 40,000 jobs, at a cost of £35,000 per job. The Institute for Fiscal Studies has calculated that, rather than the Government estimate of £200 million, the child care element will cost £4 billion as people are given a cash incentive by the Government to move their children from informal child care arrangements to formal, paid child care.

In Committee and on Report, no statements were forthcoming from Ministers to reassure hon. Members and those outside the House that the forecast higher public expenditure would not be necessary. Today, the Government have added a new clause to the Bill providing for yet another type of paid child care for those aged eight to 14, making it more likely still that informal arrangements will be replaced by paid arrangements.

The scope for fraud is colossal. That was the principal concern of the right hon. Member for Birkenhead (Mr. Field), who has said that the whole venture was fraught with great dangers and offered huge bonuses for dishonesty. He would have been a welcome member of the Standing Committee, had the tight grip of the Government Whips Office allowed him to be. Labour members of the Social Security Committee would also have been welcome, but none was appointed. Perhaps they were too busy drafting and redrafting their reports.

The Bill spawns reams of regulations with which business will have to deal. Without the regulations and the glossy document from the Revenue, one would not even be able to work out the structure of the benefit from reading the Bill.

The Government seem determined that as many people as possible should have the benefit paid through the pay packet, despite the associated problems of stigma. That is why they failed to support any of our amendments that would have given people a choice of how to receive the payment. As an inevitable consequence of that determination, there will be a huge shift of benefit payments from purse to wallet. As the Minister knows, there are currently 300,000 couples in which the man is the principal breadwinner, receiving a total of £900 million in family credit. Most of that money will shift from purse to wallet. That is an important concern. As the Joseph Rowntree Trust has concluded, money paid to the spouse with care is more likely to be spent on children.

It is odd that a Government elected on a pledge to reduce social security spending should introduce a Bill that will add £1.5 billion to social security spending on the Government's figures—£5.5 billion on the IFS figures. Hiding those numbers in an obscure line in the Red Book does not change the fact that it is a spending increase.

It is odd that a Government who pledged to reduce dependency should propose a Bill that will enable 400,000 more families, who were previously regarded as too wealthy to qualify, to claim benefits. The hon. Member for Liverpool, Riverside (Mrs. Ellman) trumpets that figure, but it is odd that a Government who pledged to reduce benefit dependency and social security spending should extend the availability of benefit up the income scale to families on £38,000.

At the lower end of the income scale, there is real concern that benefits that used to flow automatically to families who qualified for family credit—such as free prescription charges, eye tests, dental work and social fund grants—may not continue to do so when those families qualify for working families tax credit and disabled persons tax credit. Astonishingly, the Paymaster General still cannot give an answer on that. To extend benefit up the income scale, the Government are cutting benefits at the bottom of that scale.

The Government talk about wanting to improve productivity. If they read the McKinsey report on UK productivity—instead of commissioning more reports—they would realise that the biggest cause of the difference between our productivity rate and that of the United States is that, in the US, small businesses are exempt from the majority of the most burdensome regulation. Yet this Government keep piling it on. The regulatory impact assessment calculates that the Bill will cost business £103 million each and every year—and that will be an underestimate of the real cost.

The Bill will do nothing to achieve any of the objectives set by the Government. It will increase the stigma of claiming in-work benefits, rather than reduce it. It will—on the basis of the experience in Canada—increase the likelihood of fraud, not reduce it. It will increase dependency, not reduce it. It will increase social security spending, not reduce it. It will result in less money being spent on children, not more money. It will increase the burdens on business and thus hinder employment opportunities, not create them.

Through the Bill, the Government will replace a successful in-work benefit, family credit, with one that they insist, for dogmatic, ill-thought-through and misguided reasons, should be paid through the payroll. That will cause discomfort and embarrassment for many thousands of lone parents and working couples on low incomes, struggling to bring up a family in difficult circumstances. It is a bad and uncaring Bill, which I urge the House to oppose.

9.52 pm

This has been an enjoyable and lively debate. Such was the good feeling in Committee that even during the speeches of the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), I never thought, "Beam me up, Scotty." I thank Members from both sides of the House for their contributions tonight.

The working families tax credit and the disabled persons tax credit are key elements of the Government's strategy to make work pay and to help people move from welfare to work. The present system is failing hundreds of thousand of families. Moving into a job from unemployment can often leave people little better off, and people cannot improve their income by working more because of absurd high marginal tax rates.

The system fails to recognise properly the in-work costs of child care. Under the Conservative Government, there was a growing division between working and nonworking families. The Government think that one of the best ways of tackling poverty is to help people into jobs, and that is why we are reforming the tax and benefits system. By making work pay and by helping people move from welfare to work, we are starting to tackle the legacy of failure that we were left by the Conservative party, as was pointed out, in an excellent speech, by my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman).

As a tax credit—rather than as family credit paid by the Inland Revenue—the measure will demonstrate clearly, through the pay packet, the rewards of work. It will remove the stigma associated with claiming benefit.

We do not simply talk about welfare reform as the previous Government did: we are actually delivering. From what he said, the hon. Member for Brentwood and Ongar (Mr. Pickles) and I might have been in two different places when my right hon. Friend the Chancellor delivered the Budget last week. More than 20 million households will gain. On average, families with children will be £740 a year better off; and 700,000 children will be lifted out of poverty.

rose—

I will not give way as I have very limited time, but I am delighted to welcome the hon. Gentleman to the Chamber. It is very kind of him to join us.

The hon. Members for Brentwood and Ongar, for Westmorland and Lonsdale (Mr. Collins) and for Northavon (Mr. Webb) spoke about the transfer from purse to wallet. That will not happen. Couples will be able to choose which partner receives the credit. It is important to remember that, in the majority of cases, purse to wallet transfers are not even an issue.

Fraud has rightly been mentioned. It is the reason for our introducing new powers for the Inland Revenue to get the information that it needs to verify claims and to recover overpayments through the tax system, as well as directly, and new penalties to deter non-compliance and fraud.

My hon. Friend the Member for Riverside rightly drew attention to the Liberal Democrat U-turn on tax credits. That ought not to come as a surprise to anyone, because in Committee the hon. Member for Northavon, very honestly, said:

"I have an alarming tendency to believe the last person I heard. That is probably why I am in the party I am".—[Official Report, Standing Committee D, 9 February 1999; c. 113.]

It should also come as no surprise that the Tories are supporting the Liberal Democrats tonight, in a Lib-Tory pact.

The hon. Member for Vale of York (Miss McIntosh) spoke about regulation. We will take absolutely no lessons from the Conservative party. Before the general election, they removed 3,000 regulations from business; but they introduced 10,000 new ones.

The hon. Member for Bognor Regis and Littlehampton spoke, rightly, about the American example, but he failed to say that in the United States there is a minimum wage, which is good not only for the employer but for employees and everyone else, as it increases productivity and gives everyone a stake.

The Bill is a major reform of the tax and benefit system. It will deliver real benefits to those families who most need help, with a minimum income guarantee and proper child care support. [Interruption.] I notice that Liberal Democrats are sneering, just as the hon. Member for Northavon sneered at the tax credit for those with a disability. We are determined to deliver for people with a disability.

The Bill is an excellent piece of legislation and I commend it to the House.

Question put, That the amendment be made:—

The House divided: Ayes 164, Noes 295.

Division No. 116]	[9.59 pm
AYES
Allan, Richard	Evans, Nigel
Ancram, Rt Hon Michael	Faber, David
Arbuthnot, Rt Hon James	Fabricant, Michael
Ashdown, Rt Hon Paddy	Fallon, Michael
Atkinson, David (Bour'mth E)	Fearn, Ronnie
Baker, Norman	Forth, Rt Hon Eric
Ballard, Jackie	Foster, Don (Bath)
Beggs, Roy	Fowler, Rt Hon Sir Norman
Bercow, John	Fox, Dr Liam
Beresford, Sir Paul	Fraser, Christopher
Body, Sir Richard	Garnier, Edward
Boswell, Tim	George, Andrew (St Ives)
Bottomley, Rt Hon Mrs Virginia	Gibb, Nick
Brake, Tom	Gill, Christopher
Breed, Colin	Gorman, Mrs Teresa
Brooke, Rt Hon Peter	Gorrie, Donald
Browning, Mrs Angela	Gray, James
Bruce, Ian (S Dorset)	Greenway, John
Burnett, John	Grieve, Dominic
Burns, Simon	Hague, Rt Hon William
Burstow, Paul	Hamilton, Rt Hon Sir Archie
Butterfill, John	Hammond, Philip
Cash, William	Hancock, Mike
Chapman, Sir Sydney (Chipping Barnet)	Harris, Dr Evan
	Harvey, Nick
Chidgey, David	Hayes, John
Chope, Christopher	Heald, Oliver
Clappison, James	Heathcoat—Amory, Rt Hon David
Clark, Rt Hon Alan (Kensington)	Horam, John
Clark, Dr Michael (Rayteigh)	Howard, Rt Hon Michael
Clifton—Brown, Geoffrey	Howarth, Gerald (Aldershot)
Collins, Tim	Hughes, Simon (Southwark N)
Colvin, Michael	Hunter, Andrew
Cormack, Sir Patrick	Jack, Rt Hon Michael
Cotter, Brian	Jackson, Robert (Wantage)
Cran, James	Jenkin, Bernard
Curry, Rt Hon David	Johnson Smith, Rt Hon Sir Geoffrey
Davis, Rt Hon David (Haltemprice & Howden)
	Kennedy, Charles (Ross Skye)
Day, Stephen	Key, Robert
Donaldson, Jeffrey	Kirkbride, Miss Julie
Dorrell, Rt Hon Stephen	Kirkwood, Archy
Duncan, Alan	Laing, Mrs Eleanor
Duncan Smith, Iain	Lait, Mrs Jacqui

Lansley, Andrew	St Aubyn, Nick
Leigh, Edward	Sanders, Adrian
Letwin, Oliver	Sayeed, Jonathan
Lewis, Dr Julian (New Forest E)	Shephard, Rt Hon Mrs Gillian
Lidington, David	Smith, Sir Robert (W Ab'dns)
Lilley, Rt Hon Peter	Smyth, Rev Martin (Belfast S)
Livsey, Richard	Soames, Nicholas
Lloyd, Rt Hon Sir Peter (Fareham)	Spelman, Mrs Caroline
Loughton, Tim	Spicer, Sir Michael
Luff, Peter	Steen, Anthony
Lyell, Rt Hon Sir Nicholas	Streeter, Gary
McIntosh, Miss Anne	Swayne, Desmond
Maclean, Rt Hon David	Syms, Robert
McLoughlin, Patrick	Tapsell, Sir Peter
Madel, Sir David	Taylor, Ian (Esher & Walton)
Malins, Humfrey	Taylor, Rt Hon John D (Strangford)
Maples, John	Taylor, John M (Solihull)
Maude, Rt Hon Francis	Taylor, Matthew (Truro)
Mawhinney, Rt Hon Sir Brian	Taylor, Sir Teddy
May, Mrs Theresa	Thompson, William
Michie, Mrs Ray (Argyll & Bute)	Tonge, Dr Jenny
Moore, Michael	Tredinnick, David
Moss, Malcolm	Trend, Michael
Nicholls, Patrick	Tyler, Paul
Norman, Archie	Tyrie, Andrew
Oaten, Mark	Wallace, James
Öpik, Lembit	Wardle, Charles
Page, Richard	Waterson, Nigel
Paice, James	webb, Steve
Paterson, Owen	Whittingdale, John
Pickles, Eric	Wilkinson, John
Prior, David	Willetts, David
Randall, John	Winterton, Mrs Ann (Congleton)
Redwood, Rt Hon John	Winterton, Nicholas (Macclesfield)
Rendel, David	Woodward, Shaun
Robathan, Andrew	Yeo, Tim
Robertson, Laurence (Tewk'b'ry)	Young, Rt Hon Sir George
Roe, Mrs Marion (Broxbourne)
Rowe, Andrew (Faversham)	Tellers for the Ayes:
Ruffley, David	Mr. Paul Keetch and Mr. Phil Willis.
Russell, Bob (Colchester)
NOES
Abbott, Ms Diane	Bradshaw, Ben
Adams, Mrs Irene (Paisley N)	Brinton, Mrs Helen
Ainger, Nick	Brown, Rt Hon Nick (Newcastle E)
Ainsworth, Robert (Cov'try NE)	Brown, Russell (Dumfries)
Allen, Graham	Browne, Desmond
Armstrong, Ms Hilary	Buck, Ms Karen
Ashton, Joe	Burgon, Colin
Atherton, Ms Candy	Butler, Mrs Christine
Atkins, Charlotte	Caborn, Richard
Austin, John	Campbell, Alan (Tynemouth)
Banks, Tony	Campbell, Mrs Anne (C'bridge)
Barnes, Harry	Campbell, Ronnie (Blyth V)
Barron, Kevin	Canavan, Dennis
Battle, John	Caplin, Ivor
Bayley, Hugh	Casale, Roger
Beard, Nigel	Caton, Martin
Beckett, Rt Hon Mrs Margaret	Chapman, Ben (Wirral S)
Begg, Miss Anne	Chaytor, David
Bell, Stuart (Middlesbrough)	Chisholm, Malcolm
Benn, Rt Hon Tony	Clapham, Michael
Bennett, Andrew F	Clark, Rt Hon Dr David (S Shields)
Benton, Joe	Clark, Dr Lynda (Edinburgh Pentlands)
Bermingham, Gerald
Berry, Roger	Clark, Paul (Gillingham)
Best, Harold	Clarke, Charles (Norwich S)
Blackman, Liz	Clarke, Rt Hon Tom (Coatbridge)
Blears, Ms Hazel	Clarke, Tony (Northampton S)
Blizzard, Bob	Clelland, David
Blunkett, Rt Hon David	Clwyd, Ann
Borrow, David	Coaker, Vernon
Bradley, Keith (Withington)	Coffey, Ms Ann
Bradley, Peter (The Wrekin)	Coleman, Iain

Connarty, Michael	Jackson, Helen (Hillsborough)
Cook, Frank (Stockton N)	Jamieson, David
Corbett, Robin	Jenkins, Brian
Corbyn, Jeremy	Johnson, Alan (Hull W & Hessle)
Corston, Ms Jean	Johnson, Miss Melanie (Welwyn Hatfield)
Cousins, Jim
Cox, Tom	Jones, Helen (Warrington N)
Cranston, Ross	Jones, Ms Jenny(Wolverh'ton SW)
Crausby, David
Cryer, Mrs Ann (Keighley)	Jones, Jon Owen (Cardiff C)
Cummings, John	Jones, Dr Lynne (Selly Oak)
Cunliffe, Lawrence	Jones, Martyn (Clwyd S)
Cunningham, Jim (Cov'try S)	Keeble, Ms Sally
Dalyell, Tam	Keen, Alan (Feltham & Heston)
Darling, Rt Hon Alistair	Keen, Ann (Brentford & Isleworth)
Darvill, Keith	Kelly, Ms Ruth
Davies, Rt Hon Denzil (Llanelli)	Kemp, Fraser
Davis, Terry (B'ham Hodge H)	Kennedy, Jane (Wavertree)
Dawson, Hilton	Kidney, David
Dean, Mrs Janet	Kilfoyle, Peter
Denham, John	King, Andy (Rugby & Kenilworth)
Dismore, Andrew	King, Ms Oona (Bethnal Green)
Dobbin, Jim	Kingham, Ms Tess
Donohoe, Brian H	Ladyman, Dr Stephen
Doran, Frank	Lawrence, Ms Jackie
Dowd, Jim	Laxton, Bob
Eagle, Angela (Wallasey)	Leslie, Christopher
Edwards, Huw	Levitt, Tom
Efford, Clive	Lewis, Terry (Worsley)
Ellman, Mrs Louise	Linton, Martin
Ennis, Jeff	Livingstone, Ken
Etherington, Bill	Lloyd, Tony (Manchester C)
Ewing, Mrs Margaret	Lock, David
Fisher, Mark	Love, Andrew
Fitzpatrick, Jim	McAllion, John
Fitzsimons, Lorna	McAvoy, Thomas
Flint, Caroline	McCabe, Steve
Flynn, Paul	McCafferty, Ms Chris
Follett, Barbara	McDonagh, Siobhain
Foster, Rt Hon Derek	Macdonald, Calum
Foster, Michael Jabez (Hastings)	McDonnell, John
Foster, Michael J (Worcester)	McFall, John
Foulkes, George	McGuire, Mrs Anne
Fyfe, Maria	McIsaac, Shona
Galloway, George	McNamara, Kevin
Gerrard, Neil	McNulty, Tony
Gibson, Dr Ian	Mactaggart, Fiona
Gilroy, Mrs Linda	McWalter, Tony
Goggins, Paul	Mahon, Mrs Alice
Golding, Mrs Llin	Mallaber, Judy
Griffiths, Jane (Reading E)	Marsden, Gordon (Blackpool S)
Griffiths, Nigel (Edinburgh S)	Marsden, Paul (Shrewsbury)
Griffiths, Win (Bridgend)	Marshall, David (Shettleston)
Grocott, Bruce	Marshall, Jim (Leicester S)
Grogan, John	Martlew, Eric
Hall, Patrick (Bedford)	Maxton, John
Hanson, David	Meacher, Rt Hon Michael
Harman, Rt Hon Ms Harriet	Meale, Alan
Healey, John	Merron, Gillian
Henderson, Ivan (Harwich)	Michie, Bill (Shef'ld Heeley)
Hepburn, Stephen	Moonie, Dr Lewis
Heppell, John	Moran, Ms Margaret
Hewitt, Ms Patricia	Morgan, Alasdair (Galloway)
Hill, Keith	Morgan, Ms Julie (Cardiff N)
Hoey, Kate	Motley, Elliot
Home Robertson, John	Morris, Ms Estelle (B'ham Yardley)
Hoon, Geoffrey	Mountford, Kali
Hope, Phil	Mullin, Chris
Hopkins, Kelvin	Murphy, Denis (Wansbeck)
Howarth, George (Knowsley N)	Murphy, Jim (Eastwood)
Hoyle, Lindsay	Murphy, Rt Hon Paul (Torfaen)
Humble, Mrs Joan	Naysmith, Dr Doug
Hurst, Alan	Norn's, Dan
Hutton, John	O'Brien, Bill (Normanton)
Iddon, Dr Brian	O'Brien, Mike (N Warks)
Jackson, Ms Glenda (Hampstead)	O'Hara, Eddie

Olner, Bill	Starkey, Dr Phyllis
O'Neill, Martin	Steinberg, Gerry
Organ, Mrs Diana	Stevenson, George
Palmer, Dr Nick	Stewart, David (Inverness E)
Pearson, Ian	Stewart, Ian (Eccles)
Pickthall, Colin	Stinchcombe, Paul
Pike, Peter L	Stoate, Dr Howard
Plaskitt, James	Stott, Roger
Pollard, Kerry	Stringer, Graham
Pond, Chris	Stuart, Ms Gisela
Pope, Greg	Sutcliffe, Gerry
Powell, Sir Raymond	Taylor, Rt Hon Mrs Ann(Dewsbury)
Prentice, Ms Bridget (Lewisham E)
Prentice, Gordon (Pendle)	Temple—Morris, Peter
Primarolo, Dawn	Thomas, Gareth (Clwyd W)
Prosser, Gwyn	Thomas, Gareth R (Harrow W)
Purchase, Ken	Todd, Mark
Quin, Rt Hon Ms Joyce	Touhig, Don
Rapson, Syd	Trickett, Jon
Raynsford, Nick	Turner, Dennis (Wolverh'ton SE)
Reid, Rt Hon Dr John (Hamilton N)	Turner, Dr Desmond (Kemptown)
Roche, Mrs Barbara	Turner, Dr George (NW Norfolk)
Rooney, Terry	Twigg, Derek (Halton)
Ross, Ernie (Dundee W)	Twigg, Stephen (Enfield)
Roy, Frank	Vaz, Keith
Ruane, Chris	Vis, Dr Rudi
Ruddock, Joan	Walley, Ms Joan
Russell, Ms Christine (Chester)	Ward, Ms Claire
Savidge, Malcolm	Wareing, Robert N
Sawford, Phil	Watts, David
Sheerman, Barry	White, Brian
Sheldon, Rt Hon Robert	Wicks, Malcolm
Simpson, Alan (Nottingham S)	Williams, Alan W (E Carmarthen)
Singh, Marsha	Winnick, David
Skinner, Dennis	Winterton, Ms Rosie (Doncaster C)
Smith, Rt Hon Andrew (Oxford E)	Wood, Mike
Smith, Angela (Basildon)	Worthington, Tony
Smith, Miss Geraldine (Morecambe & Lunesdale)	Wright, Anthony D (Gt Yarmouth)
	Wright, Dr Tony (Cannock)
Smith, Jacqui (Redditch)	Wyatt, Derek
Smith, Llew (Blaenau Gwent)
Soley, Clive	Tellers for the Noes:
Southworth, Ms Helen	Mr. Kevin Hughes and Mr. Clive Betts.
Squire, Ms Rachel

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on Second or Third Reading);—

The House divided: Ayes 297, Noes 161.

Division No.117]	[10.13 pm
AYES
Abbott, Ms Diane	Bennett, Andrew F
Adams, Mrs Irene (Paisley N)	Benton, Joe
Ainger, Nick	Bermingham, Gerald
Ainsworth, Robert (Cov'try NE)	Berry, Roger
Allen, Graham	Best, Harold
Armstrong, Ms Hilary	Blackman, Liz
Ashton, Joe	Blears, Ms Hazel
Atherton, Ms Candy	Blizzard, Bob
Atkins, Charlotte	Blunkett, Rt Hon David
Austin, John	Borrow, David
Banks, Tony	Bradley, Keith (Withington)
Barnes, Harry	Bradley, Peter (The Wrekin)
Barron, Kevin	Bradshaw, Ben
Battle, John	Brinton, Mrs Helen
Bayley, Hugh	Brown, Rt Hon Nick (Newcastle E)
Beard, Nigel	Brown, Russell (Dumfries)
Beckett, Rt Hon Mrs Margaret	Browne, Desmond
Begg, Miss Anne	Buck, Ms Karen
Bell, Stuart (Middlesbrough)	Burgon, Colin
Benn, Rt Hon Tony	Butler, Mrs Christine

Caborn, Richard	Griffiths, Jane (Reading E)
Campbell, Alan (Tynemouth)	Griffiths, Nigel (Edinburgh S)
Campbell, Mrs Anne (C'bridge)	Griffiths, Win (Bridgend)
Campbell, Ronnie (Blyth V)	Grocott, Bruce
Canavan, Dennis	Grogan, John
Caplin, Ivor	Hall, Patrick (Bedford)
Casale, Roger	Hanson, David
Caton, Martin	Harman, Rt Hon Ms Harriet
Chapman, Ben (Wirral S)	Healey, John
Chaytor, David	Henderson, Ivan (Harwich)
Chisholm, Malcolm	Hepburn, Stephen
Clapham, Michael	Heppell, John
Clark, Rt Hon Dr David (S Shields)	Hewitt, Ms Patricia
Clark, Dr Lynda (Edinburgh Pentlands)	Hill, Keith
	Hoey, Kate
Clark, Paul (Gillingham)	Home Robertson, John
Clarke, Charles (Norwich S)	Hoon, Geoffrey
Clarke, Rt Hon Tom (Coatbridge)	Hope, Phil
Clarke, Tony (Northampton S)	Hopkins, Kelvin
Clelland, David	Howarth, George (Knowsley N)
Clwyd, Ann	Hoyle, Lindsay
Coaker, Vernon	Humble, Mrs Joan
Coffey, Ms Ann	Hurst, Alan
Coleman, Iain	Hutton, John
Connarty, Michael	Iddon, Dr Brian
Cook, Frank (Stockton N)	Jackson, Ms Glenda (Hampstead)
Corbett, Robin	Jackson, Helen (Hilbborough)
Corbyn, Jeremy	Jamieson, David
Corston, Ms Jean	Jenkins, Brian
Cousins, Jim	Johnson, Alan (Hull W & Hessle)
Cox, Tom	Johnson, Miss Melanie(Welwyn Hatfield)
Cranston, Ross
Crausby, David	Jones, Helen (Warrington N)
Cryer, Mrs Ann (Keighley)	Jones, Ms Jenny (Wolverh'ton SW)
Cummings, John
Cunliffe, Lawrence	Jones, Jon Owen (Cardiff C)
Cunningham, Rt Hon Dr Jack(Copeland)	Jones, Dr Lynne (Selly Oak)
	Jones, Martyn (Clwyd S)
Cunningham, Jim (Cov'try S)	Keeble, Ms Sally
Dalyell, Tam	Keen, Alan (Feltham & Heston)
Darling, Rt Hon Alistair	Keen, Ann (Brentford & Isleworth)
Darvill, Keith	Kelly, Ms Ruth
Davies, Rt Hon Denzil (Llanelli)	Kemp, Fraser
Davis, Terry (B'ham Hodge H)	Kennedy, Jane (Wavertree)
Dawson, Hilton	Kidney, David
Dean, Mrs Janet	Kilfoyle, Peter
Denham, John	King, Andy (Rugby & Kenilworth)
Dismore, Andrew	King, Ms Oona (Bethnal Green)
Dobbin, Jim	Kingham, Ms Tess
Donohoe, Brian H	Ladyman, Dr Stephen
Doran, Frank	Lawrence, Ms Jackie
Dowd, Jim	Laxton, Bob
Eagle, Angela (Wallasey)	Leslie, Christopher
Edwards, Huw	Levitt, Tom
Efford, Clive	Lewis, Terry (Worsley)
Ellman, Mrs Louise	Linton, Martin
Ennis, Jeff	Livingstone, Ken
Etherington, Bill	Lloyd, Tony (Manchester C)
Ewing, Mrs Margaret	Lock, David
Fisher, Mark	Love, Andrew
Fitzpatrick, Jim	McAllion, John
Fitzsimons, Lorna	McAvoy, Thomas
Flint, Caroline	McCabe, Steve
Flynn, Paul	McCafferty, Ms Chris
Follett, Barbara	McDonagh, Siobhain
Foster, Rt Hon Derek	Macdonald, Calum
Foster, Michael Jabez (Hastings)	McDonnell, John
Foster, Michael J (Worcester)	McFall, John
Foulkes, George	McGuire, Mrs Anne
Fyfe, Maria	McIsaac, Shona
Galloway, George	McNamara, Kevin
Gerrard, Neil	McNulty, Tony
Gibson, Dr Ian	MacShane, Denis
Gilroy, Mrs Linda	Mactaggart, Fiona
Goggins, Paul	McWalter, Tony
Golding, Mrs Llin	Mahon, Mrs Alice

Mallaber, Judy	Sheerman, Barry
Marsden, Gordon (Blackpool S)	Sheldon, Rt Hon Robert
Marsden, Paul (Shrewsbury)	Simpson, Alan (Nottingham S)
Marshall, David (Shettleston)	Singh, Marsha
Marshall, Jim (Leicester S)	Skinner, Dennis
Martlew, Eric	Smith, Rt Hon Andrew (Oxford E)
Maxton, John	Smith, Angela (Basildon)
Meacher, Rt Hon Michael	Smith, Miss Geraldine (Morecambe & Lunesdale)
Meale, Alan
Merron, Gillian	Smith, Jacqui (Redditch)
Michie, Bill (Shef'ld Heeley)	Smith, Llew (Blaenau Gwent)
Moonie, Dr Lewis	Soley, Clive
Moran, Ms Margaret	Southworth, Ms Helen
Morgan, Alasdair (Galloway)	Squire, Ms Rachel
Morgan, Ms Julie (Cardiff N)	Starkey, Dr Phyllis
Morley, Elliot	Steinberg, Gerry
Morris, Ms Estelle (B'ham Yardley)	Stevenson, George
Mountford, Kali	Stewart, David (Inverness E)
Mullin, Chris	Stewart, Ian (Eccles)
Murphy, Denis (Wansbeck)	Stinchcombe, Paul
Murphy, Jim (Eastwood)	Stoate, Dr Howard
Murphy, Rt Hon Paul (Torfaen)	Stott, Roger
Naysmith, Dr Doug	Stringer, Graham
Norris, Dan	Stuart, Ms Gisela
O'Brien, Bill (Normanton)	Sutcliffe, Gerry
O'Brien, Mike (N Warks)	Taylor, Rt Hon Mrs Ann(Dewsbury)
O'Hara, Eddie
Olner, Bill	Temple—Morris, Peter
O'Neill, Martin	Thomas, Gareth (Clwyd W)
Organ, Mrs Diana	Thomas, Gareth R (Harrow W)
Palmer, Dr Nick	Todd, Mark
Pearson, Ian	Touhig, Don
Pickthall, Colin	Trickett, Jon
Pike, Peter L	Turner, Dennis (Wolverh'ton SE)
Plaskitt, James	Turner, Dr Desmond (Kemptown)
Pollard, kerry	Turner, Dr George (Norfolk)
Pond, Chris	Twigg, Derek (Halton)
Pond, Chris	Twigg, Stephen (Enfield)
Pope, Greg	Vaz, Keith
Powell, Sir Raymond	Vis, Dr Rudi
Prentice, Ms Bridget (Lewisham E)	Walley, Ms Joan
Prentice, Gordon (Pendle)	Ward, Ms Claire
Primarolo, Dawn	Wareing, Robert N
Prosser, Gwyn	Watts, David
Purchase, Ken	White, Brian
Quin, Rt Hon Ms Joyce	Wicks, Malcolm
Rapson, Syd	Williams, Alan W (E Carmarthen)
Raynsford, Nick	Winnick, David
Reid, Rt Hon Dr John (Hamilton N)	Winterton, Ms Rosie (Doncaster C)
Roche, Mrs Barbara	Wood, Mike
Rooney, Terry	Worthington, Tony
Ross, Ernie (Dundee W)	Wright, Anthony D (Gt Yarmouth)
Roy, Frank	Wright, Dr Tony (Cannock)
Ruane, Chris	Wyatt, Derek
Ruddock, Joan
Russell, Ms Christine (Chester)	Tellers for the Ayes:
Savidge, Malcolm	Mr. Kevin Hughes and Mr. Clive Betts.
Sawford, Phil
NOES
Allan, Richard	Breed, Colin
Ancram, Rt Hon Michael	Brooke, Rt Hon Peter
Arbuthnot, Rt Hon James	Browning, Mrs Angela
Atkinson, David (Bour'mth E)	Bruce, Ian (S Dorset)
Baker, Norman	Burnett, John
Ballard, Jackie	Burns, Simon
Beggs, Roy	Burstow, Paul
Bercow, John	Butterfill, John
Beresford, Sir Paul	Cash, William
Body, Sir Richard	Chapman, Sir Sydney (Chipping Barnet)
Boswell, Tim
Bottomley, Rt Hon Mrs Virginia	Chidgey, David
Brake, Tom	Chope, Christopher

Clappison, James	Lyell, Rt Hon Sir Nicholas
Clark, Rt Hon Alan (Kensington)	McIntosh, Miss Anne
Clark, Dr Michael (Rayleigh)	Maclean, Rt Hon David
Clifton—Brown, Geoffrey	McLoughlin, Patrick
Collins, Tim	Malins, Humfrey
Colvin, Michael	Maples, John
Cormack, Sir Patrick	Maude, Rt Hon Francis
Cotter, Brian	Mawhinney, Rt Hon Sir Brian
Cran, James	May, Mrs Theresa
Curry, Rt Hon David	Michie, Mrs Ray (Argyll & Bute)
Davis, Rt Hon David (Haltemprice & Howden)	Moore, Michael
Moss, Malcolm
Day, Stephen	Nicholls, Patrick
Donaldson, Jeffrey	Norman, Archie
Dorrell, Rt Hon Stephen	Oaten, Mark
Duncan, Alan	Öpik, Lembit
Duncan Smith, Iain	Page, Richard
Evans, Nigel	Paice, James
Faber, David	Paterson, Owen
Fabricant, Michael	Pickles, Eric
Fallon, Michael	Prior, David
Feam, Ronnie	Randall, John
Forth, Rt Hon Eric	Redwood, Rt Hon John
Foster, Don (Bath)	Rendel, David
Fox, Dr Liam	Robathan, Andrew
Fraser, Christopher	Robertson, Laurence (Tewk'b'ry)
Garnier Edward	Rowe, Andrew (Faversham)
Gibb, Nick	Ruffley, David
Gill, Christopher	Russell, Bob (Colchester)
Gorman, Mrs Teresa	St Aubyn, Nick
Gorrie, Donald	Sanders, Adrian
Gray, James	Sayeed, Jonathan
Greenway, John	Shepherd, Richard
Grieve, Dominic	Smith, Sir Robert (W Ab'd'ns)
Hague, Rt Hon William	Smyth, Rev Martin (Belfast S)
Hamilton, Rt Hon Sir Archie	Soames, Nicholas
Hammond, Philip	Spicer, Sir Michael
Hancock, Mike	Steen, Anthony
Harris, Dr Evan	Streeter, Gary
Harvey, Nick	Swayne, Desmond
Hayes, John	Syms, Robert
Heald, Oliver	Tapsell, Sir Peter
Heathcoat—Amory, Rt Hon David	Taylor, Ian (Esher & Walton)
Horam, John	Taylor, John M (Solihull)
Howard, Rt Hon Michael	Taylor, Matthew (Truro)
Howarth, Gerald (Aldershot)	Taylor, Sir Teddy
Hughes, Simon (Southwark N)	Thompson, William
Hunter, Andrew	Tonge, Dr Jenny
Jack, Rt Hon Michael	Tredinnick, David
Jackson, Robert (Wantage)	Trend, Michael
Jenkin, Bernard	Tyler, Paul
Johnson Smith, Rt Hon Sir Geoffrey	Tyrie, Andrew
	Wallace, James
Keetch, Paul	Wardle, Charles
Kennedy, Charles (Ross Skye)	Waterson, Nigel
Key, Robert	Webb, Steve
Kirkbride, Miss Julie	Whitney, Sir Raymond
Kirkwood, Archy	Whittingdale, John
Laing, Mrs Eleanor	Wilkinson, John
Lait, Mrs Jacqui	Willetts, David
Lansley, Andrew	Willis, Phil
Leigh, Edward	Winterton, Mrs Ann (Congleton)
Letwin, Oliver	Winterton, Nicholas (Macclesfield)
Lewis, Dr Julian (New Forest E)	Woodward, Shaun
Lidington, David	Yeo, Tim
Lilley, Rt Hon Peter	Young, Rt Hon Sir George
Livsey, Richard
Lloyd, Rt Hon Sir Peter (Fareham)	Tellers for the Noes:
Loughton, Tim	Mrs. Caroline Spelman and Sir David Madel.
Luff, Peter

Question accordingly agreed to.

Bill read the Third time, and passed.

Delegated Legislation

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation)

Rating And Valuation

That the draft Railways (Rateable Values) (Amendment) Order 1999, which was laid before this House on 24th February, be approved.—[Mr. Betts.]

Question agreed to.

Rural Services

Motion made, and Question proposed, That this House do now adjourn.— [Mr. Betts.]

10.24 pm

I am delighted to have obtained this Adjournment debate, not only because of my deep interest in the welfare of people in rural Britain, but particularly because of my passionate commitment to my constituents in rural South Holland and The Deepings.

I make no apology for adding that I feel I have a disproportionate responsibility to represent those in most need in my constituency: the elderly, the disabled, the poor and those in remote communities, who are most isolated from public services. Nor is there any contradiction in my making a fierce defence of the gentle, or passionately advocating the case for quiet, unassuming, unchanging rural Britain. It is in that crusading spirit that we should approach the delivery of public services in rural communities.

Rural Britain has felt besieged since Labour came to power. It may be true that new Labour, with its assumptions about modernity, its fascination with everything new and its metropolitan culture, is particularly hostile to rural traditions. It is certainly true that the Government have treated rural Britain relatively badly. Evidence of that can be found in the on-going crisis in agriculture, but I particularly want to concentrate on public services and the Government's settlements for local authorities. [Interruption.] Perhaps I should wait a moment while the Minister takes her seat. Rural communities have fared badly in those settlements.

I have figures from the House of Commons Library that reveal that in the two years in which the Government have made local government settlements, most of Britain has received an increase of 8.2 per cent., while shire districts and counties lag behind on 7.7 per cent. Rural services have, therefore, suffered as a result of inadequate financing from the Government. That may be partly because the Labour party has so little rural representation. Despite its extravagant claims, only 19 of the 100 most rural seats in Britain are held by the Labour party. In England alone, the party fares even worse, holding only 17 of the 100 most rural constituencies.

I do not want to be unnecessarily ungenerous to the governing party. There are times when it is necessary to be ungenerous, but, on this occasion, I do not want to give in to temptation. However, the services that are so essential to sustaining rural communities have certainly been neglected. The Government will undoubtedly talk about the extra support that they have provided for rural transport, but I have to tell them that it is not enough for the hon. Member for Crewe and Nantwich (Mrs. Dunwoody), who, when serving on the Environment Sub-Committee of the Select Committee on Environment, Transport and Regional Affairs, said that as the Government grant additional money to rural bus services, they are disappearing. She stated that

"even though the Government has put up a lot extra money, that may not be anywhere near enough to even begin to reverse the existing decline."

Frankly, even if one totalled the money that the Government have allocated to rural transport, it would not be enough to solve the problem in even one part of Great Britain. Many rural communities have almost no public transport services, and the car is the only way that people can get around.

Will my hon. Friend note that in rural areas such as Shropshire, 67 per cent. of the work force go to work in a private car, and the swingeing increase in diesel and petrol duties is the equivalent of 1p on income tax in the course of this Parliament?

I am extremely grateful to my hon. Friend for drawing that to the attention of the House. He is the personification of Housman's "A Shropshire Lad", and a staunch defender of all things rural and, in particular, the interests of his constituents.

My hon. Friend mentioned the increase in diesel duty, which was a particular blow to the haulage industry. People such as Jim Welch of Fowler Welch in my constituency viewed that as a slap in the face, given that the information that the Government had received from the industry had made it clear that any further increase would endanger the future growth of that industry and even its maintenance. Haulage is an important rural employer, as I am sure the Minister is aware.

We should not be too ungrateful because we have, at long last, the beginnings of a White Paper on rural affairs. That is not the White Paper itself, which is very late, but a precursor in the form of a discussion document, which says that the Government are committed to providing rural services that are accessible for the whole community. It questions what mechanisms are necessary to ensure that rural issues are considered in policy making. I can tell the Minister that such mechanisms are not regional development agencies or regional assemblies. There is a fear that a regional authority dominated by Derby, Leicester and Nottingham would forget the needs of rural Lincolnshire. The equivalent must be true for many parts of Great Britain.

The answer to question 10 in the discussion document—how we connect consumers and what farmers produce—is certainly not supermarkets. As my hon. Friend the Member for North Norfolk (Mr. Prior) said in an Adjournment debate last Thursday, it is local suppliers who most often forge productive links with local producers. They purchase their products from the local area, whereas large supermarkets tend to buy nationally. The expansion of supermarkets will do nothing in rural communities to maintain the link between farmers, consumers and retailers.

So we have the precursor to the White Paper. It is rather late and slightly thin, but at least it is a step in the right direction.

I shall refer particularly to the latest attack on the countryside and public services, by which I mean the Budget. My hon. Friend the Member for North Shropshire (Mr. Paterson) has mentioned haulage, but we should not ignore the effect of increased petrol costs on individuals, which once again will be felt disproportionately by rural motorists. The Government's national traffic survey, combined with road traffic statistics, suggests that rural dwellers typically travel about 2,500 more miles a year than their metropolitan equivalents. This is about not just the availability of local services, but access to them.

Figures from the Library suggest that the total extra annual cost of the Budget in terms of fuel costs to rural dwellers is £350 million, and Lincolnshire's share of that is about £10 million. It is inequitable to introduce additional taxation that affects rural motorists in this way, especially when we consider that the luxury of a car in London is the necessity of a car in rural Lincolnshire. That is why car ownership as a universal measure of deprivation, or of the lack of deprivation, is such a misleading criterion.

When Mr. John Edwards of the Rural Development Commission gave evidence to the Select Committee on Agriculture, he said:

"We certainly have concerns that a number of formulae and systems"—

for example

"the SSA for local government finance … are picking up urban disadvantage much better than they are rural … For example, if you want to measure poor access to services, what you need to do is find out those areas which do not have a shop and … do not have a regular bus service and then count the number of people there"

who cannot find easy access to local community facilities.

The knock-on effect from private motorists' problems reaches the public services. We know already, for example, that the national health service will be £1.5 million poorer because of extra fuel tax. Once again, the burden will fall unequally because of the higher level of transport costs in rural communities.

Figures from the Library show that police spending on transport is greater in rural communities. For example, 2.4 per cent. of the budget for non-staff transport costs is allocated in rural areas, compared with 2.2 per cent. in metropolitan areas and 1.5 per cent in the Metropolitan police force area. In Lincolnshire, that means that £60,000 will have to be devoted from a scarce police budget solely to fund the increase in petrol tax that has arisen as a result of the Budget.

Does my hon. Friend agree that one of the categories of people who will suffer as a result of the swingeing increase in the price of petrol is those who work voluntarily for charities, including Mrs. Zettl, an 81-year-old lady living in the high street in Buckingham? She is of modest means and working for two local charities. She cannot contemplate with equanimity the savage increase in the cost of petrol that she will have to face.

I am looking forward to meeting my hon. Friend's constituent and discussing these matters in greater detail, no doubt over a cup of tea.

The fire service is even worse affected. Fire services in rural areas spend an even greater proportion of their budgets on transport. Social services, refuse collection and a panoply of other local authority services display a similar difference between metropolitan and rural spending patterns.

The Minister will claim that standard spending assessments are adjusted to take account of sparsity, but with regard to the police, for example, she will know that there has always been criticism of the formula that was introduced in 1995–96, which led to the allocation formula working group. Questions about the particular difficulties of policing rural areas have not been satisfactorily resolved. Although a research project was set up by the Government, we need assurances that it will report speedily.

Surprisingly, there is no adjustment in the SSA to take account of the additional costs of the provision of rural services by fire brigades. For only three other local authority services are there adjustments in the SSA to take account of sparsity, although I admit that one of those is social services. That adjustment was introduced by the Government this year. I welcome that warmly—well, fairly warmly.

When the Minister responds, there are some particular assurances that I hope she will give us. First, what progress can we expect on the research on the additional costs of rural policing? Secondly, the fire brigade must be included in the estimates of additional costs for rural provision. Thirdly, the sparsity variable in the cost adjustment of the general allocation for health and ambulance services must be revised upwards.

Fourthly, other local authority services must be studied to ascertain the effect of sparsity and rurality in their delivery. Fifthly, the differential cost of transport, petrol and diesel in particular must be an identified separate factor in the funding of local authority and Government services.

The sixth point is that there must be additional support for areas with scattered populations, and those with sparse populations, which are not the same thing—for example, there may be a rural area in which there are many villages and not much in between, or there may be a fenland area in which the population is thinly spread.

Given that the Minister is so highly regarded in all parts of the House, expectations will be high tonight that, having thought on her feet, she will agree to all that I have suggested. If she does not, she should be aware in her comfortable and privileged Hampstead and Highgate constituency that there are those of us who will fight and campaign unstintingly for the interests of the countryside and rural areas.

Problems similar to those that the hon. Gentleman describes have existed in my part of rural England for the past 20 years. Why do the Conservatives suddenly feel the need to campaign, when they could have done something about the problems during all those years?

We must concede and move on. There is no doubt that all Governments make mistakes. It is fair to say that previous Conservative Governments could have done more in some of those areas. The Labour Government were elected with a great fanfare. However, the rural citizens of this country are bitterly disappointed with what they have seen over the past two years.

We will fight unstintingly. We will crusade and campaign for the interests of rural Britain. We will be inspired in that campaign by our reverence for the England of Chesterton and of Betjeman, and for the British Isles of Buchan and of Yeats, where

"midnight's all a-glimmer, and noon a purple glow,

And evening full of the linnet's wings."

10.38 pm

The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions

(Ms Glenda Jackson)

I begin by apologising to the hon. Member for South Holland and The Deepings (Mr. Hayes) for not being present in the Chamber at the start of the debate. I was attempting to fight my way through the mass exodus from the Chamber.

I congratulate the hon. Gentleman not only on securing the debate, but on ensuring so much support when he presented his case. Given the direction from which he is coming, the amount of protection that he brought with him is warranted.

The hon. Gentleman was clearly much concerned about the most recent standard spending assessment. That was the best local authority settlement for seven years. There has been an increase of £2.6 billion in the sum that has gone to local authorities. I was somewhat surprised at his tone, considering that Lincolnshire has an SSA of 5.7 per cent., whereas the average is 4.2 per cent. The SSA for his constituency is 3.9 per cent., although the average is 3.2 per cent.

The hon. Member for North Shropshire (Mr. Paterson) referred to increases in fuel duty. I point out to Conservative Members that the fuel duty escalator was introduced by the previous Administration at 5 per cent. In effect, we have put it up by 1 per cent. However, the debate this evening is about the delivery of public services in rural areas.

The Government's election manifesto included specific pledges to recognise the special needs of rural areas, not to allow rural transport and other public services to deteriorate, to give greater protection for wildlife and to give greater freedom for people to explore the open countryside.

Our vision for the countryside has five strands: a living countryside, with thriving rural communities where public services are properly supported; a working countryside, with a balanced mix of homes and jobs; a countryside in which the environment is properly protected and conserved; a countryside for all, where there is genuine access so that the beauty and tranquillity of the countryside can be enjoyed widely; and a countryside in which the Government recognise the interdependence of town and country and wish to strengthen the relationships between the two.

The Government have already achieved much for rural areas, such as extra funding for rural public transport, rate relief for village shops, extra support to the farming community and the creation of a new Countryside Agency.

As the hon. Member for South Holland and The Deepings said, the Government are to produce a White Paper for rural England later this year. It will consider how the prosperity and competitiveness of the rural economy can be strengthened, how development and regeneration policies can help those areas that are in need and how we can make sure that all people in rural communities have opportunities to participate fully in society.

We issued a discussion document on 17 February, setting out key themes and inviting comments by 30 April. We will also continue to talk to many interested people and organisations. We will be looking closely at how the urban and rural White Papers can complement each other, to build a clear and comprehensive strategy for the future.

The rural White Paper will be produced by my Department and the Ministry of Agriculture, Fisheries and Food. We will work together closely, and many other Departments and agencies, whose responsibilities have a bearing on rural England, will be involved. We have an important opportunity to look at a range of policy and delivery issues afresh and we are confident that the White Paper will set out a clear and comprehensive strategy for the future.

Transport, or rather the lack of it, and the accessibility needs of rural areas were a major considerations in our review of transport policy. Local transport plans and legislation to provide for bus quality partnerships provide a much sounder base for local authorities to develop more effective strategies in rural areas.

The Rural Development Commission's 1997 survey of rural services showed that only 25 per cent. of parishes had a daily bus service. In contrast, car ownership is comparatively high—only 22 per cent. of rural households do not have access to a car, compared with 34 per cent. of households in urban areas. The poor level of public transport means that car ownership is often a necessity in rural areas, but a significant minority has no access to a car. Regrettably, if people do not have a car and there is no public transport, it is extremely difficult for them to get to services such as shops and hospitals, or even to visit friends. We need to provide our rural communities with more choice in transport.

The Government have already taken action. In March last year, we announced an additional £50 million a year for rural public transport. That injection of funds is one of the positive steps that we are taking to assist rural communities and it reflects our wider commitment to improve public transport services for the benefit of all sectors of society.

As I have said, the problem is that public transport that satisfies the needs of scattered communities can never be provided. A bus would have to stop in hundreds of places all over my constituency to pick people up from isolated areas—not even hamlets, but places where there is just a house. The car will always be a necessity for such people. Are not increases in fuel duty indiscriminate because they affect the poor just as they affect the rich? It is most cruel to say that, although fuel duty is being increased, people have the choice of using public transport. That fiction will never become reality.

I am somewhat surprised that the hon. Gentleman is not aware of the rural bus challenge competition, which was put in place specifically to introduce innovative services that will begin to meet the needs of the sparsely populated and scattered communities to which he referred. Lincolnshire has done extremely well from the rural bus challenge—it received £1,219,990 for a package entitled, "Making the connection", in addition to the £1,194,385 that it received from the new money found specifically to provide bus services in rural areas.

Bus services have a crucial role to play in providing precisely the sort of transport choices to which the hon. Gentleman referred. They can offer flexible, adaptable ways of meeting rural needs. That is why the majority of the additional funding—£32.5 million in a full year for each of the next three years—is being used to support such services in England. In many cases, that has doubled the existing subsidy from local authorities. The details and allocations to local authorities were announced in June. I have told the hon. Gentleman how well his county has done from that. We selected an excellent range of schemes for the rural bus challenge—large and small; simple and technically more advanced—from all over the country. Lincolnshire put in an exciting and interesting plan and received more than £1 million.

We have also set aside £4.2 million of the additional funding to support the new rural transport partnership scheme, administered by the Rural Development Commission. The overarching aim of the RTP is to improve the accessibility of jobs, services and social activity for rural communities.

The resources for those new initiatives are additional to, and separate from, the assistance that the Government provide for transport in rural areas. Last week's Budget provided a further £10 million a year for the next two years to assist rural public transport. One of the key proposals in our integrated transport White Paper is for new five-year local transport plans. There will be more resources—an extra £700 million over three years—and significantly greater local discretion over their allocation. We want to ensure that local transport plans recognise the needs and particular issues that rural communities and businesses face.

The package approach has been very successful in urban areas, and we are encouraging local authorities to use their local transport plans to develop a more strategic approach for rural areas as well.

Many Opposition Members have expressed concern—usually from a sedentary position—about the Government's fuel duty strategy. I have already pointed out that the fuel duty escalator was introduced by the previous Administration at 5 per cent; this year it is 6 per cent. It is crucial that CO² emissions from road transport are reduced if we are to achieve our Kyoto climate change commitments. The fuel duty escalator is the most important existing measure to reduce those emissions and to encourage the efficient use of road transport. The inefficient use of road transport costs this country £20 billion a year. The impact of that is felt as much in rural as in urban areas. Pollution, which causes deaths, illness and disease, is a burden which the whole country has to bear. It affects rural as much as urban areas.

I know how deeply compassionate the Minister is in her approach to these matters. Does she not understand that to talk in that ethereal way about world pollution is of no great comfort to the elderly lady or disabled person in a remote part of my constituency when she cannot get to a hospital, to any social activity or to the shops? I had a meeting only last week with a local bus company in my constituency, because bus services are diminishing, not growing. I hope that the Minister will look particularly at how bus services in my constituency can be improved and extended.

I am happy to look at the hon. Gentleman's constituency in the light of the information that he has given me. I have told him of the large amount of money that is going into Lincolnshire. There is no reason why the services to which he has referred, and which are vital, cannot be delivered.

Of course, many of the difficulties that are being experienced by people in rural communities have to do with the decisions of the previous Administration. I admire the fact that the hon. Gentleman has taken his leader's advice and chosen to acknowledge that mistakes were made.

Reducing the need to travel is important. The hon. Gentleman touched on the difficulty because of the fact that so many supermarkets have been built. Again, that followed a decision by the previous Administration. They denuded small market towns by giving permission for large supermarkets and shopping centres to be built far out on the edge of urban areas.

There was also a drastic decline in the number of village shops. It was one of the most noticeable and regrettable trends in rural areas, but the work of the Village Retail Service Association and the village shop scheme that is administered by the Rural Development Commission have been invaluable in halting and reversing that decline. Again, the Government are playing their part in ensuring that those successes continue. The introduction of rate relief at 50 per cent. for single village shops or post offices in villages of under 3,000 people, should help towards that objective.

Tory policy.

Order. The hon. Gentleman must listen to the Minister's reply to the debate and not shout from a sedentary position.

Thank you, Mr. Deputy Speaker.

Will the hon. Lady concede that the policy to reduce the rates on village shops came out of the rural White Paper that was introduced by the last Conservative Government? It is something that her Government have inherited.

It may be something that the Government have inherited, but they have given a clear commitment to continue that policy. I ask the hon. Lady and other Conservative Members why they cannot continue to support the other policy that was introduced by her Administration—the fuel duty escalator.

The village school continues to play an important part in many rural communities. They were often the centre of villages. Great concern was expressed at what seemed to be the inevitable demise of village schools under the previous Administration. However, the present Government have made it clear that, under both present and future arrangements for decision-making on rural schools, the presumption will be against closure.

The Government are taking action on health care. We are continuing to support the essential small pharmacies scheme, giving support to the dispensing services of pharmacies that are more than 1 km from another such outlet. We have introduced health action zones to tackle a range of health problems in some of the most deprived areas. Eleven zones were selected initially and a further 15 have been added in a second wave.

Three of those health action zones are in predominantly rural areas: north Cumbria, Northumberland and Cornwall. A total of £5 million is available in 1998–9 to promote better working on health issues. A further £30 million will follow for the first 11 zones in 1999–2000, with £15 million for the second wave.

That is the third time that the hon. Lady has given way. She is satisfying my desire to prove that she is compassionate and generous, as I described earlier.

In my constituency, local hospitals are threatened with closure. The policy among health authorities throughout the country seems to be to invest in large urban centres of excellence that are very distant from remote rural communities. In many parts of my constituency, to get to one of those centres of excellence, people have to travel 40 or 50 miles—to Lincoln, Peterborough—

The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at six minutes to Eleven o'clock.

Volume 327: debated on Wednesday 17 March 1999

House Of Commons

Prayers

Greening Government Initiative

Maritime And Coastguard Agency

Soccer Grounds (Northern Ireland)

Suburban Areas

Water Charges

Private Business

City Of Westminster Bill Lords

Oral Answers To Questions

Cabinet Office

Drug-Testing Programmes

Better Regulation Task Force

Government Modernisation

Genetically Modified Foods

Public Consultation

People's Panel

Regulations

Information Technology

Genetically Modified Foods

Civil Servants

Illegal Drugs

Parliamentary Commissioner For Administration

Prime Minister

Engagements

Overseas Territories

Iraq

Leasehold Reform

Leasehold Reform

Tax Credits Bill Money No 2

Orders Of The Day

Tax Credits Bill

New Clause 5

New Category Of Child Care Providers For Tax Credit Purposes

New Clause 1

Housing Costs

New Clause 4

Payment Of Tax Credits To Agricultural Employees

Clause 6

Payment Of Tax Credit By Employers Etc

Clause 16

Financial Provisions

Schedule 2

Transfer Of Functions

Schedule 6

Repeals

Delegated Legislation

Rating And Valuation

Rural Services