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Westminster Hall

Volume 404: debated on Tuesday 29 April 2003

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Westminster Hall

Tuesday 29 April 2003


School Funding

Motion made, and Question proposed, That the sitting be now adjourned.— [Mr. Sutcliffe.]

9.30 am

I welcome Members to this first sitting of Westminster Hall following the somewhat shortened but none the less very enjoyable Easter recess. I hope that all colleagues are duly refreshed.

Thank you, Mr. Deputy Speaker, for welcoming us so warmly to this debate on school funding, which it is a great privilege to have secured.

I begin by paying tribute to the hard work of the many heads, teachers and governors whom I have been fortunate enough to meet in the past two years during my continuing effort to visit every primary and secondary school in the Wycombe constituency before this Parliament ends. I pay special tribute and give my warm thanks to all the teachers in my constituency who not only teach difficult and sometimes disruptive pupils but act as social workers or, in some cases, parents. They socialise and, in the real sense of the word, civilise children who may live in homes where rules are arbitrary or non-existent and who lack the care, support and love in childhood that many of us have been lucky enough to take for granted.

Turning directly to school funding, I want to begin by reading a letter recently sent to all parents by a school's chairman of governors. It says:
"The Government has changed the way it allocates block grants to councils and has moved money from the south-east to the north. We believe the Government has not thought through the implications of all changes for some of the neediest schools. We will have to cut our spending on resources dramatically. This means no new books or computers. In effect, we will only be able to buy the most basic of resources such as pencils and paper. We do not want to make anyone redundant but that may come. In any event, as staff leave we will not be able to replace them.
Although we will do our best to maintain standards, we cannot guarantee that the quality of education will not suffer. It is our most needy children who stand to lose the most."
Those are the words of Fiona Millar, the chairman of governors at Gospel Oak primary school of Camden in London, and they sum up perfectly what is not just a funding problem for Gospel Oak primary school in particular, but a funding crisis for schools in general, to which I shall turn more fully in a moment.

First, however, I should tell the Minister that if he wants to track down Ms Millar to discuss with her in person the problems of Gospel Oak primary school, I can help him to locate her during school hours. As we learned from the papers, some of which printed her letter yesterday, Ms Millar's working address is none other than 10 Downing street, London, SW1. She works as personal assistant to the wife of the Prime Minister, who may be able to pass on Ms Millar's views directly to the Minister, or even to higher authorities within the Government.

In High Wycombe, we know how Fiona Millar in Camden feels. Like constituencies represented by some of my hon. Friends in the Chamber this morning, Buckinghamshire is sometimes thought of as green, leafy and prosperous in its entirety. However, the background against which some schools in my constituency are set is somewhat different. The national indices of deprivation show that Marsh and Micklefield ward in my constituency stands at 2, 659 in the table of 8,000 wards, and Oakridge and Tinkers Wood at 2,178. Oakridge and Tinkers Wood is therefore just outside the top 2,000 wards for deprivation. Booker and Castlefield ward stands at 1,669, and at 886 for education. It therefore falls within the 1,000 most deprived wards for education. That illustrates the fact that, as hon. Members will know, there remain serious pockets of social exclusion, deprivation and poverty in areas that are generally thought of as prosperous.

Marion Clayton, the cabinet member for schools on Buckinghamshire county council, said of the current schools funding crisis:
"Schools are faced with the real possibility of having to make teaching staff redundant—ironic when it is so difficult"—
my hon. Friends will appreciate the significance of the next few words—
"to recruit teachers in the south-east—and I suspect many schools will be setting deficit budgets with no real hope of recovery in the short-term."
Buckinghamshire is not alone: apparently other authorities are worse affected. David Hart, the general secretary of the National Association of Head Teachers, says that 70 redundancy notices have already been issued in Essex. My hon. Friend the Member for Rayleigh (Mr. Francois) may have more to say about that.

I am sure that the Minister will listen with interest to my hon. Friend's remarks. Redundancy notices are also likely to be issued in Devon, Gloucestershire, Bournemouth, Poole, Torbay, Plymouth and Barnet. Nick Butt, the head of St. Edmund's primary school in King's Lynn, Norfolk, which is near, if not in, the constituency of the Secretary of State for Education and Skills, is leaving his post in protest.

How has all that happened when the Government boast, for example, of a 6.2 per cent. increase in grant in Buckinghamshire, which, as I am sure the Minister will point out, is well above the rate of inflation? How has that happened when the Government also boast of passporting money for education directly to schools?

I shall answer those questions with a response from David Shakespeare, the leader of Buckinghamshire county council, to a letter from the Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Shipley (Mr. Leslie). Mr. Shakespeare writes:
"Buckinghamshire's 6.2 per cent. increase in grant that is quoted in your letter is indeed a well above inflation increase. However, the Government's own assessment of our Council's spending requirement (FSS) in order to cover inflation, new responsibilities placed on the County by Government and demographic changes is an 8.3 per cent. increase, not 6. 2 per cent.
As three-fifths of the Council's income comes from Government grants which, as you state, have only increased by 6.2 per cent., the remaining two-fifths contributed by the council tax payer has to increase by over 11 per cent. for the overall spending increase to be the 8.3 per cent. specified by the Government (FSS). This is simple arithmetic.
Your officials further need to understand that the resource equalisation factor incorporated in the Government's new grant distribution has taken away £11.2 million of grant from Buckinghamshire, which automatically adds a 7.5 per cent. increase to the council tax to replace this loss."
That is the shift of Whitehall money from south to north or, more specifically, from efficient, mainly Conservative-controlled authorities in the south to inefficient, mainly Labour-controlled authorities in the north, to which Ms Millar referred in her letter.

Mr. Shakespeare continues:

"The remainder of Buckinghamshire's council tax increase consists firstly of a further 1.5 per cent. to be able to comply with the Government's new FSS spending target for schools and the new 88/12 budget split between classrooms and support services. Secondly, a further 1.4 per cent. increase in council tax to fund the action plan required of us by the Government's social services inspectorate."
The story of Government funding not matching Government requirements is as true when applied specifically to schools as it is when applied to local government in general.

Marion Clayton points out that although there has been a 6 per cent. increase for education in general, that increase is "not sufficient" to cover assimilation arrangements for teachers, employers' national insurance increases and the loss of standards funds money in Buckinghamshire.

I shall now give some national figures. The Local Government Association, was not, when I last looked, an outpost of Conservative central office. The LGA says that the formula spending share for education
"does not allow for the following pressures…The teachers' employers' superannuation increase—£50 million. National insurance contributions increase—£115 million. Teachers pay increase—£548 million. Other inflation—£200 million. Withdrawal of Standards Funds Grants—£335 million."
There may be disagreement between the Government and the Conservative-run Buckinghamshire county council, between the Government and the non-Conservative run LGA, and between the Government and the decidedly non-Conservative Fiona Millar about how much money local authorities and local schools should be receiving, but surely there should be no dispute between anyone about how much money local schools are actually receiving? However, there is. At the annual conference of the Association of Teachers and Lecturers, the Minister for School Standards, whom we are all delighted to see here today, said:
"About half the LEAs have more than £2 million still to be allocated to individual schools and some have over £10 million. If that trend is repeated across all LEAs, we are talking in the order of £500 million still to be allocated to schools."
However, as the LGA points out:
"Local authorities, in aggregate, are passporting the full increase in provision to schools in 2003/4, even where it is not backed up by grant…Local authorities are planning to continue to spend above the Government's provision for schools by approximately £100 million in 2003/4. This clearly demonstrates local government's continuing commitment to education, even though this has resulted in large increases in council tax in many areas…For the ten years between 1993/4 and 2003/4, local authorities have provided £4.3 billion above government education provision…In 2003/4, 130 out of 148 authorities will passport in full."
In addition, as Marion Clayton points out:
"I can assure Charles Clarke that Bucks certainly has not held anything back—the purse is empty."
I stand back for a moment from the figures, claims, and counterclaims about money to ask a simple question: why have relations between the Government, who, when they stood for election in 1997, said, "Education, education, education", and schools deteriorated to such an extent that we now read in The Times Educational Supplement that the Secretary of State for Education and Skills told chief education officers that their request for money
"just floods over my head"
"I don't listen to what you say, quite frankly"?
Why did even Doug McAvoy of the National Union of Teachers, who was not especially close to Ministers when the Conservative party was in government, describe the relationship between the Government and the NUT as
"worse than anything that happened through the Thatcher years"?
Above all, how did a woman such as Fiona Millar, who has been deeply committed to the New Labour project since its inception, as has the Minister, and could scarcely be closer to the Prime Minister, come to write a letter so critical of Government education policy—a letter that, as an experienced journalist, she would have expected to find its way into the national press?

The answer does not lie in Education Ministers' lack of good intentions, nor in the way in which Ministers have robbed largely efficient Conservative councils in the south to fund inefficient Labour councils in the north. Nor does it lie in the Chancellor's national insurance hike, damaging to business and schools though it is. I believe, as I am sure my hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) will argue, that it lies not in what Ministers spend but, as Ms Millar indicated, in how they spend. The schools funding crisis is intimately linked to the Government's regime of ever-increasing command and control of schools from the centre and of bewildering new funding streams and new bodies that many believe are remote and unaccountable.

Finally, I give two examples from my own constituency. The first relates to learning and skills councils. In the past month, it is striking that I have received two complaints from heads of local secondary schools about the local learning and skills council, which both heads claim has in effect reneged on agreements about funding into which it had entered. I do not intend to take a view on either of those complaints today, or on where the rights and wrongs lie, but I believe that they express some of the frustration that schools feel in dealing with bodies that they sometimes seem to regard as bureaucratic and unresponsive.

The second example relates to the time and standards initiative on school governors. I recently received a letter from Catherine Hinds, chair of the Buckinghamshire Association of School Governors, about the initiative, stating that the association
"has grave concerns about the attitudes and lack of trust exhibited by Ministers in school governors shown in its handling…We are concerned that our national representative body, the National Governors Council, has been refused a place in the discussion about reforming the school workforce.
Further, we feel that it is an oversight that there will be no governor representatives on the new Implementation Review Unit (IRU) nor on the monitoring group. Both will impact on the work of governing bodies and yet will have no voice. We feel that at a time of Government commitment to partnership working, the exclusion of governors sends out an unfortunate message."
I shall be interested in the Minister's response to the matter when he replies to the debate.

In those two examples of grievances raised by heads and governors in my constituency, the approach to education and schools is characterised by an excess of centralisation and a lack of consultation. It has left schools with 20 pages of paperwork for each school day of the year and is failing some of the most vulnerable children in my constituency and in the constituencies of hon. Members of all parties present in the debate.

9.46 am

I congratulate my hon. Friend the Member for Wycombe (Mr. Goodman) on securing this important debate and on introducing the subject so ably.

I am pleased to have been called to speak on a subject that I confess I feel strongly about: the effect on school funding in Essex of the Government's new formula spending share, or FSS system, which replaced the standard spending assessment, or SSA system, for determining central Government grants to local authorities from April 2003.

Under the Government's new FSS grant formula, Essex county council received the worst grant settlement of any English county—under 3.7 per cent. That is particularly important for county councils as provision of education accounts for a large proportion of everything that they do. Thus grant changes have a major knock-on effect on schools within their areas. In Essex, the situation is arguably worse than almost anywhere else in the country, as the rise in the education element of the FSS settlement outweighs the formula grant that they are receiving to pay for it. That leads to a funding gap, which in the case of Essex represents over £7 million.

Although 3.7 per cent. sounds initially like a small real-terms increase, it is nothing of the kind when seen in the context of all the increased costs that schools will have to bear this year, some of which have been mentioned by my hon. Friend. Those additional costs include, first, the 1 per cent. increase in national insurance contributions on staff pay, which obviously affect the school's salary budget; secondly, increased pay scales, including performance-related pay, which is necessary to aid retention of key staff as recruitment and retention of teachers has been a problem in the home counties, including Essex, for several years; thirdly, higher contributions by employers towards teachers' pensions—the Government actuary estimated that the employer's contribution should increase from about 8 per cent. to about 13 per cent. from April 2003; and fourthly, increasing insurance costs for both building and personnel, which fall on schools too.

The matter has been highlighted in the Essex press. For example, the Evening Echo ran a major article about the subject on 7 April entitled "Why our schools face a financial crisis" with a large photograph of the Secretary of State for Education and Skills.

I am grateful to my hon. Friend for giving way as he was delighted to have an opportunity to deliver his speech, which has been maturing like wine for some time. Does not the list of things that he mentions as the reality of what faces schools show how surprising it is that the Secretary of State expressed shock and surprise when those factors came out? That shows clearly how out of touch the Government are with the reality of teaching and with what is going on elsewhere in Government.

I agree. For a number of months before the new system came into operation in April, those in local government and those involved in the teaching profession warned the Government of the likely consequences. It is untrue to say that the Government were not given notice. They were told ad nauseam what was likely to happen, but now Education Ministers feign surprise when the effects become apparent, which does them no credit.

The article entitled "Why our schools face a financial crisis" describes the situation as follows:
"Schools are facing financial meltdown because the Government hasn't done its sums properly. That's the view of embattled headteachers across south Essex. Many are facing a shortfall of hundreds of thousands of pounds for the coming year—a deficit which could increase class sizes, end building projects and even lead to redundancies. Astonishingly, the crisis has been brought on by a Government attempt to make school funding fairer."
A number of Essex schools must resort to quite drastic measures as a result of the changes. Many have put a virtual halt on development work and seek to reallocate money where possible to cover increased staff costs. A number of Essex schools, including several in my constituency, have thrown in their final reserves to try to balance their budgets for this year and avoid compulsory redundancies. However, by definition, that tactic cannot be repeated next year.

By March 2003, David Hart, the general secretary of the National Association of Head Teachers, had reported that 70 redundancy notices had already gone out in Essex, as my hon. Friend the Member for Wycombe cited. There could well be more as schools run out of money during this financial year. Later in March, the Minister for School Standards, who is with us this morning, announced an extra £28 million in funding to help to alleviate the situation, but only a fraction of that money will come to Essex, because it is being spread across a number of local education authorities. There is some small relief, but it in no way matches the scale of the problem. Another important point is that, as Ministers have not yet made definitive announcements on year two of the new system, no one can plan ahead with certainty. People have no idea exactly how much money they will have in 2004–05.

Many schools in Essex must struggle through this year, not knowing whether the outlook next year will be the same or even worse as the new system well and truly kicks in. Before the Minister attempts to argue that that is the fault of Essex county council because it has not passported through sufficient funding to its schools, I remind him that Essex has one of the best records of passporting money through to schools. I looked at the figures for a couple of years ago, when I think that we had the second highest proportion passed through of any county council in England after Lincolnshire. Whatever flannel the Minister attempts to give us about money being held back at county hall, the cabinet member for education on Essex county council, Councillor Iris Pummell, has repeatedly stated that Essex passports through everything that it can and that the basic problem is that the money from central Government is not enough.

As we in Essex understand, the net effect of the changes in the grant formula for allocations to local authorities has been to transfer resources away from authorities in London and the home counties to assist the Government's friends in the north—even if that has not assisted the Government's very close friends in Downing street. If the Government believe that local authorities in the midlands and the north of England need more resources, fair enough, but I do not see why council tax payers in Essex should be asked to foot the bill. Even with a county council tax increase of 16 per cent. this year, it has not been possible to make up for the funding gap in education in Essex.

The supreme irony in all of that is that Labour came to power in 1997 repeating the mantra "Education, education, education". It claimed to put it at the heart of everything that it stood for. That now rings particularly hollow in Essex where head teachers and governors have been left with extremely hard choices as a result of Government policy towards the county. Unless Ministers alter the arrangements for next year, the consequences for schools, teachers and pupils in Essex could be truly awful. Finally, there are five Labour Members in Essex and not one of them is here this morning to defend the Government's policy. That speaks volumes about their attitude to the way that the Government have treated our county.

9.55 am

I start by congratulating my hon. Friend the Member for Wycombe (Mr. Goodman) on initiating this important debate on school funding. Like my hon. Friend the Member for Rayleigh (Mr. Francois), although I try not to be quite as beastly as him, I am a little disappointed that no Labour or even Liberal Democrat Back Benchers are present. I would not like to say why that it is. Perhaps they have not got funding problems in their schools, or perhaps they are pounding the pavements desperately trying to find someone who might vote for them.

Let us not dwell on that because I want to talk about the London borough of Hillingdon. Like many constituencies represented by my hon. Friends and by Labour Members, we have a crisis in our schools. Many face a budget deficit. I came to the House from a business background. I understand budgets, although I am not sure that some Labour Members understand how money works. Budgets have to be balanced and if there is insufficient money one has to look at various ways to make them balance. One can cut overheads. The schools to which I have spoken have cut their overheads to the bone.

The only option in many schools is to look at reducing staff costs, in other words to reduce staffing numbers. As we all know, that is probably one of the major expenses of any business. Any of us who really care about education would consider that to be one of the worst options. Parents will find it difficult to understand why teacher numbers are going down when council taxes are rising horrifically. It is difficult for them to understand when the Government say that they are putting more and more money in. The statistics can show what is going in, but we do not see what is coming out. That is one of the problems.

I believe that the Department has genuinely miscalculated. I do not subscribe to the view of some of my hon. Friends that the Government could possibly be so cynical as to try to put resources elsewhere. After all, this blessed Government have been put on earth to give benefit to all in this country. Any thought of something like that is close to blasphemy. I must warn my hon. Friends that that sort of talk will lead them into perdition. The Government are a bit worried about this. They are asking around to try to find out what is happening. The Department has approached the London borough of Hillingdon for details about numbers of schools likely to incur a deficit or to reduce their staffing levels. I congratulate them. Having created the mess, they are trying to sort it out. I hope they succeed.

One of the difficulties is not merely the Government's approach, but the complexity of the situation. The Minister will know if this is correct, but as I understand it there are 66 different funding streams for secondary schools, despite the Government's recent reforms. That is a recipe for chaos.

My hon. Friend is absolutely right. What is going on is down to what one might call in layman's terms the cock-up theory. The Government do not understand exactly what is going on. That is why I do not think that the problem is caused by a malevolence of intent.

I am a little bit saddened when I hear the Secretary of State saying that the Government have given all the funding and the problem is all the fault of rotten local education authorities. I cannot speak for other local authorities, but I think that many of them are passporting the money on. One of the Minister's colleagues visited Hillingdon recently, and that borough has been doing an excellent job for several years in passporting the money through. The leader of the authority, Ray Puddifoot, had been working extremely hard to do just that—it has been one of his principle aims since he became leader. We have an excellent director of education, Mr. Philip O'Hear, who has also made that a priority. The Minister acknowledges the excellence of that gentleman, which may show that he is not a placeman of Conservative or Liberal Democrat Members. He is doing an excellent job.

What is causing the problem? We know that the funding has to go towards the increased teachers' pay award, national insurance changes, teachers' pension increases and pupil number changes. The standards fund has ceased and other grants have just stopped, and schools have to try to find money from other places. Some other factors have been highlighted such as the cost of collapsing the nine-point teachers' pay scale to a six-point scale. In September 2002, that meant that a range of teachers leapfrogged a couple of incremental points, adding to the salary bill. The full-year effect of that is that there is no new financial year. Performance-related pay arrangements for teachers have largely been funded by Government grants until now, but the second stage will require a 40 per cent. contribution from each school. That will cost roughly £400 per teacher per annum.

Another problem that affects London and the south-east, to which my hon. Friend the Member for Rayleigh referred, concerns recruitment and retention. That is another subject for another day, except to say that one of the ways that anyone in business—I am afraid to say that these days schools have that element to them—has to retain people is to offer them incentives, such as a higher pay scale, a better salary and so on. That has to come out of the budget, so it is a real problem.

I know that other hon. Members want to catch your eye, Mr. Deputy Speaker, so I do not want to speak for too long. The Government have to take the matter seriously, because people from schools are coming to me and my colleagues in the borough saying that they have a serious problem that will affect the education of children. I do not think that Ministers sit around wondering what they can do to Hillingdon today to make life awkward. By and large, they are a pretty fine bunch of people. They are sometimes misguided in their political views but they do try quite hard. They have not, however, got the full picture.

I have to say that a bit of complacency has crept in. I am not going over the top because I want to get the most for my borough, and I recognise that if one starts attacking the Government they sometimes return that attack. I am prepared to be as nice and toady-like as necessary in order to ensure that my constituents and their children get what they deserve.

10.4 am

I intend to concentrate my remarks on what is happening in my local education authority of Bedfordshire. The director of education recently informed me that 21 teaching and teaching assistant posts are under threat. Section 188 notices have been sent. Ten of them are in my constituency of South-West Bedfordshire, and four schools are affected. However, I am particularly worried by conversations that I have had about schools other than the four about which I have been formally notified. They face very challenging budgetary situations and are able to continue employing some of their teachers and teaching assistants only because of reserves that they have built up in previous years, which will not be in place next year.

I intend to deal in detail with the financial situation of one particular lower school. I shall not name it, because it would not be proper to do so. I was fortunate to receive a detailed briefing from the school governor who prepares the budget. Bedfordshire operates a three-tier system of lower, middle and upper schools, so a lower school would equate to a primary school in most other constituencies. The governor told me that the school faces a 14 per cent. increase in the cost of employing all its teachers, including the head teacher. However, the combined income from the LEA and the Government has increased by less than 1 per cent.

School funding is horrendously complicated, as other hon. Members have said. The school's basic income, which comprises only 70 per cent. of its total budget, has gone up by a respectable 6.4 per cent. That is a credit to the Bedfordshire LEA. Its financial settlement increase from the Government for education was only 3.13 per cent; it was later increased with a further grant to bring it up to 3.2 per cent. The LEA, which passports money to schools and has a good record of putting additional money into schools, was able to raise the increase to 6.4 per cent.

However, the school will be £30,000 short because of the deficit in its budget. In effect, that is one teacher. The governor likened the situation to an extended death sentence over the school. It will be able to fund that teacher out of reserves that it has prudently built up, despite receiving some criticism in the past, but it will not be able to build the new classroom that it planned to build. It will be able to keep the teacher in place for one more year, but what will happen after that? My worry is that the situation next year will be even more serious for many such schools.

Is that an isolated case? Does that school face a unique combination of circumstances that result in a particularly difficult budget? Apparently not—the head teacher told the governor that all her colleagues in the district face the same problems. Bedfordshire received the 118th worst settlement of all 150 LEAs. As I said, it received only a 3.13 per cent. increase. My constituents will feel aggrieved when they compare that with the 8.96 per cent. increase that Hartlepool received. All our children have needs, and that considerable disparity is not fair.

The Secretary of State for Education and Skills tells us that it is all the fault of the LEAs, which are holding money back from schools. I confirm what other hon. Members have said. In fact, my local authority is rather like a postbox at the moment. The money comes in and goes directly out to schools. The local authority does that willingly, because it knows that it is the right thing to do. It has a good record historically and at present on passing money on to schools.

A further detail relating to the school on which I am concentrating worries me. I have heard from the head of financial policy at the county council that there is some money from the standards fund for items such as the national grid for learning which the council hopes to be able to pass on to schools. The council says that it intends to do that, probably before the end of May. When I heard that from the county council, I thought, "I need to check this out very carefully. Perhaps the Secretary of State has a point. " I phoned the governor who had briefed me carefully about his school and raised the matter with him. He said categorically that as far as the standards fund items, including the national grid for learning, for his school were concerned the budget was already nil. The school had nearly £4,000 for that last year; it gets nothing for this year. Indeed, the school's standards fund money is down by some £10,300 overall. That worries me greatly. The Secretary of State and some officials within LEAs appear to think that money will be coming to schools, but the school I am talking about has had it confirmed that that will not be the case as far as it is concerned.

I will quote briefly from a paragraph in a letter written to me recently by the headmistress of another lower school in my constituency:
"The school did not receive the budget until 4th March".
Frankly, I do not find that acceptable. We have to remember that in many schools budgets are the work of governors, who are volunteers. They do such work at the end of long working days, at weekends and when they have looked after their families and all their personal administration. The school did not get the budget until 4 March,
"which was too late to make any redundancies to balance the figures. By reducing the hours of some staff, not replacing an Assistant who retires in July and the Headteacher increasing her teaching commitment we are still approx £15,000 short of balancing the budget."
What general lessons can we draw from the situation to remedy the problems facing so many of our schools? I will make a number of suggestions. We must reduce the complexity of schools funding. The governor responsible for finances at the school about which I have been speaking tells me that there are changes every year. It is difficult to draw up budgets when they change every year. It is extremely difficult for people to get their heads round the numbers and the different budgetary streams.

Let us increase the basic income—what most of us call the core funding for schools. I understand that it is around 70 per cent. There should be a target to raise that figure much higher. Let us push it up to 80, 90 or 95 per cent. Schools would know what they were going to get and, at the start of the year, they could set a proper budget. They would know that their staff were secure and would not waste time bidding for bits of money here and there, which ties up a tremendous amount of teacher time. There is an opportunity cost to the schools in question. Heads, teachers and governors could be doing other, more constructive things in schools if they were not bidding for small amounts of money that they may or may not get and were able to produce proper budgets at the start of the year.

Finally, it is important that the Government seriously consider raising their revenue in ways that do not add costs and cause more complications for schools and other public services. It is the mark of a Government who are a little naïve and inexperienced in running large organisations, whether in business or the public sector, that the shocks—the tax and revenue-raising methods that they have brought in—have caused many complications in schools by adding to the costs of national insurance, pension contributions and so on. Perhaps we need a little more honesty in terms of raising Government revenue in ways that do not impact directly on the costs to our schools.

10.14 am

I begin by congratulating the hon. Member for Wycombe (Mr. Goodman) on securing this debate on the first Tuesday after the Easter Adjournment and on his extraordinary prescience in choosing school funding as his subject in advance of the clamour that has arisen about the subject following the Easter conferences of the teachers' trade unions. As we seem to have rather more time towards the end of the debate than I expected, may I add that school funding is not provided entirely by the Government—

Does the hon. Gentleman agree that he has more time than he anticipated because of the complete absence of Labour Back Benchers wishing to participate in this debate?

I forbore to say why Labour Back Benchers may not be present in the Chamber today, but it is reasonable to suppose that many of them have local elections in their constituencies and may believe that their duties lie in their constituencies today.

I am sure that many London Members wanted to be present and I see one or two here.

An interesting aspect of school funding that has not been mentioned is that it does not all come from the Government. Some funding comes from parents who choose to pay for their children's schooling and it may be worth mentioning to those who may not have seen it that an interesting article about independent schools in The Independent, which may have appeared in other newspapers, points out that around one in five failed their Ofsted inspections this year and a number of them are, worryingly, said to take on teachers without putting them through the usual tests with the Criminal Records Bureau that all state schools now insist on. It might be sensible for the matter to be brought to the attention of parents who send their children to such schools. I would be very worried if any child of mine went to such a school.

This debate has arisen just before the Secretary of State is expected to make a major statement on the subject of school funding. That statement is expected on Friday, the day after the local elections. It is not particularly cynical to suspect that his statement may be embarrassing for the Government. Let us hope that he is, at least, honest enough to admit that the shortfall in school funding is due to Government miscalculation of the real costs faced by schools this year and not because local authorities have squandered or squirrelled away all his money.

I also read that the statement will be made on Friday, but, as the hon. Gentleman is probably aware, the House will not be sitting on Friday. Presumably the information will be given not to the House but to a newspaper in Norwich or some such place.

The hon. Gentleman makes a good point. His party has more opportunities for Opposition day debates than my party and he might like to consider whether that would provide a suitable opportunity to bring to the House some of the subjects he would like to discuss following the Secretary of State's statement on Friday.

When the Chancellor announced the comprehensive spending review in July, he talked about the biggest sustained rise in education spending in a generation. There is no question but that more money is going into education, but past experience has taught us not to take at face value everything that this Government claim in their spending plans. I remember that £19 billion of the first comprehensive spending review turned out not to exist. It was the product of double and treble accounting. The last Budget settlement is also a product of smoke and mirrors, hence the mismatch between ministerial rhetoric and reality, about which many hon. Members have already spoken, when schools are facing a tough Budget settlement. The outcome is that head teachers are having to consider employing fewer teachers and support staff while local authorities are being forced to choose between service cuts and increased council tax.

When the Government talk about a 6 per cent. plus increase in funding for education, they are ignoring two key factors. First, the increase is not evenly spread. Changes to the distribution formula for local government funding have created many losers as well as some winners. Councils allocated an increase in the Government's floor of 3.2 per cent. are particularly vulnerable. Secondly, the statement does not take into account the extra costs being loaded on to schools, including the increases in national insurance contributions, teachers' pay and employers' pension contributions.

Is the hon. Gentleman aware of what the Select Committee on Housing, Planning and Local Government, which is surely dominated by Government Members, has said of the funding formula? Hon. Members will be interested to know that it said:

"The result is that many of the new formulae do not appear to be evidence-based and can be criticised for being insufficiently robust and more open to judgment than was previously the case."

There are still big problems with the funding formula. There have been problems for many years now in trying to arrange a fair funding formula for local government, perhaps for education in particular. I therefore take the hon. Gentleman's point that there may still be a need to try to get funding more in line with the needs of local authorities across the country.

According to the Local Government Association, the 2003–04 settlement does not take account of additional pressures on schools amounting to more than £1.2 billion. Once those are taken into account, only £282 million of the new money is left. The transfer of some standards fund categories to core budgets is being used to mask what amounts to a cut in schools' real funding. Some £538 million has been put into the core budget to cover the cost of transferred standards funds, but last year those grants amounted to £694 million. That is a shortfall of £156 million. The Secondary Heads Association, therefore, is right to argue:
"The first principle of moving from Standards Fund categories to core budgets has to be that the same amount of money (increased for inflation) must find its way into school budgets."
That has not happened this year.

Last year, some 15 per cent. of schools without sixth forms and 19 per cent. of schools with sixth forms had deficit budgets. The new pressures come at a time when schools are being asked to implement the time and work load agreement. As last week's statement from the National Union of Teachers made clear—little though the Secretary of State may like to hear what the NUT has to say—that is now in jeopardy.

Ministers say that local councils are to blame for failing to pass on all the money allocated to school budgets. The reality is very different. No less than 130 of the 148 local authorities are passporting the full increase to schools for 2003–04, even when the increase in school funding exceeds the increase in their overall grant.

On authorities where the increase in school funding exceeds that in the overall grant from the Government, it is worth mentioning in passing that such an increase can come about not only in authorities that have suffered a poor settlement this year but, interestingly, in those where the grant allocated by the new formula is comparatively generous—perhaps more so than that allocated by the old formula. Under the Government's new formula, such councils have hit their ceiling and are not, therefore, being granted the amount that even that formula says that they should receive. In my local authority, the total grant that should have been given under the new formula has been cut back by the ceiling. Therefore, the total extra grant provided this year is less, over the whole of the authority's expenditure, than the amount that should normally have been passported through to education alone. That has led to particular difficulties in funding all the other services.

I thank the hon. Gentleman for his courtesy in giving way yet again. Just in case the Minister believes that we are crying wolf today, may I press the point that one of the reasons why we are so concerned is because we realise that this is not a one-off but the beginning of a process, which is likely to run for years and years? From our perspective, it looks like it will only get worse. That is why it is important to protest now while we perhaps have the chance to persuade the Government to change their mind.

I sympathise with the hon. Gentleman's point. As far as those authorities that have hit a ceiling are concerned, I hope that they will find that it is less effective next year and that they will get a better settlement. I am sure that he is right on those settlements that have been cut back by the new formula.

Interestingly, local councils plan to spend an extra £100 million this year on top of the passported amount, which shows that there is still a gross mismatch between central Government allocations and assessments of local need. The Government admitted that mismatch when they allocated an extra £28 million to 36 local education authorities. They said:
"We recognise that in some authorities the combination of a low increase in Education Formula Spending coupled with reductions in grant through the Standards Fund may result in lower than expected budgets for schools."
The Minister may recognise those words because he used them in a Department for Education and Skills press notice released on 26 March 2003. His expression suggests that he does not recognise those words—perhaps he has forgotten including them in his press release, but. I can assure him that he did.

It is the old story of the Government retaining their grip on the purse strings while local councils are asked to accept accountability without responsibility. In other words, there is a fundamental lack of transparency. A key aspect of the transparency problem is that the funding system for education remains extremely complex and difficult to understand, which is something that other hon. Members have pointed out this morning. Even taking into account the measure of rationalisation that the Government have sought to introduce, the Secondary Heads Association says that there are still at least 66 varieties of funding available to secondary schools.

Some schools have budget deficits of up to £1 million, while others are sitting on more than £2 million—where is the transparency in that system? Where, indeed, is the fairness when money allocated for spending on today's children is being set aside by schools for a sports hall, which will be built five years down the line. Liberal Democrat research has shown that schools with the lowest numbers of pupils on free school meals are most likely to record a surplus, and there is a serious question about whether funds are reaching the schools that need them most.

Who exactly is accountable for that? Is it the Chancellor of the Exchequer, who sets the budget? Is it the Secretary of State for Education and Skills, who has responsibility for how that money is spent? Is it the Deputy Prime Minister, whose Department allocates schools money to local authorities? Is it the local authorities, which distribute the money to schools and have the option of topping it up via council tax increases? That confusion, which is built into the system, results in a confusion of accountability. May I repeat the request of my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis) for an audit of all local authorities, which should publicly declare any money that they may be holding back?

Liberal Democrats want to see education until the age of 14 funded by local authorities through local taxation with top-ups from general taxation to ensure equity. Under our scheme, local councils would be able to vary the amount paid into local schools and colleges. Our party would also support an individual pupil needs formula, whereby those from disadvantaged backgrounds would carry additional funding to the schools that they attend. The bottom line is the need for a fairer, more transparent, more accountable system, which should cater for the needs of local schools and individual pupils.

This year's settlement raises questions that go well beyond whether there is enough money in the system. More fundamentally, it poses the question whether the Government are serious about working together with schools to boost standards for all, or whether they prefer to play a game of fantasy figures in a desperate bid to avoid responsibility.

10.29 am

I am delighted to speak in this debate about perhaps the most important domestic crisis affecting the Government. I am particularly pleased to follow the hon. Member for Newbury (Mr. Rendel), who in response to an intervention gave us a valuable insight into what the Liberal Democrats see as the priorities of a Member of Parliament. He made it clear that he thought that MPs are far better off knocking on doors and claiming credit for things than coming to the House of Commons to raise concerns on behalf of their constituents, as my hon. Friends the Members for Wycombe (Mr. Goodman), for Rayleigh (Mr. Francois), for Orpington (Mr. Horam), for Uxbridge (Mr. Randall) and for South-West Bedfordshire (Andrew Selous) have rightly done.

It would be slightly unfair to criticise all Labour Back Benchers for failing to take part in the debate, because at least the hon. Member for Hendon (Mr. Dismore), although he is not here this morning, took the trouble to attend education questions immediately before the recess. He was open in his condemnation of what the Government are doing and the effect that that has had on schools in Barnet.

Does my hon. Friend think that the comments by the hon. Member for Hendon (Mr. Dismore) before the recess and his absence now are connected?

I would not care to speculate on that, but I am pleased to see that my hon. Friend is being less nice and toady to the Government than he threatened to be in his earlier contribution.

I congratulate my hon. Friend the Member for Wycombe on giving us the opportunity to debate this important subject. Many parents, teachers and head teachers across the country regard the crisis in school funding as the grossest betrayal that the Government could have perpetrated. Having seen Labour pledge in 1997 that its three top priorities would be education, education and education, they are bewildered to see the state into which some schools are being plunged by the Government.

Does the Minister understand the anger and frustration felt by parents, teachers, heads and governors? All of us are paying massively higher taxes both locally and nationally but seeing our children coming home from school with letters in their satchels such as the one written by the chairman of governors at Gospel Oak primary school, Ms Fiona Millar, which was referred to earlier.

As the Minister knows, the situation is worse in London and the south-east. In Barnet, schools are suffering a shortfall in their budget of up to £450,000, and one head teacher told me shortly before the Easter recess:
"It's breaking my heart. We run a good school here, but we are struggling to find every penny".
The Minister blames the press and the media, as he did last night on Channel 5 news. He shakes his head, but I heard him do that. Faced with an early-years teacher from Barnet who was distressed by the fact that she was having to ask parents to buy coloured pencils for their children to bring into school, he said that there was no crisis but that the media had started to pay attention to something. I have been aware of the looming crisis from my visits to schools and conversations with head teachers for weeks and perhaps months, so he should have been, too.

The media were slow to pick up the issue precisely because of the natural reluctance of head teachers to go public and to say that their schools face difficulties. That is why, six weeks or so ago, I conducted an unattributable survey of the top 25 state schools in the country, which showed an alarming picture beginning to develop. We found that of the 20 schools that responded, 17 faced a budget shortfall. Seven were expecting cuts but were awaiting final figures. Five schools said that they faced cuts of at least £100,000, and two faced cuts of at least £250,000. At least one school was looking at redundancies this year, while others were thinking about redundancies in future years. Anticipated cuts ranged from £60,000 to £300,000, and the average shortfall for the schools that were able to give a figure was £155,000.

We learned that those schools are not alone in considering redundancies. We heard from my hon. Friend the Member for Rayleigh that 70 redundancy notices had already been issued in Essex by the end of March. In one constituency alone—that of my hon. Friend the Member for South-West Bedfordshire—10 redundancy notices have already been issued. Since then, more and more schools have spoken out in anger and frustration.

We learned from a report in the Evening Standard on 14 April that the St. Marylebone Church of England school in London said that it may have to shed six teachers, and is asking parents to pay £100 each to avert the crisis. The head teacher of Christ's college in Barnet, Mr. Paul O'Shea, said that his school was £450,000 short of the £4 million that it needed to achieve a standstill budget. In The Daily Telegraph on 29 March, he said that he had never known the situation to be as bad as this, the Government were in denial when they said that there was nothing wrong with the formula and there must be something wrong.

We know that something must be wrong because we are hearing it from so many people. The Westminster head teachers' consultative committee sent a letter to me on behalf of all Westminster schools in which it said:
"We, the Head teachers of all Westminster schools wish to make it clear that they will be unable to provide effective full-time education for pupils with the funds allocated in the financial year 2003/4. Consequently, the targets set in the recent target setting round will no longer be valid and standards will inevitably suffer."
As my hon. Friend the Member for Rayleigh said, 70 jobs are already being lost in Essex. We have heard that up to 90 teachers and teaching assistants face the sack in Bournemouth and Poole. We also know that Thornbury primary school in Plymouth expects to make five members of staff redundant, including two teachers, to counter a shortfall of £80,000 in its budget. We have even heard from one of the few employees of the Downing street machine with any connection to reality. My hon. Friend the Member for Wycombe quoted Fiona Millar's comments, but it is worth repeating them, as her letter as chairman of governors to parents made it clear that the Government are to blame. She says:
"The Government has changed the way that it allocates block grants to councils and has moved money from the south east to the north. Camden has been one of the authorities that has done least well out of this change. There has been a significant increase in the contribution that employers (including schools) have to pay to national insurance contributions. There has been a significant increase in schools' contributions to the teachers' pensions fund. There has been a significant reduction in a grant paid to schools called the School Standards Fund."
My hon. Friend the Member for Uxbridge should be commended for having considered the question from a business point of view. A root cause of the problem is that the Government did not understand the consequences of increasing taxes, or what increasing employers' national insurance contributions would do to businesses throughout the country. Nor did they understand that all employers, whether in the public or private sector, would be hit, which they have been.

The problem affects not only the south and south-east. The head teacher of the King Edward VI school in Morpeth, Northumberland said that half of secondary schools in her area were short of an average of £100,000. She said:
"We were extremely angered by this year's budgets."
In my constituency, Mr. Tarun Kapur, the head of the outstanding Ashton-on-Mersey school—a sports college and a beacon school—told Manchester Metro News of a shortfall of between £60,000 and £80,000. He is not alone: schools throughout my constituency are in a similar position.

It is a massive problem for schools. Not only have they to deal with a shortfall today, but they have to contemplate redundancies and cuts in their budgets for next year simply to achieve a balanced budget.

Does my hon. Friend agree that the situation has severe consequences for people thinking of entering the teaching profession? Only three clays ago, I was talking to a teacher in an upper school in my constituency who told me that it advertised for a post but had only one applicant, who was not of the ideal standard. The whole background, which the national press are currently highlighting, is not conducive to attracting people into the profession when their futures are uncertain.

My hon. Friend makes a valid point. I was at Altrincham grammar school for girls yesterday morning. It is one of the best schools in the country. Even a school such as that, which to some extent has been insulated from the difficulties that other schools have faced in recruiting staff, has fewer qualified applicants for the posts that it advertises. Not only is this an immediate crisis for schools seeking to maintain the standards, but it makes a mockery of the Government's aspiration to tackle the problems of teacher work load.

I should like to indulge in a short anecdote, which will make the Minister slightly jealous. I did get away with my wife for a few days over Easter and did not get to the teaching union conferences, perhaps like the Secretary of State himself. While I was sitting in a hotel bar—I will not say where as it will make the Minister too jealous—I overheard a conversation between two teachers. They did not know that I was there. The Minister might unkindly point out that, even if they had known, they may not have realised who I was. The conversation went as follows: "Will you benefit from the Government's teacher work load agreement?" It is unbelievable, but these things are discussed by people who work in schools.

The Minister will not be so pleased to hear the response. The other teacher said: "I will give you £1,000 if I am not still photocopying my own lesson plans in September. It simply is not going to happen." It is not going to happen because schools are supposed to change the work load arrangements for teachers, the working hours and the tasks and functions that teachers are expected to carry out by bringing in a raft of new support staff. How can they possibly do that if they are faced with a budget shortfall in maintaining their current standards and levels of provision?

Faced with a crisis in school funding today, what are we promised? We are promised yet another Government review tomorrow. Perhaps I can give the Minister a few suggestions. First, if one increases taxes on employers someone has to pay them. That includes public sector employers. As the Chancellor looks at the black hole in the Government's finances, which he is told remains after this year's Budget, and contemplates possible future tax rises he should consider the debilitating effect on schools and hospitals, just as on businesses.

Secondly, if one charges schools more for teachers' pensions, the money has to be found from somewhere. It is another tax on the employer. Thirdly, he cannot take away huge sums of money from the standards fund and then blame local authorities for budget cuts. Fourthly, having legislated last year to take powers to direct local authorities to ring-fence their schools budget, the Government look absurd when they try to blame local authorities, as they have done this week, for the amount of money that is going into schools.

If the Minister really wants a way of funding schools that is fair, transparent and simple enough to explain when he goes on the "Today" programme he should look at the system that Labour dismantled in 1998 when they abolished grant-maintained schools. By adopting a national funding formula for all schools, based on the number of pupils, but taking account of local needs, we will create a system of school funding that is straightforward, fair and above all puts real control into the hands of heads, staff and governors.

We will be interested to hear whether this is the Minister's policy. If it is, it will be a welcome, albeit belated U-turn. We will be looking for an indication that the Minister really understands the anger, frustration and sense of betrayal felt by parents and teachers that a Government who promised that their three priorities were education, education and education are delivering tax and spending and cuts and redundancies.

10.44 am

Thank you for starting us off this morning in such a positive frame of mind, Mr. Deputy Speaker. This has been a rather good debate and I am grateful to the—[Interruption.] I did not catch that.

I am happy to agree with the Minister. The reason for the excellent debate is the lack of participation by Labour Members.

That is somewhat unfair. Given that the hon. Gentleman seemed to be in toadying mode during his remarks, it is unfortunate that he has spoiled the party so quickly.

Some rather good points were made in the debate. The hon. Member for Rayleigh (Mr. Francois) spoke about a need for three-year budgets. It is argued that there is a difficulty when standards funds or central funds are reduced. The gain is that there is less bidding, to which the hon. Member for South-West Bedfordshire (Andrew Selous) referred. Of course, when central funds are reduced, there is a disproportionate effect on the schools that benefited from them, but none the less he made a useful point. The hon. Member for Wycombe (Mr. Goodman) deserves the congratulations of all hon. Members, according to protocol. He raised the important issue of disadvantaged pupils in relatively wealthy authorities, a point to which I shall return.

There were low points, but I shall not go into them in detail. Suffice it to say that the data on schools funding has not been published before the local elections, because it is against the law to publish politically contentious material before polling day. We have said that we will do so as soon as possible afterwards.

The hon. Member for Wycombe deserves recognition for another reason. I think that he is the only hon. Member so far to place on the record his thanks and congratulations to the teachers in his area for their work and the outstanding results that they have been achieving. I associate myself with those remarks—[Interruption.] The hon. Member for Altrincham and Sale, West (Mr. Brady) talks about money, which is extremely unwise, because the details of the funding cuts in Trafford between 1992 and 1997 create a stark contrast with the increase in funding between 1997 and the present day, and for the next three years. I warn him to be more careful in venturing on to that terrain.

As I said, the hon. Member for Wycombe highlighted some of the important work being done in primary and secondary schools in his constituency. However, the debate focused on funding and I shall pick up a number of the points that were made. The most important was the plea from hon. Members that the Government take their views extremely seriously. I hope that they will take it in the right spirit when I say that we must take even more seriously the views of the head teachers and governors who write to them and to us. There is no question of complacency on the part of the Government.

This is a unique year for a number of reasons, notably the changes to the teachers' pension fund and the significant changes to the local authority funding formula. That change causes uncertainty, but we are committed to working with schools and local education authorities to ensure that—

Just let me finish my point. We are committed to working with schools and LEAs to ensure that, when schools make decisions about their budgets for the coming year, they are comparing like with like and the full budget for 2003–04 with the full budget for 2002–03. I shall return to that. I point out in particular to the hon. Members for Rayleigh and for Newbury (Mr. Rendel) that there is a significant difference between an LEA decision to passport all funding given to it for increases in schools to the education budget, and a decision to allocate all that money to schools. The difference between passporting and allocation is at the heart of many of the difficulties that some schools face. I will return to that if I have time.

The Minister says that this will be a unique year, and schools up and down the country will hope that that is true. Will he give a clear undertaking that, should there be any future change in the actuarial valuation of the teachers' pension fund or the need to finance it, the increased costs will be borne entirely by the Treasury, not schools, as has been the case this year?

There has been full recompense to the schools system, above the increase in education formula spending share, for the pensions fund increase, as I shall make clear. For 2003–04, the total national increase in revenue funding for schools and LEAs is about £2.6 billion or £2.7 billion—an increase of about 11.6 per cent. and at least £250 million more than the figure relating to the national pressure from pay, pensions, national insurance and grants that are ending. We calculate those pressures to represent about 10.5 per cent.

Let me finish the point. To put the 11.6 per cent. increase another way, the education formula spending share for 2003–04 has increased by about 6.5 per cent., in addition to compensation of £586 million for the pension contribution increase, and £500 million of grant funding transferred into general funding in 2003–04.

It is important that the hon. Member for South-West Bedfordshire should know that I am spending less money this year. Over the three years of the spending review, central Government grants are declining because we want to cut back on the bid culture that the hon. Gentleman deplores and fears may distract teachers from the important business of teaching. None the less, the apparently happy consensus on reducing central standards funds can have difficult effects on the ground, where schools that have been successful in their bids may lose money.

The Minister said that this is a unique year. Can he also assure us that it will be unique in being the only year in which the ceiling is applied? In future years, those whom even the Government believe should get more money should get that money.

As the hon. Gentleman knows, and as other hon. Members have said, the Government have to take their decision on floors and ceilings for future years. On the basis of this year's experience, we are sure that floors and ceilings are a necessary part of the system. One of the problems at local level is that damping mechanisms do not exist in local education authority funding formulae: there are no floors to protect schools that suffer because of changes in their pupil numbers or other matters.

For the benefit of the hon. Member for Buckingham, I shall address the significant issues that have arisen—

The Minister has just confused my hon. Friend the Member for Wycombe (Mr. Goodman) with my hon. Friend the Member for Buckingham (Mr. Bercow).

I should certainly not want to do that. Perhaps the hon. Member for Buckingham (Mr. Bercow) spends his time reading the Hansard reports of Westminster Hall debates, and I apologise to him if my confusion causes him any embarrassment.

Since 1997, the education spending assessment in Buckinghamshire has risen by about £60 million, which is an increase of more than 35 per cent., and when adjustments to the baseline for 2002–03 are involved, the increase is about 6 per cent. Funding through the formula is, however, only part of the picture. The standards fund has increased from about £3 million to £16 million, and the direct grant to schools—the schools standards grant—is now worth £6 million. It is also noteworthy that capital investment in Buckinghamshire has risen from £12 million to £28 million.

The new funding formula has aroused a lot of interest in the debate, and allegations of unfairness have been made, to which I will return. I hope that every hon. Member agrees with the important principle that similar pupils in different parts of the country should have similar amounts of money attached to them. We would all agree that there are certain pupils who have extra needs, and that they should have extra money attached to them by central Government, wherever they live. Those principles have been applied in the development of a new formula.

The new formula has three parts: first, a simple £2,000 for a primary school pupil and £2,660 for a secondary school pupil; secondly, an additional amount for additional educational needs, notably for children who are growing up in disadvantaged circumstances, about which the hon. Member for Wycombe was concerned; and thirdly a recognition of additional cost—the so-called area cost adjustment.

I shall deal in detail with those points. In introducing the new system for additional educational needs, we wanted to recognise poverty in all its forms. For a relatively high-employment area such as Buckinghamshire, which has some low-wage work, that was a significant decision. Should poverty be defined only by reference to the number of people on income support—as a measure of unemployment—or should there be recognition of the additional costs that sometimes arise for pupils whose families are in low-wage work? The hon. Member for Wycombe will be pleased to know that Buckinghamshire, as well as other areas, benefits from the Government's decision to recognise pupils in low-wage households in the formula.

Spurious allegations have been made that the funding system has been distorted to the disbenefit of Conservative areas of the country. Last night, I took the time—as, no doubt, did other hon. Members—to scrutinise the Labour party's website. The website has some useful data that gives the lie to some of the allegations that have been made.

Conservative councils such as Buckinghamshire, Cambridgeshire and Wiltshire have all benefited from substantial grant awards that are well above the average. Tory-run councils such as Cheshire have benefited from grant increases that are substantially above inflation. Conservative Opposition Members may be sorry to hear that some Liberal Democrat councils have also done well out of the settlement. Moreover, as several hon. Members have said, some high-profile Labour councils have not felt especially well-served by the new system, but as I said, its purpose is to treat similar pupils in different parts of the country in the same way.

Earlier, the Minister referred to the funding situation in the borough of Trafford, where my constituency is situated. That is one instance of an authority where Labour has been clinging to control for some time, albeit with a minority of the votes cast. Will the Minister say whether it is the Labour Government or the Labour council that is to blame when a head such as Tarun Kapur at Ashton-on-Mersey school in my constituency says that he is facing a shortfall of £60,000 to £80,000 in the next year?

It would be wrong for me to comment on the case of an individual school on which the hon. Gentleman says that he has data or has visited recently. I know that Trafford has benefited enormously—to the tune of a 32 per cent. increase in the education SSA—and that its capital funding has doubled. I am perfectly happy to consider the individual case raised by the hon. Gentleman but it would be wrong for me to do so without any basis in fact.

The hon. Member for Wycombe asked certain questions about Buckinghamshire's final allocation of 6.4 per cent. and it is important that I address them. Buckinghamshire is one of the least deprived authorities in the country. It has a below-average proportion of families receiving income support—about 9.3 per cent. compared with a national average of about 20 per cent.—and on ethnic minority indicators Buckinghamshire is just below the average on the primary measure—9 per cent. compared with 10 per cent.—and is above average at secondary level. Such data are fed into the formula and have delivered to Buckinghamshire the amount of money that it has to allocate.

Central Government are not the only funder of schools and certainly do not fund schools directly, although I was interested to note that the hon. Member for Altrincham and Sale, West seemed to be announcing a new Conservative policy when he said that he was in favour of central funding. That will be news to the vice chairman of the Local Government Association, whom we must contact, who was on the radio with me recently denouncing any thought of a national funding formula. 'We shall have to scrutinise carefully the Hansard report of the hon. Gentleman's speech, as what he said will be news not only to his elders and betters but to his colleagues in local government.

As I said, the situation in 2003–04 is unique; the devolution of funding to schools depends on a partnership between LEAs, which have their own funding formulae, and central Government. Each LEA sets its own council tax, decides how much money in the schools' budget is to be passed on to schools; has its own formula for distributing funding to schools and its own priorities between primary and secondary provision. That is a healthy part of our constitutional settlement. As we do every year, we are collecting data from every LEA—their so-called section 52 returns—about their budgets. About 100 LEAs have so far sent us the information and some significant patterns are emerging. They bring out the difference between passporting money into education and devolving, or allocating, all the money to schools. That is why we talk about money that is as yet unallocated. About half the LEAs have more than £2 million still to be allocated to individual schools. It may be earmarked for the education budget but it has not been allocated to schools. Some have more than £10 million, which may be of particular interest to the hon. Member for Rayleigh, but he will have to contain himself until Friday to see the full details.

The information suggests that from LEAs whose returns we have analysed so far, about £340 million is still to be allocated to schools on a pro rata basis—about £500,000 that schools can still expect to see. There are big variations in the proportion of the increases in schools budget that are actually being passed to schools. In three quarters of LEAs, the increase in funding that is going direct into the individual budgets of schools is lower than the overall increase that the LEA has made for school funding.

In some areas, there are major increases in special needs funding and nearly a quarter of LEAs, significantly in a unique year, are transferring money from the revenue budget into the capital budget. There may be all sorts of local reasons why those decisions are being taken, but our message is simple: LEAs and schools need to sit down and ask some hard questions about those decisions. Has all the standards fund been distributed? Has the whole of the individual schools budget been allocated or is some money still waiting to be devolved? Has the LEA formula spread money fairly between schools? Such discussions should be taking place at local level because it is important from our point of view that no school takes a precipitate decision about employment or other matters in the course of the next year without full knowledge of what its budget will be. I am proud that the budgets of schools have risen by an average of £640 in the past five years and I look forward to that continuing in the future.

Bbc Monitoring (Reading)

11 am

We now move to the second debate, which has been initiated by the hon. Member for Newbury (Mr. Rendel), who is already in the Chamber having been present for the previous debate. The subject is funding for BBC Monitoring. I was not sure whether it was reading or Reading, but I am advised that it is Reading.

It does seem rather greedy of me to have a slot in two different debates, but I am delighted to have the opportunity, and thank you for calling me to initiate the debate, Mr. Deputy Speaker.

The debate is intended to raise the issue of funding of BBC Monitoring, which is in Caversham on the edges of Reading. I raise the matter not least in relation to whether that funding will be sufficient for the salaries of the BBC staff working in the south-east outside London, particularly those working for BBC Monitoring, given the high cost of living in our area.

The issue affects a number of my constituents who work for BBC Monitoring, but it also affects the constituents of a number of other hon. Members in the region. They will be as aware as I am of the concerns of BBC staff and the campaign being run by the National Union of Journalists for a regional salary weighting. The Minister will be aware that those concerns were set out in early-day motion 502, tabled by the hon. Member for Reading, East (Jane Griffiths), which has the support of Members on both sides of the House. Sadly the hon. Lady is unable to be with us today as she is away on Council of Europe business. However I know that she supports wholeheartedly the remarks that I shall be making and she very much regrets not being able to be here in person.

I am however happy to see the hon. Member for Reading, West (Mr. Salter) in his place, and I know that he has asked permission to make a few remarks on behalf of his constituents—unusual in a half-hour Adjournment debate—when I have finished speaking. I shall try to leave him the three minutes that he has requested before the Minister replies, and I hope that he will catch your eye, Mr. Deputy Speaker.

The first point that I want to make is that BBC Monitoring, which operates out of Caversham Park in Reading, provides a very valuable public service. Indeed, that is generally true of the BBC World Service, of which BBC Monitoring is a part. The Minister will be aware of the role played by this service in covering the war against Iraq, to take just one highly prominent and topical example.

The BBC Monitoring website states:
"We operate around the clock to monitor more than 3,000 radio, TV, press, Internet and news agency sources, translating from up to 100 languages."
As someone who struggles sometimes with English, let alone with so many different foreign languages, I can only gasp in awe at the thought of so much linguistic skill gathered together in one organisation. Something of that internationalism comes across when we consider that the organisation operates out of six main regional centres: Moscow, Tashkent, Baku, Kiev, Nairobi and its head office in Caversham Park, Reading. In-house language teams in Reading include Arabic, Kurdish, and Persian. The importance of such a service hardly requires emphasis given the foreign policy challenges that we face in the Middle East and elsewhere.

The crisis in the middle east highlights the importance of accurate, up-to-date information and of cross-cultural, trans-national communications for the future peace of the world. If we aspire to a world of mutual understanding and accommodation between different peoples, institutions such as the BBC World Service and BBC Monitoring are surely worthy of political and public support. Accurate, impartial information is also critical to democracy, both here and abroad, because it provides the basis on which the public as well as Governments can make informed judgments and decisions about world affairs.

It follows that we should value and support the high quality, professional staff who work for BBC Monitoring and make the service the invaluable foreign news and information service that it is. Moreover, we should not forget that the operation runs 24 hours a day, seven days a week, and the employees work plenty of antisocial hours.

The Minister is no doubt already aware of the problems that we face in recruiting and retaining public service workers such as police officers, teachers, nurses and local government officers to work in the south-east, where the cost of living, particularly housing, is so high. In fact, house prices in our part of the country are similar to, if not higher than, those in parts of outer London.

The same point applies to the staff at BBC Monitoring in Reading just as much as it does to those working in other public service jobs. However, it seems that financial discrimination is occurring between BBC World Service staff who work outside Greater London and those who work inside Greater London. That discrimination is based not on the cost of living—the two groups may live in the same place—but solely on where they happen to work.

Whereas BBC World Service staff based in London and all other BBC staff working in the capital receive a weighting of £3,250 if their basic salary is below £22,000—they receive a weighting of £2,912 if their salary is greater than £22,000—the same does not apply to their colleagues in Reading, who receive no such allowance. It should be noted that basic starting salaries for staff at BBC Monitoring, most of whom are graduates with previous professional experience, are well below the £22,000 threshold. Indeed, starting salaries for researchers are less than £17,000, those for assistant researchers are less than £15,000 and those for language monitors are less than £19,000.

How can it be justified for two sets of employees, who face equivalent costs of living and who work in the same publicly funded organisation, to be treated so differently when it comes to pay? It seems to be a gross injustice, and the case becomes even stronger when one considers that many other public sector employees are paid an allowance if they have to work in the south-east outside London. For example, policemen may not get the full London allowance in the Thames valley if they work in areas around London, but at least they are paid a special allowance over and above their basic, nationally agreed pay scales to make up for the higher cost of living and, as I have said, the higher cost of housing.

Apart from the discrimination between employees in different public services in calculating remuneration packages, there is also a discrepancy between the public and private sectors. Several major companies in the Reading and west Berkshire area, for example, pay some form of cost-of-living allowance to their staff. On those grounds, there is a strong case for paying a regional cost of-living allowance to BBC staff working in the south-east, including those at BBC Monitoring in Reading. The pay for those staff is, of course, a matter for the BBC, but staff at BBC Monitoring and the BBC World Service are in a slightly different position from other BBC staff in that they are funded not by the licence fee, which we all pay for our televisions, but by the Foreign and Commonwealth Office. BBC Monitoring also receives some money from the Ministry of Defence, the Cabinet Office and subscriptions. The question of Government support and funding for BBC Monitoring is therefore highly relevant to whether the BBC can afford to pay regional allowances of the sort that I am requesting.

Before I finish, may I give just one example, Mr. Deputy Speaker, of the kind of problem to which the lack of funding of regional allowances leads? One of the employees at BBC Monitoring is a 40-year-old man who has not just one but two degrees. He joined the service towards the end of the last century and his salary is just under the £22,000 threshold. He lives, as he has always done since he joined the service, in a single room in a hostel on BBC premises. That man has an 11-year-old daughter, who normally lives with her mother about 100 miles from Reading, but she cannot visit him at the weekend because there is nowhere for her to stay. He has struggled to get a mortgage so that he can see his daughter regularly again, but on his current salary, he comes nowhere near being able to afford a mortgage of the size that he would need. Normal parental contact with his daughter is, for him, quite impossible, although had he been working in the same job, for the same organisation, in London, that vital family contact might have been maintained.

Given the events of the last two months, which we have been so keenly following on the television and radio and in the press, I am sure that we are all acutely aware of the value of the monitoring service to our country. The men and women involved might not have put their lives at risk in the same way as armed forces personnel, but they nevertheless deserve our heartfelt gratitude for all their efforts. We should not be treating them as we are treating that man and his daughter.

I hope that the Minister can assure us not only that the Foreign and Commonwealth Office will continue to fund this vital public service, but that it is concerned for the staff who make that service what it is and for the welfare of their families. I am sure that he agrees that the continued success of BBC Monitoring depends on its ability to recruit and retain highly qualified and professional staff. I hope that he will also agree that the high cost of living in the south-east is currently an obstacle to recruitment and retention, and that he will take this opportunity to pledge the Government's support for a pay structure that takes that into account.

Before I call the hon. Member for Reading, West (Mr. Salter), I should tell the House that he has obtained the permission of the Minister, the initiator of the debate and the Chair to participate in this half-hour debate.

11.12 am

Thank you, Mr. Deputy Speaker. This must be the first time in my short parliamentary career that I have followed protocol to the letter to such an extent, and I thank the hon. Member for Newbury (Mr. Rendel) and the Minister for being so flexible as to allow me to pinch a few moments of their time allocations.

This is a truly cross-party campaign. The hon. Member for Newbury and my hon. Friend the Member for Reading, East (Jane Griffiths) have met extensively with staff from BBC Monitoring in Caversham and I wish to associate myself with the remarks of the hon. Member for Newbury and the tribute that he paid to the excellent work of the staff there. We thank them for the valuable briefing material that they have provided individually and through their trade union, the National Union of Journalists. That is in stark contrast to some of the nonsense that we have received from BBC management as a helpful guide to the debate.

As the hon. Gentleman said, the debate is part of a wider issue of regional pay. We need to examine how we can sustain recruitment and retention in our key public services, and we all agree that BBC Monitoring is a key public service. I, too, wish briefly to highlight for the Minister's attention the insanity in other public services. Teachers receive an outer London and an inner London weighting allowance. It is a supreme irony that outer London is more expensive than inner London, but the outer London allowance is lower. The Thames Valley police in Reading receive a supplement of £2,000 compared with one of £6,000 inside London. Even though house prices are actually higher in the constituency of the hon. Member for Newbury, the police there receive a supplement of only £1,000. There is no logic at all to that. Officers in the fire services in Bracknell, which apparently is now part of London, receive a London weighting allowance, but not those in Reading. Again, that is completely inconsistent. In the national health service, qualified staff receive a cost-of living supplement in Reading, but apparently London weighting does not apply to Reading unless one is in the NHS.

Governments of all political persuasions have prevaricated far too long on regional pay supplements. There is a serious recruitment and retention crisis in some key public services, not least in BBC Monitoring. This debate is about funding for BBC Monitoring. It will send a signal to the Minister, the Foreign and Commonwealth Office and other Departments that provide funding for BBC Monitoring that, if they want its invaluable service to continue, they must ensure that the staff are able to live and work in the Reading area.

I shall end my short contribution with a quote from someone who works at BBC Monitoring. Members of the public often sum up a situation better than we can as politicians. The quote is from an e-mail that arrived in my office yesterday. It says:
"The general problems are the same as for teachers, nurses, etc."
—and for police officers.
"It costs as much to live in Reading as it does in London. People have virtually no hope of buying houses or renting houses unless you share"—
for the rest of one's life, presumably.
"With both my husband and myself on 'public sector' wages it is very difficult to live in this area."
This is the key point:
"It is ridiculous to continue paying London weighting to those only working inside of London when the financial boundaries of London have spread!"
It costs less to buy a house in some inner London boroughs than in Reading, Wokingham, Slough or Newbury. If we are to put public services first—I believe that the Labour party and the Government want to do that—it is time that we recognise the reality of the situation and put those who work in such services first. That is why the Chancellor's announcement in the Budget of the need seriously to review regional pay is most welcome. The challenge now to the Government and to Ministers is to turn that into reality so that services such as BBC Monitoring can continue to serve the public and this country.

11.16 am

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs
(Mr. Bill Rammell)

I congratulate the hon. Member for Newbury (Mr. Rendel) on securing this very important debate. I listened carefully to what he said and noted the concern that he expressed on behalf of his constituents about the absence of a weighting allowance for BBC Monitoring staff, who work in an area of the south-east where property prices are high.

I am also aware of the campaign by local government trade unions for a £2,000 allowance for those who work in the south-east but outside London to compensate for additional living expenses. I know from what I have heard and from personal contacts that my hon. Friends the Member for Reading, East (Jane Griffiths) and for Reading, West (Mr. Salter) have played a significant part in that campaign and have lobbied extensively on its behalf.

In principle, I understand the concern. As a fellow Member of Parliament from the south-east, I am very conscious of the problems that high house prices and costs of living cause. However, I wish to begin by explaining the role of the Foreign and Commonwealth Office in the funding of BBC Monitoring and the extent of its responsibility to BBC Monitoring and its staff.

As the hon. Member for Newbury said, BBC Monitoring is formally part of the BBC World Service. However, there are important differences in their funding regimes. The World Service is funded by grant-in-aid for which the Foreign and Commonwealth Office is directly responsible, but BBC Monitoring is funded under a semi-hard charging subscription regime by four stakeholders: the Foreign and Commonwealth Office, the Ministry of Defence, the Cabinet Office and the BBC World Service. That quadripartite funding regime has been in place since 1997, following a review that was undertaken by a previous Government in 1994. It replaced the grant-in-aid that was funded jointly by the Foreign and Commonwealth Office and the Ministry of Defence.

Under the current regime, the Foreign and Commonwealth Office contributes approximately £7 million per annum to BBC Monitoring's total annual costs of some £22 million, and BBC Monitoring raises some external income through commercial activity, which is very welcome. As the hon. Member for Newbury outlined, BBC Monitoring supplies news, information and comment from the world's media. It covers a range of topics, including politics, elections, international security, terrorism, human rights, technology, the environment and economic affairs. It is the main open source provider of information for the Government and the BBC World Service. It provides a valuable service to its stakeholders and to others throughout Government. By tracking world events and reactions to them, including, importantly, perceptions of British foreign policy, it assists the Government in their decision-making processes.

The value to the BBC World Service is that BBC Monitoring contributes significantly to its news reporting. In conjunction with its US partner, the Foreign Broadcast Information Service, BBC Monitoring works around the clock, very effectively, to provide worldwide coverage of media reports from across the globe. Expert linguists and journalists select major international news reports for translation into English. Altogether, as was noted earlier, BBC Monitoring has access to 3,000 sources from 150 countries, in 100 languages. Based on that track record, it well deserves the reputation that it has built up as a provider of timely and accurate news reports of world events.

The importance of that role has been underlined in recent times. The response of BBC Monitoring to an increased demand for monitoring of the Islamic media post-11 September deserves a special mention. It has been and continues to be of great importance to the Foreign and Commonwealth Office's Islamic media unit. Recently, BBC Monitoring provided coverage of the crisis in Iraq from the foreign media, reporting developments and regional and international reaction to those developments, and providing the texts of speeches, statements and interviews, as well as press reviews and media round-ups. It has been able to provide a picture of what the media in the region have been saying. At a time of acute crisis throughout the world, that has been a particularly positive contribution.

It is worth relating some of the feedback and comments about the quality of the service. No. 10 Downing street and the Foreign and Commonwealth Office have found the media behaviour material "extremely useful"; the Ministry of Defence has complimented the "dawn" middle east regional digest and Iraq reports on casualties; and the Cabinet Office finds the digest "very clear". Material from BBC Monitoring has alerted the Foreign Office to key developments and has been judged "critically useful and timely". BBC World Service, one of the other stakeholders, has made record use of the alerts and greatly values the clear reports and information that BBC Monitoring has provided. At a time when users are flooded with material, the BBC World Service values short round-ups and dispatches, such as those now provided by the newsgathering reporters based at Caversham. The Ministry of Defence has also pointed out that while many people are focused on events in Iraq, it also relies on BBC Monitoring for continuing coverage of other developments around the world.

It is gratifying that Departments value the work of BBC Monitoring. May I just put a scenario to the Minister? If the work were to tail off, if staff were unable to afford to live in the Reading area and the quality of service started to degenerate as a result, what would be the Government's response to the BBC management, in relation to the quadripartite funding arrangement, in respect of the pay and conditions of staff?

My hon. Friend anticipates some of the comments that I am about to make. There are significant concerns, but there is not yet evidence that there has been an impact on recruitment and retention. I will come on to that important point.

The key point I wanted to get across is that we very strongly value the work that BBC Monitoring undertakes. However, as I explained earlier, BBC Monitoring is funded under a semi-hard charging subscription regime by the four stakeholders. BBC Monitoring staff salaries and allowances are funded from the £22 million provided by the four stakeholders. The key point is that it is the responsibility of the BBC to set the salary scales and allowances, and Government stakeholders, including the Foreign Office, have no say in the matter. The Foreign and Commonwealth Office therefore considers the matter of pay and allowances for staff to be an internal management issue. Indeed, were there to be a change in the regional allowance or London weighting for BBC Monitoring staff, my understanding of the current structure of the BBC is that that would entail similar changes for BBC staff throughout the organisation, which would clearly have implications for the licence fee. We do not have power to intervene directly in the issue of pay. Rates of remuneration and conditions of employment for BBC staff are strictly a matter for the corporation.

I understand the genuine desire for higher pay and the problem of high living costs in London and the south-east, as I made clear at the beginning of my speech. I am not endorsing what the BBC is doing, but the current pay regime does not seem to affect adversely staff recruitment and retention by BBC Monitoring at a time of record low unemployment. In 2002, BBC Monitoring received 890 applications for 13 editorial posts and 274 applications for six IT posts. Turnover relative to other organisations and sectors is not high. I understand that BBC Monitoring is not aware of any staff who have left on the grounds that their salary did not meet the cost of living in the Thames valley. Indeed, I understand from the BBC—this is important to both hon. Members—that no formal representation has been made by the NUJ at Caversham to the BBC about payment of the south-east weighting allowance, although the matter was raised by trade union representatives at a meeting with the former director, Andrew Hills, earlier this year. If the issue is to be taken up, it must be taken up by the relevant trade unions, with the support of the hon. Members, directly with the BBC.

I listened carefully to what the hon. Member for Newbury said about the need for increased pay and I respect his intention in raising the issue, but it is part of a pattern of Liberal Democrat campaigning. When I listen to Liberal Democrat Members, there is a sense that more can always be done for any interest group, whatever it is and wherever it may be. However, if the end is willed, the means must be willed, and that is the problem with some of the arguments from Liberal Democrat Members. The clear implication of what the hon. Gentleman is saying is that there should be an increase in Government funding to provide extra money for BBC Monitoring—the hon. Gentleman nods—so that increased finance can be made available on top of the significant increase that has been agreed in the current three-year spending round for the World Service, which is a part-contributor to BBC Monitoring.

It is indicative that the hon. Member for Truro and St. Austell (Matthew Taylor), the Liberal Democrat shadow Chancellor, made it clear that, despite the arguments for extra Government spending, the Liberal Democrats are not calling for additional Government spending. In a letter to his colleagues about the alternative Budget in 2003 he said:
"Unlike recent years, the budget proposals cannot simply be based on our past programme of tax increases…We have already agreed at shadow Cabinet to start from the premise that the Government are now putting in vast real terms expenditure increases…simply proposing further spending…rises at this stage of the Parliament is unrealistic."
It is all very well coming forward and arguing for increased spending, but the argument lacks credibility unless they can identify where that money will come from.

I think that it was clear in our alternative Budget that we intend to increase some aspects of Government funding and that some tax increases would go through if the Liberal Democrats were now in power. That would not apply across the board and they would not necessarily be the same tax increases as we suggested in our previous manifesto.

I am grateful to the hon. Gentleman because he gives me the opportunity to confirm that within the alternative Liberal Democrat budget no additional funding was identified for BBC Monitoring. He may challenge me on that fact if he wishes.

I hold out one avenue of opportunity for hon. Members to pursue. A review is being undertaken of BBC Monitoring at the request of the Cabinet Office following a realignment of stakeholder contributions in 2001. That review is being carried out by an independent consultant who will report before the end of June. Hon. Members clearly have genuine concerns about the matter and if they make written representations to me, I shall be more than happy to ensure that they are put in front of the consultant. I cannot give a commitment that there will be a change, but I can ensure that their views are put in front of the consultant and considered as part of the review. I am more than happy to conclude on that point, Mr. Deputy Speaker.

11.30 am

Sitting suspended until Two o'clock.

New Partnership For Africa's Development

2 pm

I am delighted to have been fortunate to have my application for this debate supported by Mr. Speaker and for us to be able to debate the implementation of a new partnership for Africa's development—NEPAD—before our Government go to the G8 summit at Evian to discuss with the other G8 members the progress made since decisions were taken last year at Kananaskis in Canada about how the rich world—the G8—would respond to the new partnership.

Earlier this month, when the World Bank published its African development indicators, the bank's chief economist for Africa, Alan Gelb, said:
"Africa urgently needs rich nations to deliver on their promises of more generous aid and wider trade opportunities to reverse the cruel effects of the HIV/AIDS pandemic, civil wars and persistent low growth rates."
He is right, but it is not all gloom and doom in Africa. The figures published in the World Bank's reports show that over the past two decades life expectancy in the Gambia, for example, has increased from 45 to 53 years. Fertility rates have fallen in every African country, and the percentage of the population involved in education has more than doubled in several African countries, including Burkina Faso, Ethiopia, Liberia, Malawi, Mali and Uganda.

Growth is poor throughout the continent, but not in every country. Between 1990 and 2001, which is the period covered by the World Bank report, several African countries—Mozambique, Mauritius. Botswana and Uganda—averaged growth of between 2 and 4 per cent. year on year. However, other countries—Sierra Leone, Burundi, Rwanda and Angola—had consistent negative growth during that period, as I am sure my hon. Friend the Member for Bethnal Green and Bow (Ms King) will point out. It is clear that there is a correlation between conflict and negative growth.

Africa will certainly need strong and consistent economic growth if it is to meet the millennium development goals. Aid will be important in providing infrastructure, in dealing with health needs in the continent and in providing for primary education and education at higher levels, but it will not deliver growth on its own. Growth will depend on trade and investment and on avoiding things such as war and corruption. NEPAD's strength is that it identifies what conditions make it easier to obtain high rates of growth and what conditions make it harder to obtain them.

The question before us is whether NEPAD will work. There are plenty of sceptics who predict failure: indeed, some predicted failure before NEPAD was launched. People say that the attention of the developed world will move elsewhere following the conflict in the middle east. It is true that important deadlines in the Doha trade negotiations have been missed. Developing countries were relying on those deadlines to ensure that the round was indeed a development round. Africa has failed to grapple with the crisis in Zimbabwe, which many people in western countries see as a test of the rigour and effectiveness of NEPAD's commitment to good governance and human rights. There has been a less than wholehearted commitment to the peer review process, which people in developed countries regard as an important part of the partnership.

These are important issues but I do not believe for one moment that they spell the end of the road. We need to recognise who the sceptics are, on both sides of the Mediterranean and in north and southern Africa. There are western leaders who do not want to commit to more aid or to refocus their aid on the alleviation of poverty. They do not want to change the terms of trade between the rich and the poor worlds in the Doha talks. They do not want to have to adjust the way in which the rich world deals with rural economies. There are African leaders who do not want to be accountable to their people. They do not want to meet the democracy goals, the requirement for good governance in NEPAD, the human rights requirements and the requirement to establish the rule of law.

It is on the record that President Mbeki said in his opening speech to NEPAD that credit and aid had undermined African development. What does the hon. Gentleman have to say about that remark?

There are applications of credit and aid that have been highly damaging for developing countries. There are problems of debt and the need for the rich world to respond with debt forgiveness. However, it would be a mistake to believe that Africa can achieve the millennium development goals without aid as part of the package. Similarly, it would be a mistake to believe that aid alone can achieve the development goals; it cannot. Private sector investment and production for profit will also be necessary if those goals are to be met.

For every sceptic in Africa there is an enthusiast, and the enthusiasts and their countries will benefit most from NEPAD. Over the years, many African developments have failed because they have been built on expectations that people outside Africa would do certain things, particularly in providing more aid. NEPAD's strength is that it concentrates on what Africa can do for itself. Unless Africa creates the conditions to encourage investment, that investment will not take place. No national or international agreement will produce investment if investors cannot see a return on their investment in the country in which they are considering investing. No agreement can guarantee investment if law and government practice do not create the conditions to encourage it, and no international agreement can guarantee exports to African countries if Africa does not produce things that people elsewhere in the world want to buy.

The "everything but arms initiative" from the European Union and the Africa growth and opportunity active initiative from the United States place some real hurdles in the way of African exporters, and they have not created as much growth in exports from Africa to north America and the European Union as they could have done if all the opportunities that have been opened up—tariff-free access was opened up by those agreements—had been fully exploited by African countries.

The changes in economic conditions in Africa that are needed to encourage private investors to invest and do business with the continent will not happen overnight. However, they will happen. That is not because I want them to take place or because Tony Blair or George Bush want them to happen, but because Africans want them. Anyone who talks to the African middle class in Africa or in this country knows that they want conditions in which their businesses and enterprises can thrive. However, G8 members and other rich countries, including Development Assistance Committee donors, can do several things to assist the implementation of NEPAD, and I hope that the Minister and her colleagues in the Government will raise these points at the G8 summit in Evian.

All G8 members must recognise that it is a long-term process and that we are in for the long haul. The G8 group of personal representatives of the Heads of State and government played an important role in crafting the G8 response to NEPAD at last year's summit and in preparing reports for this year's summit. I hope that that group will continue to operate for the foreseeable future, because the momentum of the rich world's response to NEPAD will falter if there is not a continued, co-ordinated response from representatives of the leaders of our countries. I also want a commitment that Africa and the G8's response to NEPAD will appear on the G8 agenda at subsequent summit meetings. If that does not happen, once again the continuity of the commitment from the highest levels of government in the rich world will be interrupted.

We talk, rightly, about the need for transparency and accountability among Africa leaders, which is why the peer review process is so important and why it is encouraging that it is beginning to happen. However, transparency and accountability are needed from the rich world, too. As G8 countries, we have signed up to many proposals in response to NEPAD and the G8 Africa action plan, which was published after last year's G8 summit. This year, we need a written report that states what progress has been made on each of the commitments given and statements made at and following the Kananaskis summit. The report should also include proposals for future action that G8 countries intend to take, and the document should be provided for and published after G8 meetings in subsequent years. We also need to know what each G8 country has provided in aid, including untying its aid and refocusing it on the needs of the poorest people in the poorest countries, and what its plans are for future years. We need transparency and accountability from our leaders and African leaders.

I agree with the case that my hon. Friend is making. Does he agree that that transparency and accountability should go as far as arms control? As we know, the greatest problem with Africa is that it is awash with arms that are fuelling many conflicts. So rather than supply arms to all of the squabbling groups, would it not be better to use some of that in vestment to try to build up their armed forces and law-and-order bodies so that they can provide the stability needed for economic advancement?

My hon. Friend makes a good point, and I agree with it absolutely. I was encouraged that when the United Kingdom published its implementation plan, highlighting the areas on which it would concentrate in the first year of NEPAD, conflict resolution was put at the top of the list. One way to avoid conflict is to reduce the flow of arms into conflict regions and, as one of the world's major arms producers, we should take action to limit that. We should also be transparent and publish information about where the arms are produced and how they are supplied. Several Members are present who will surely raise the issue of conflict in Africa.

On that point, does the hon. Gentleman agree that we could provide one example in this country by taking a much stronger position on private military companies, to which most of us would refer in some respects as mercenaries? We could take a lead by making such activities entirely illegal and by preventing British citizens from leading conflicts in African countries, with the harm that we see around us.

The hon. Gentleman makes a powerful point. He may want my hon. Friend the Minister to respond on the Government's behalf, and I am sure that she will, but I have great sympathy with what he says.

Many hon. Members want to speak, so I shall raise just three other points that I should like the Government to press at Evian. In addition to the recognition that we are in this for the long haul and that there is a need for accountability on the G8 side, greater coherence is needed among G8 countries in their development policies and among all Development Assistance Committee members. There are enormous inefficiencies in the delivery of aid when different donors require recipient countries to produce separate, but often quite similar, poverty reduction strategy reports and other reports. We should work towards a situation in which donors collaborate. They might appoint one of their number as a lead donor in a particular country that would negotiate with all the other donors about their requirements, with that leading to a poverty reduction strategy. They would agree jointly to be bound by a single strategy that the country develops.

It is particularly important to improve co-ordination among donors because of the creation of a United States millennium challenge account. I warmly welcome the fact that the US has greatly increased aid. According to the DAC annual report, which has just been published, the percentage increase in US aid is greater than that for any other donor country. Albeit the increase is from a fairly low base in percentage terms. As that account will concentrate large amounts of resources on a relatively small number of countries, it is important that the US talks with other donors about the implications for the aid that other donors give. In other words, we need to work together and share thinking.

No. I shall make progress so that others have time to make speeches.

I should like to see further progress on the quantity of aid that is provided. I was pleased that, in the statement of the most recent African Heads of State and Heads of Government meeting on the new partnership for Africa's development in Abuja, there was warm support for the proposal from my right hon. Friend the Chancellor of the Exchequer to create an international financing facility. I hope that that is raised at Evian and that we receive commitments from other G8 countries to advance work on creating such a facility. Unless more money goes into assisting development in the poorest countries, the millennium development goals will not be met. We know from the Zedillo report to the Monterrey summit that about a doubling, in real terms, of development assistance is needed between now and 2015 if those goals are to be met in Africa. The only proposal on the table anywhere in the world that offers a hope of doubling the volume of aid in real terms between now and 2015 is that of my right hon. Friend the Chancellor of the Exchequer, so I hope that our team at Evian will push it as vigorously as possible.

Finally, we must make progress on the development dimension of the Doha trade round and, most significantly, on access to medicines and reductions in agricultural subsidies. I was pleased that, in his statement on new proposals for Africa, President Chirac included recognition that a temporary elimination of export subsidies is needed. That is an important step forward by France, although if export subsidies to European farmers damage the prospects of African farmers in the short term, they are also damaging in the long term. The goal must not be a temporary removal of export subsidies, but elimination as part of a wider reform of a common agricultural policy.

2.19 pm

I congratulate the hon. Member for City of York (Hugh Bayley) on securing this debate on a matter that he, I and many other hon. Members consider to be extremely important. The countries of Africa have slipped off the agenda somewhat in recent months because of our concentration on Iraq and other matters in the middle east. NEPAD is an historic initiative by the nations of Africa to take up the challenge of eradicating poverty through the pursuit of sustainable growth and development, underpinned by the advancement of good governance, democracy, human rights and conflict resolution. It is most important that that is all done in partnership between the countries of Africa and the developed world.

We should congratulate the leaders in Africa on their vision and courage in taking up a formidable challenge that has eluded the best efforts of the international community and international institutions for nearly half a century. In particular, I should like to place on record my recognition of the efforts of the President of Senegal, who got a democratic mandate in 2000 in Senegal's first universally free and fair elections since it gained independence. President Wade was a worthy winner of Liberal International's freedom prize last year. He is certainly a catalyst in bringing together like-minded leaders across Africa to forge the principles of NEPAD and to formulate its implementation programme.

We should congratulate the African nations on striving to take control of their own destiny under the auspices of the African Union. We should support them and not listen to the sceptics. We should also be careful not to rush to judgment on how quickly the African nations make progress in NEPAD. We must not fall into the trap of comparing unfavourably the aspirations of the African Union with the achievements of the European Union. Democracy and human rights have been enshrined in the principles of good governance throughout Europe for centuries, if not always practised. However, the concept of democratic representation in Africa is probably less than three generations old and in many places is still untested. In our new partnership with Africa, our over-riding objective must be to ensure that NEPAD succeeds. If NEPAD fails, Africa will continue to be marginalised and it will be a failure for us all.

Against that backdrop, we need to examine and to pursue, as the hon. Member for City of York did in his speech, the status of the UK's action plan for NEPAD and to examine the progress on the implementation reports for the forthcoming G8 summit at Evian. Initially, we would like the Minister to clarify the UK's position on NEPAD's African peer review mechanism. The first review could be completed by the end of 2003. I understand that some 13 states have already signed up to the mechanism. I also understand that the mechanism will use expertise from the United Nations Economic Commission for Africa and the EU and will be serviced by the NEPAD secretariat.

It is pretty obvious from the progress made so far that the resources available to the NEPAD secretariat and to NEPAD in general are somewhat, if not severely, stretched. Have there been any discussions between our Government and NEPAD representatives to see whether any assistance can be given in that regard? The reviews are due to start this month—we are almost at the end of the month now—and Ghana is tipped to be first. We have no further news of that on the NEPAD website. Again, if the Minister can give further information on that it will be most welcome.

So far, the G8 response to NEPAD has focused on a range of extremely worthwhile and fundamental objectives, including democracy and political governance, prevention and reduction of conflicts, human development, information and communications technologies, economic and corporate governance, action against corruption, stimulating private investment in Africa and increasing trade, which are both essential, combating hunger and increasing food security. That is a worthy list but challenging if it is to be achieved in anything other than the long term.

Recognising that G8 funding goes not directly to NEPAD but to individual countries, it is clear that peer review performances are a key aspect. I understand that those performances will be taken into consideration when deciding on enhanced partnerships with individual countries. I am concerned that the monitoring and mentoring process that will undoubtedly be applied in those individual partnerships should be reasonable. Expectations of progress must recognise the capability of the countries to make that progress. We must not fall into the trap of making the comparison between our achievements in the EU and the aspirations of the African Union.

I understand that there are six areas in the United Kingdom's plan: peace and security; trade; health; education; aid effectiveness; and, significantly, transparency in the extractive industry. However, as yet, I have been unable to find any further details on that plan, or any report on the Foreign and Commonwealth Office website. Will the Minister give us an update on how far that planning has progressed? I understand that the UK priorities for the G8 summit are still under discussion, particularly with regard to trade and education.

As the hon. Member for City of York emphasised, trade is a key issue. We must see fair trade and look at reducing subsidies. The French initiative is welcome, but we need more than that. We must remove the barriers to imports. Will the Minister tell us what progress the UK is making with our EU partners on establishing a fair trade process with the African continent?

As the hon. Member for City of York said, the G8 personal representatives will report to the Evian summit on progress in implementing the G8 Africa action plans. In that context, the international finance facility proposed by the Chancellor, which is intended to help to meet the millennium development goals across the underdeveloped world and is aimed at the poorest countries, has direct relevance to the progress that can be made with NEPAD.

The intention to double official development assistance has been welcomed by NEPAD, as long as it does not increase Africa's external debt burden. According to the Treasury, the new facility,
"providing an additional $50 billion a year, could thus help in partnership with additional resources mobilised by developing country governments"—
which would be very worth while—
"to ensure that every child has primary schooling; radically reduce avoidable deaths from infant and maternal mortality, and tackle HIV/AIDS; and halve world poverty."
Those are admirable aims that we all wish to see achieved. However, I am concerned that that does not remain just a wish list, and that our representatives to the G8 promote positive action and concrete and achievable objectives.

I have a number of concerns about how the process regarding the G8 and NEPAD will unfold. What are the Minister's views on who should take the lead in the NEPAD-G8 action plans? Should the lead be taken by the presidency of the time and, if so, is there not a danger that responsibility for implementation will shift with the presidency, and that no one will take any real action? We have seen examples of that in the EU all too often, but I would like to think that the G8 is somewhat more constructive.

Can the Minister explain what mechanisms will be put in place by the G8 to ensure that the objectives are met? Can she tell us whether the NEPAD representatives are being asked to report to or to attend the Evian summit? That is not clear.

What safeguards are in place to ensure that the results of the African peer review mechanism are not unreasonably adversely affected through aid provision? We all understand the need for monitoring and mentoring, but it is vital that we do not set targets that are not achievable. At the same time, of course, we must have some safeguards to ensure that the international finance facility is used as intended. What measures are being developed to avoid creating higher unsustainable debt, which is, rightly, a great fear among NEPAD participants?

Can the Minister tell us what progress has been made on the Government's Africa action plan? Will the Government make Africa a priority under the UK's presidency of the G8? NEPAD faces many challenges before the vision can even begin to become a reality, not least the creation of an effective African peer review mechanism. The major concern for many must be whether NEPAD has the resources necessary to back the will to make that mechanism work.

There is a particular point about the situation in Zimbabwe, which is seen by many in the west as a test case for NEPAD's resolve. It is vital that the United Kingdom in particular does not attempt to offload its responsibilities on to an as yet fragile mechanism. If the concept of partnership that is enshrined in NEPAD is to have any meaning, the UK must continue to play a leading role in working with African nations to resolve the crisis in Zimbabwe.

Before I call the next speaker, I remind Members that winding-up speeches must begin at 3 o'clock. I hope that those who wish to speak will bear their colleagues in mind and exercise self-discipline.

2.33 pm

As both previous speakers said, there is an understandable risk in an uncertain world that attention switches far too quickly from one area of need to another; for example, from post-9/11 Afghanistan to Africa at the G8 summit last year, on now to the middle east and, recently, to Iraq. The danger is that none of those places receives the sustained commitment that they clearly need. On Africa, it is absolutely vital that the start that was made at Kananaskis in building international support for NEPAD is carried through at Evian and beyond.

I congratulate my hon. Friend the Member for City of York (Hugh Bayley) on obtaining this important debate at this vital time and on providing a comprehensive account of progress in a very positive way. I join other Members in welcoming the positive tone that he set for the debate and the emphasis that he gave to the need for long-term thinking.

I wish to make a few points about the finance that will be needed to support NEPAD. We can all have aspirations and action plans, but nothing will be achieved unless we back them with resources. I agree with my hon. Friend that aid alone is not enough. However, aid will be essential if NEPAD is to come to fruition. I believe that it is now generally accepted by all parties in the House and, indeed, more widely, that the global aid budget of $50 billion, which is what is currently spent each year on aid, is no longer adequate. The addition that was agreed at Monterey of $12 billion, which includes the millennium challenge account and the UK's commitment to 0.4 per cent. of GNP by 2006, is very welcome. Nevertheless, it is widely recognised that if we are to achieve the millennium development goals of halving world poverty, ensuring that primary education is universally available and so on, not least in Africa, we must double the amount of development assistance that we make available.

I warmly welcome the call of my right hon. Friend the Chancellor that was outlined in many documents, including the Red Book and his statement to the International Monetary Fund on 12 April, for an international financing facility through which richer, developed countries can borrow in the capital markets to finance the health, education and livelihood needs of the poorest people in the world. I was pleased to see in the communiqué issued at the end of the IMF's spring meeting that the international finance facility proposal is under active consideration. However, there is a long way to go and I would like the United States and Germany in particular to show more enthusiasm for an idea that could mean that from 2010 the world would be delivering $100 billion a year in development assistance.

The potential for the international finance facility to give life to NEPAD is clearly understood by African Heads of State. At their meeting on 9 March, they warmly welcomed the proposal from our Chancellor and committed themselves to work in support of it. Evian provides an opportunity for the G8 to build and share that enthusiasm. I seek the assurance of my hon. Friend the Minister that the United Kingdom will do everything possible at the G8 summit to further the development of the international finance facility. As my hon. Friend the Member for City of York said, it is the only show in town and the only way in which the considerable increase in development and assistance can be delivered, particularly to Africa, which requires aid on a level and within a time scale that allows us no pause for breath.

My second point is a plea to all of us, whether Back-Bench Members or Ministers, whether we work and campaign with non-governmental organisations or with international institutions, to understand better the way in which the various strands of our strategy to defeat poverty connect and sometimes overlap. I have referred to development assistance and the international finance facility proposal. I remember, as no doubt do other hon. Members, standing in the streets of Birmingham five years ago forming a human chain to demand more generous debt relief. In June, we shall be lobbied in our constituencies by campaigners for the trade justice movement demanding fairer trade, particularly for developing countries. Aid, trade and debt relief are not separate strategies; they are part of one strategy to defeat poverty.

On a recent visit to Ethiopia, I saw the plight of coffee farmers and the effect of collapsing commodity prices. Does my hon. Friend agree that such matters are linked because they have an impact on debt relief and through the HIPC initiative? Unless trade, aid and so on are combined to create poverty reduction strategies that rely on all three of those areas working together, the major achievements and advances to which he refers will not occur.

I strongly agree with my hon. Friend and will refer specifically to Ethiopia in a moment.

My main point is that when the connections cannot be seen, we may not see the unintended consequences that the overlapping of the various strands can have. I shall give an example that refers to three countries: Niger, Rwanda and Ethiopia. Those heavily indebted, poor African countries hope for debt relief through the HIPC initiative, to which my hon. Friend the Member for City of York referred, and for more generous development assistance. They are making determined efforts to improve good governance in their countries and have adopted and are working on good, poverty-reducing strategies. Niger wants to extend the scope of primary education. Rwanda wants, among other things, to build up and extend the capacity of its justice system to underpin a more stable society. Ethiopia, understandably, wants to improve food security and ensure that agriculture provides a real basis for its development. To make those things happen, however, they need more aid and a significant part of that aid will come in the form of loans from the International Development Association. Those are soft loans over long terms at low interest, but if those countries take them they will exceed their debt sustainability thresholds, which apply under the HIPC rules. It is crazy that one aspect of that strategy is defeating another, and we must find a way through that issue.

About a year ago, the United Kingdom and the United States had a fundamental disagreement about whether IDA loans should be given in the form of loans or grants. A settlement has been reached on that issue, and it is unlikely that it will be unpicked. However, it would be helpful if the Minister could confirm that the Government intend that the money made available through the international financing facility will be in the form of grants rather than loans so that that kind of problem can be avoided, especially in very poor African countries.

The most important feature of NEPAD is that it is led by Africa and, through the peer review mechanism, will be accountable to Africa. The developed world's role, particularly through the G8, is to provide political and financial support for that process. The Evian summit is a hugely important opportunity for us to give that support and to show that we, too, are active partners in the development of Africa.

2.41 pm

I congratulate my hon. Friend the Member for City of York (Hugh Bayley) on raising these important matters. In the past few months, our attention has naturally been focused on the middle east, but there have been many other crises in the world. Many of the crises in Africa have been largely ignored and hidden from view, and I hope that at the G8 summit in Evian the world community will correct that omission and focus its time and resources on the urgent needs of some of the poorest people on our planet.

The NEPAD agreement devotes its first chapter to peace and security, which must, of course, remain a top priority if its other aims of encouraging investment and development are to be achieved. Unfortunately, conflict is still the chief obstacle to progress in Africa, and I should like to focus my remarks on the continuing crisis in the Democratic Republic of the Congo. Sadly the humanitarian situation in the eastern DRC, and particularly in the Ituri province, has not improved despite the recent peace negotiations. The conflict in the DRC has cost an estimated 3 million lives since 1998, and just this month a massacre, which is estimated to have killed more than 1,000 civilians, occurred in the Ituri province.

The international response to that region of the world, which has been virtually stateless for many years, has been practically negligible. There are less than 5,000 UN observer troops to cover the entire territory within the DRC, which itself is roughly the size of western Europe, and there are only eight military observers in Bunia, Ituri, to cover a population of 4.5 million. That is completely inadequate to meet the needs of the area. More than 500,000 people have been displaced from Ituri, and there have been more than 50,000 violent deaths in the past three years.

To give just one comparison—I will not compare the DRC with the middle east or eastern Europe—Sierra Leone has suffered 50,000 violent deaths, which is about the same as Ituri. In Sierra Leone, however, there are 17,000 members of the British armed forces, which shows the scale of the response—or the lack of it—in the DRC.

Support and resources from the international community are long overdue. Our scandalous inaction in the face of that appalling tragedy should result not in more of the same but in a determined attempt to engage with our colleagues in Africa through NEPAD in order properly to address the increasingly dangerous political and security vacuum and to resolve the humanitarian crisis.

The G8 members, and especially its European members, have a vital role to play. The conflict in Ituri runs not only on tribal lines—principally, the Hema and Lendu groups—or as a national dispute for control of the DRC itself, but increasingly as a dispute between two neighbouring countries, Uganda and Rwanda. Both Rwanda and Uganda rely on significant amounts of aid from the UK and the other G8 members, and we have a unique position in NEPAD from which to influence a peaceful resolution to the dispute.

In 1998, as the Minister will be aware, Uganda occupied the Ituri province and its army is still present, with recent reports of a significant increase in troop size. Of the nine armed groups operating within Ituri, all have at some stage benefited from Ugandan support. Actual power in the area has rested with a spectrum of different political factions that change according to the infighting and shifts in Ugandan patronage. The Rwandan influence is more recent and there are reports of a growing relationship between the groups and the Hema political party as well as incidents of Rwandans providing ammunition and military training. There have also been sightings of Rwandan soldiers in the area.

There is a growing extremism in the level of violence with regular reports of torture, rape, mutilation and even cannibalism, and there is every reason to believe that the killing is increasingly based on ethnic genocide. The external support from Uganda and Rwanda allows the militia groups to be more sophisticated in their attacks, using heavier arms and land mines.

Urgent and decisive action is needed to prevent both an uncontrollable human rights disaster in Ituri and a potential re-ignition of the great lakes conflict with neighbouring states. There have been numerous reports in recent weeks of troops massing on the Rwandan border with the DRC and Ugandan forces preparing for conflict in Ituri itself. If fighting were to break out, it would effectively wreck the current Congolese peace process, which has been hopeful in many other respects, and set the chances for sustainable peace back by years in a huge swathe of the African continent.

Today I strongly urge the Minister to ensure that the UK Government raise those issues at the G8 summit and persuade our European and other international partners to assist in significantly strengthening and increasing the size of the MONUC observer force. As the Minister will be aware, the UK is the biggest bilateral aid donor to both Rwanda and Uganda and I ask the Government to continue to use their influence—I know that the Department for International Development has already done so—to put pressure on the Governments in the great lakes region to withdraw from military conflict in the DRC.

I ask the Minister to persuade the G8 members through NEPAD to offer appropriate political and financial support to the Ituri Pacification Commission, which was set up as part of the peace settlement, and press for a high profile facilitator who can gain the respect of all parties. Time is not on our side; nor is it on the side of the people of Ituri or the DRC, and I hope that the Evian summit will produce a substantial result to prevent future tragedy in the region.

2.47 pm

I congratulate my hon. Friend the Member for City of York (Hugh Bayley) on three counts: first, on securing the debate, secondly, on his excellent speech, and thirdly, on his robust and diligent leadership of the all-party group on Africa. One of the reasons for constituting that group was the recognition that Africa's problems and opportunities were so great that a more consistent effort to raise those issues in the British Parliament was required.

My hon. Friend outlined the clear link between conflict and poverty. We have just heard more on that in the excellent speech of my hon. Friend the Member for Glasgow, Maryhill (Ann McKechin). In the New Partnership for Africa's Development, conflict is a headline priority for the G8, particularly in the great lakes region, Angola and Sudan. During my brief speech, I trust that hon. Members will permit me to dwell on the problems facing the great lakes, notwithstanding the preceding adept description of those problems.

I was going to say that some MPs might be unaware that 3.3 million people are estimated to have died in the Democratic Republic of the Congo since 1998, but if they listened to the speech of my hon. Friend, they will have been disabused of their ignorance on that subject. I would like to point out that, in ballpark figures, that number is equivalent to the entire population of Ireland. I find it astonishing that we hear so little about it. The G8 comprises the world's richest countries with enormous military capabilities, as we are all aware, and they must take responsibility to end this carnage.

In the joint DFID and Foreign and Commonwealth Office document entitled "G8 Africa Action Plan: towards the 2003 summit", the Government commit to supporting

"the resolution of conflict and consolidation of peace in the Great Lakes region"
and to supporting the development of a long-term plan to build conflict management capability in Africa and an effective African peacekeeping force.

I shall return to what we currently have in terms of the African Union's contribution, or putative contribution, to peacekeeping, but there is some good news. The recent all-inclusive peace deal in the DRC, as we have heard, offers a chance of peace. The bad news, as we have also heard, is that the violence continues. I shall not repeat what my hon. Friend said, but shall just mention the numbers involved in the UN mission in the DRC. Some 200 troops have recently been deployed to support the military observers in Ituri. We have heard about the terrible situation there and that move is very much welcomed. However, many more troops have been promised and I was told that a battalion of Bangladeshi troops would be deployed there. There has been no sign of that, and I wondered whether the Minister could update us. Ugandan troops have begun to pull out, and we need to consider what will happen if, when they pull out, there is a power vacuum because we do not have sufficient peace-keeping forces available.

Briefly on Burundi, the transition from the current Tutsi President Buyoya to the Hutu Vice-President Ndayizeye will take place tomorrow. Again, that is very welcome. Equally, the arrival of the first African Union peacekeepers in Burundi last Sunday is a positive step but that contingent represents only 43 of the promised 3,500 troops. Despite numerous peace deals, violence continues. Just last week, the capital Bujumbura came under shell fire for three days. The African Union and all regional states need to be pressed into making that African Union force a reality as soon as possible.

Finally, I turn to natural resources. The G8 Africa action plan is explicitly committed to working with African Governments, civil society and others to address the links between armed conflict and the exploitation of natural resources. My hon. Friend and I have visited Rwanda, and I have also visited regions of the DRC, where we have seen the link between the exploitation of natural resources and the prolongation of conflict. Work on the Kimberly process on conflict diamonds and the extractive industries transparency initiative are welcome, but those measures alone are simply insufficient. Multiple reports, including that of British MPs who went to the DRC—the first delegation of British MPs ever to go there—have identified the exploitation of natural resources as the single most important factor in the continuing conflict in the DRC.

That report of the all-party group on the great lakes region and genocide prevention and numerous independent reports, including, most recently, one released today from Amnesty International and one from the UN Security Council, have come to the same conclusion. Yet there has been no concrete action. What assurance can the Minister give us that the G8 will honour the commitment made at its last summit and break the insidious link between conflict and resource exploitation? Until that happens, I fear that Africa will continue to be cursed by riches.

2.54 pm

I, too, offer my congratulations to the hon. Member for City of York (Hugh Bayley) on securing the debate, which has, as always in this Chamber, been interesting and illuminating.

At the launch of NEPAD, President Mbeki said:
"The programme is anchored on the determination of Africans to extricate themselves and the continent from the malaise of underdevelopment and exclusion in a globalising world."
That is good stuff. It is extremely important, as we have heard. The initial action plan talks of strengthening the conflict prevention measures. The hon. Member for Stroud (Mr. Drew) brought up the important issue of arms control. Democracy, good governance, economic factors, and corporate governance must be taken into account if NEPAD is to succeed. It has stated clearly the things that it feels are important. They include, above all, peer review to end wars and corruption; we have heard about that from other Members. I understand that 13 states have so far signed up to what is a really admirable initiative.

NEPAD is a political agreement between African leaders; it is not a funding mechanism. We must keep that very clear in our heads. The G8 countries will not be funding the initiative directly, but countries that show commitment to all the things that NEPAD stands for will be rewarded in ways that hon. Members mentioned in their speeches.

People often ask me, "What is the most important single factor in development?" I say, "Well, there are about 10 actually and they are all of equal worth." We have heard much about such factors this afternoon from hon. Members. While telling us that there was much good news in Africa, the hon. Member for City of York said that the importance of trade and the reform of agricultural subsidies has to be absolutely way up on the list of priorities. As he quite rightly reminded me, the countries will need aid for many, many decades to come. Trade is the key issue for them. He emphasised that we must get the matter on the G8 agenda, and make sure that the report goes to the G8 every time it meets, that it gives us a report back and that there is some sort of audit and measurement of what is going on in relation to the NEPAD process.

My hon. Friend the Member for Eastleigh (Mr. Chidgey) talked a lot about peer review. I am glad that he mentioned Zimbabwe, because everyone in this House is going around with an awful sinking feeling about Zimbabwe. How can we do something about Zimbabwe? If anyone can do anything about it, it should be an organisation such as NEPAD. If NEPAD is talking about peer review and stands for all the things that it says it stands for, it should be putting on pressure, led by President Obasanjo and President Mbeki in particular. It should be leading the fight against what is going on in Zimbabwe.

The hon. Member for Wythenshawe and Sale, East (Paul Goggins) talked about the importance of the international finance facility recently set up and debt relief. Such huge financial issues are crucially important. The hon. Members for Glasgow, Maryhill (Ann McKechin) and for Bethnal Green and Bow (Ms King) talked about the Congo, which is another country that is going through the most terrible traumas. The whole of the great lakes region in Africa is awash with guns, war and suffering. Hopefully, NEPAD will be able to do something about that too.

I was rather surprised that there was not much mention of AIDS. In sub-Saharan Africa, a third of the population is now infected with HIV. They need not just drugs, health care and health centres where those drugs can be delivered, but protection from other diseases. What I am really concerned about, and what we must flag up today, is that if SARS—a dangerous and infectious disease—reaches Africa, the population suffering from HIV will be wiped out.

Does the hon. Lady recall from our visit to Rwanda and the subsequent report of the Select Committee on International Development three years ago the astonishing figure that AIDS was estimated to be wiping out 1 per cent. of Africa's gross domestic product per annum? Does she know whether that figure is increasing or decreasing?

I do not know, but I thank the hon. Lady for raising the point, because it is crucial to NEPAD's ideals. The difference with HIV is that it wipes out the economically active population. Other diseases in the history of the world—even SARS, malaria and tuberculosis—wipe out the very young, the very old and the weak, but HIV/AIDS wipes out the economically active. All our plans for African development could fall if SARS reaches the continent, as that population will die because they will not have the immunity to resist. I hope that someone is bearing that in mind, because the African countries may not have the surveillance procedures in place that they will need to stop the epidemic spreading.

We have heard a lot about Africa in the past two years, particularly from our Prime Minister in a wonderful speech that brought tears to my eyes. In his conference speech in autumn 2001—after 11 September—he described the state of Africa as a scar on the conscience of the world and promised to send more aid, to write off debt, to help with good governance and to train soldiers in peacekeeping and conflict resolution. He promised that Africa would have access to our markets in the west and the G8 countries. After all those promises, what did we get? We got Afghanistan and Iraq. I do not want to start another debate; I want only to say that we can always find billions to make war, but we never seem to be able to find the little extra needed to fund development that, in the long term, would prevent wars.

Yes, since the Prime Minister's speech there has been conflict in Afghanistan and Iraq. However, if our Prime Minister had not said to the other G8 leaders that they must invite Thabo Mbeki to the Genoa summit, the question of NEPAD would not have been on the G8 agenda. If he had not kept on pushing it, the response would not have been made at the Kananaskis summit. That is good, and we should all feel proud of it.

I am glad that the hon. Gentleman feels proud of the Prime Minister, but I should also point out that the problems that have been created in the past 12 to 18 months also fall on the budget of the Department for International Development. That makes me angry. I know that the Treasury coughs up to a certain extent, but reconstruction processes take money out of DFID. We hear different protests that they will not affect the millennium targets or other aims, but they will.

The war in Iraq is only just beginning; we are in only the early stages of what will happen in that area. We know that Afghanistan is descending once again into lawlessness and chaos, and huge humanitarian problems are developing. We know that war does not solve the problems and that more money will have to be spent. We have a bottomless bucket of money for war but never quite enough to deal with the problems of Africa and the developing world.

We have had many initiatives, and I have often asked DFID for a glossary of development initiatives and acronyms. There are the millennium targets and the Okinawa, Copenhagen and Skagen declarations. There is also the Cotonou agreement, which is very good, but is yet another agreement. We have the EU-Africa Cairo plan of action, the international finance facility, the global health fund and the HIPC initiative. Yesterday, I heard about SWAPs—the sector-wide approach to development—which is something else to get one's head around. I presume that it will have to link in with NEPAD somehow, because it has some of the same ingredients as the NEPAD ideals. There are many of these initiatives, and I very much hope that NEPAD will be able to bring them together for Africa.

I dread the possibility that NEPAD, if not taken seriously, will simply become a glossy and expensive talking shop. There are already enough of those in the world. Africa needs action.

3.6 pm

I, too, congratulate the hon. Member for City of York (Hugh Bayley) on introducing this important debate. I intend to stick more closely to the subject of the debate than did the hon. Member for Richmond Park (Dr. Tonge), but I point out to those who might wonder why so many hon. Members from both sides of the Chamber are not here today for the debate how unfortunate it is that due to the modernisation of our procedures the debate is taking place at the same time as the meeting of the Select Committee on International Development, which is considering aspects of the Doha agenda, and at the same time as the meeting of the Select Committee on Foreign Affairs, which is considering aspects of the war against terrorism. I do not doubt that more hon. Members would be present if that were not the case.

I remind the hon. Gentleman that I have taken part in many such debates in the Chamber before modernisation took place, and there have never been many more hon. Members present than there are today. It is missing the point to blame the lack of attendance on modernisation.

That is a perfectly valid comment. [Interruption] I must make some progress, as I want to talk about the issue, not why other hon. Members are not here.

This is a very important debate. We support the idea of NEPAD. It has only been one year since NEPAD's implementation, and we are very much at the start of a process. We should not make harsh judgments about what it has achieved so far. It represents a significant shift in pan-African politics and, as Kofi Annan warned, we must
"not mistake hope for achievement".
NEPAD has no teeth in terms of its implementation. I am reminded of the comments made by Christian Aid, which, before the G8 meeting in 2002, warned that
"NEPAD has been developed predominantly between African heads of state along with G8 leaders. It is not yet a partnership between African Heads of State and their own people, or between African peoples."
It recommended that
"poor people themselves, the experts on poverty, must be placed at the heart of NEPAD. Their needs and priorities must be the foundation upon which NEPAD is based. Ordinary Africans must also be involved at all stages of NEPAD. They should be consulted as NEPAD is revised and must be central to its implementation, and scrutinise its impact."
That must be right.

The African peer review mechanism is an important development, and we warmly welcome the statement of the chairman of the steering committee this month that the independent panel of experts is expected to be appointed within the next couple of months. However, I share the frustration, which has been expressed, that so little has been said about Zimbabwe. Baroness Amos, the Minister with responsibilities for these matters in the other place, said that the attitude of African leaders towards President Mugabe was "disappointing". That is a great understatement. The decision by the African Union not to attend the EU Africa conference if President Mugabe was not invited contradicted all the commitments it made at NEPAD to provide and support good governance, not putting African solidarity as its first priority.

We are in no position to punish a whole continent for the actions of one country, but there must be more recognition by the Governments of Africa of the deteriorating, critical situation in Zimbabwe. Indeed, it makes it hard for the rest of the G8 membership to promote NEPAD if there is no such recognition. Tony Leon, the South African Democratic Alliance leader said that
"the real threat to NEPAD is not the war in Iraq. It is the situation in Zimbabwe…the silence of Africa on Zimbabwe is so damaging and decisive because the failure has been almost complete."
What discussions has the British Government had with members of NEPAD about the formation of some form of sanctions mechanism to punish bad behaviour and the breaching of their commitments in that regard? Can the Minister say whether pressure to do that could be applied through other bodies that support NEPAD such as the United Nations?

For NEPAD to make real progress towards the 2015 millennium development goals, Africa's nations must be supported by the international community. The plan, agreed at the G8 summit in Canada last year, sets out specific actions in areas of peace and security, strengthening institutions and governance, fostering trade and investment, debt relief, education and health as well as HIV/AIDS, agriculture and water, all of which will be discussed at the G8 Evian summit on 1 to 3 June.

It is important that the Africa action plan and any NEPAD implementation plan should be set within the context to which hon. Members have referred of chronic food insecurity and HIV/AIDS in Africa. Both need to take account of the negative, knock-on effects that those issues have on the time scale and human resources for all those plans. Of course, Save the Children, among other organisations, has called for the vital need for food assessments to go hand in hand with all health and education plans.

The importance of peace and security has been mentioned today. Conflict management and prevention and peace building is at the heart of the Government's Africa policy. That has been carried forward within the Africa conflict prevention pool in which the Department for International Development, the Foreign and Commonwealth Office and the Ministry of Defence work together to make our approaches to conflict in Africa more strategic and co-ordinated. That is very good; but we do not know what criteria DFID and the FCO use for targeting conflict countries in Africa in terms of our involvement. They argue that different criteria were used regarding Zimbabwe and Angola, but both countries have 6 million children suffering from deprivation and conflict. What mechanisms are in place to ensure the transparency of the process of our involvement in African conflict?

It is no good our insisting that there is transparency and accountability in African countries and governments if we are not transparent and accountable in deciding between different desperate situations in different countries in Africa. With Oxfam and Save the Children, we support the publish-what-you-pay initiative. What is being done to press for the enforcement of regulations to control the economic exploitation of natural resources, which have played such a significant part in so many African conflicts?

We also support and call for corporate social responsibility and transparency in terms of dealings with natural resources, especially in Africa. Further, we support the development of a long-term plan to build conflict management capacity in Africa. Specifically, we support an effective African peacekeeping force and the ambition to achieve it by 2010. Can the Departments involved provide more information on the force? If the Minister cannot do so today, will she be kind enough to write to those who have spoken in the debate to tell us what is going on with regard to the force? Will it be run through the African Union or through NEPAD? To whom will it be accountable? What support in the form of money, resources and expertise do we plan to give? Which will be the lead Department in respect of the Africa action plan?

Another aspect of the Government's approach to international development that I question constructively is the sector-wide approach—the so-called SWAP approach, which many non-governmental organisations have criticised. It looks attractive. Instead of saying, project by project, "Let's send in the NGOs that know most about this project," whether it relates to education, health, agriculture or water, we say under the sector-wide approach, "No, let's ensure that the Government of the country controls the programme and that we finance that Government to do something according to our criteria."

I have a real problem with that approach because many countries simply do not have people with the same professional achievements—accountancy or information technology skills, for example. Often countries do not have sufficient resources—either capital or human resources—to implement such an approach. It is possible to do so in some countries—thank goodness—but in many others it is not, so I am watching critically the development of the sector-wide approach to ensure that it does not do more harm than good in some of those countries.

Africa has 12 per cent. of the world's population, but only 2 per cent. of the trade. Of course, I agree that trade is extremely important to the future development of African economies and people. Full integration into the international trade system would hugely benefit the development of Africa's many countries, but this is a hugely difficult issue on which to make progress with the G8 and the European Union. The last three deadlines at the Doha trade negotiations—2 December 2002 and 1 and 31 March 2003—have been missed. Doha was a crucial kick-start on trade, but to date there has been a disappointing lack of progress. The greatest disappointment has been the failure of the United States to agree to amend the trade-related aspects of the intellectual property, or TRIPS, agreement to provide for developing countries to import patented drugs cheaply, as initially agreed in Doha.

Following the missed Doha deadlines, what is the risk that the agenda at Cancun in Mexico in September will be overburdened and will fail in terms of discussing all the issues in detail and moving forward? What plans are there to increase African participation in the international standard setting bodies? How are we working with NEPAD to ensure that trade barriers and tariffs between African countries, as well as between Africa and the G8 and EU countries, are tackled? What assessment has DFID made of the impact of declining commodity prices on developing countries' economies, and what steps will it take in light of that?

Another aspect of international development that has cropped up this afternoon and which I wholeheartedly underline is the problem of health. A fifth of an African person's life is spent in poor health. We recognise that fact especially in terms of HIV and AIDS, and we have debated it often enough. However, if we consider the international impact of the SARS virus and the fact that no expense is spared to protect the rich nations of the world and other nations, including China, that are developing fast, that puts into perspective the problem of malaria in Africa. Up to 3,000 children a day and 1 million people a year die from malaria, and the number of cases has quadrupled in the past 20 years.

Medecins Sans Frontieres has called for renewed efforts and the provision of new anti-malarial treatments, as traditional drugs are failing due to growing resistance. Even the proper use of mosquito nets could reduce malaria transmission by up to 60 per cent. and death rates in children by a fifth. A massive effort is needed by African Governments to eliminate sales tax on malaria bed nets. What pressure are we putting on NEPAD to achieve that?

The African countries that are NEPAD members need to be reassured that this country and this Parliament take an intense interest in the progress of a young body that has huge potential to do great good for the people of Africa. We wish them well, but we will be critical in our assessment of not only their achievements, but the achievements of our Government in seeking to deliver what should be a massive step forward.

3.20 pm

The Parliamentary Under-Secretary of State for International Development
(Ms Sally Keeble)

I start by congratulating my hon. Friend the Member for City of York (Hugh Bayley) on securing the debate and on the work of the all-party group on Africa, which is important in raising and discussing the issues. The debate on the New Partnership for Africa's Development is obviously extremely timely in the run-up to the G8 summit, at which G8 countries will reflect on their support for it through the G8 Africa action plan.

Hon. Members have raised many different issues this afternoon, and I shall try to deal with them all. If I fail to cover a point, I shall ensure that hon. Members receive a written reply. I hope that Members will be patient, and I will not take interventions in order to try to deal with the points that have been made.

NEPAD represents an important step forward for both African Governments and the international community in achieving sustainable development in Africa and managing Africa's reintegration into the global economy. There are several important points about NEPAD. One is that it is African-owned and focuses on sustainable development for Africa. The forum also deals with the need for increased donor coordination and provides a framework for tackling performance issues that are hindering sustainable development both by Africans and the west. Hon. Members have mentioned several of those issues already.

My hon. Friend rightly talked about the poverty in Africa and the need for greater investment. He was also right to say that it is not all doom and gloom. He highlighted the fact that, between 1990 and 2001, growth in some African countries was between 2 and 4 per cent., although I should point out that one of NEPAD's objectives is to achieve growth rates in African countries of 7 per cent. That is what is needed to reach the millennium development goal of halving world poverty. If we examine the growth rate between 1990 and 2001, hon. Members will see the mountain still to climb.

My hon. Friend and other hon. Members were also right to highlight the importance of trade, because to achieve a 7 per cent. growth rate, there will have to be a massive improvement in the trade figures for Africa. As has been repeatedly noted, that will be one issue on the agenda at Evian, and it is also crucial to my Department's work. We recognise that, for example, if we halved the trade and tariff barriers between the west and the developing world, about $150 billion extra would be produced as income for developing countries. If we compare that with aid figures, we see the comparative advantages for African countries in improving trade performance.

Like other hon. Members, my hon. Friend was right to emphasise the fact that more support is needed from the donor community, including substantial improvements to the volume of aid, as well as aid effectiveness. The G8 support for NEPAD has been extremely important, and the G8 Africa action plan is a clear articulation of it. The G8 focus on Africa has been an important signal of the notion of mutual accountability and that that has been taken seriously at the highest level. The Evian summit will report deliverables to measure progress against each of the priorities of the G8 Africa action plan.

We have also published our own plan, to which hon. Members have referred, to detail the areas of the G8 plan on which we have focused, and we will report on progress against those priorities at Evian. Obviously, it would be premature for me to report on those now. We will also look to the G8 to report contra-indicators of progress at the Evian summit, and we should also be clear that although the summit is a key milestone, it is not the end in itself. We will have to have long-term sustainable support for Africa for many years to come.

Reference was made to the objectives set for Evian, and I shall refer to one or two of them. At Evian, we will press especially for commitments for support for the international finance facility and for the $50 billion that it would produce for international aid. Several hon. Members referred to that. I believe that it was my hon. Friend the Member for Wythenshawe and Sale, East (Paul Goggins) who asked if this would be in the form of grants or loans. The intention is that that should be in the form of grants, although there may be a requirement for concessional loans. I hope that that gives the hon. Gentleman the reassurance that he seeks.

There was also a question of who would report and who would not. There are clear indications that France, Canada, the United States and the United Kingdom will report, and I believe that Germany will report to its Parliament. Two members have not yet said that they intend to report.

I shall try to cover some of the points raised in the short time that I have left. My hon. Friend the Member for City of York asked about coherence. We are committed to working on coherence, and have done so. For his information, we also support the notion in NEPAD that there should be some sort of peer review of donor performance. We would certainly be happy for our own performance to be judged on that basis.

The hon. Member for Eastleigh (Mr. Chidgey) made a great number of detailed points. I shall write to him about them if I do not deal with them now. He asked in particular about the peer review mechanism, which we support. However, we have not yet provided direct financial support for it, although we have provided some support for civil society activity that is connected to it. We have provided a total of some £1 million in support for NEPAD, and aim to increase that sum. However, we believe that if a process is Africa-owned and Africa-driven, we must ensure that it is Africa-resourced.

Several hon. Members talked about the Doha agenda. We are leading Europe and the world on a wide range of issues. The hon. Member for Richmond Park (Dr. Tonge) asked what we were doing about Africa and made the point that there had to be action, not just words. This country led the progress made on HIPC and on access to medicines, and has done extensive work and on time. That is a real indication of our high level, cross-Government commitment to tackling the deep-seated problems that have beset Africa.

The hon. Member for Eastleigh also asked who would lead the plan. There must be joint ownership if this is a partnership, and joint responsibility must be taken for it. That is especially important when we in the UK are trying to get other countries to give the same priority to Africa that we do, and to make the same commitment to providing the finance and to tackling difficult issues such as agricultural reform, the reduction of trade barriers and untying of aid.

The hon. Member for Altrincham and Sale, West raised several issues about debt relief. We are considering some of the issues relating to longer-term sustainability, and are ensuring that countries that have passed a completion point do not find themselves in a poverty trap because they are excluded from certain types of grant and do not fall back into higher levels of debt.

My hon. Friends the Members for Glasgow, Maryhill (Ann McKechin) and for Bethnal Green and Bow (Ms King) raised many issues about the Democratic Republic of the Congo and about conflict in Africa. Conflict in Africa relates to about 2 per cent. of economic growth, and we have a detailed strategy for tackling it. I shall ensure that hon. Members who have asked about it receive information about it.

In conclusion, the UK will continue to support NEPAD and Africa and will continue to argue the case for both in the wider donor community in order to ensure that the millennium development goals are achieved and that the people of Africa can enjoy a more prosperous future.

Tom Leonard Mining Museum

3.30 pm

May I say what a pleasure it is to see you in the Chair, Mr. Deputy Speaker? Every time I initiate or take part in a debate, you are in the Chair. It has taken me at least a year to get this debate off the ground. Mr. Speaker finally granted it, so I shall be eternally grateful.

I wish to focus on how our heritage is not always the heritage of the great and the good or the legacy of the rich and powerful, but may be about the work and deeds of ordinary men and women. I wish to bring to the attention of the Chamber how local people in my constituency came together to build a living monument to the work and lives of their forebears, thereby bringing into existence a museum of Cleveland life. I wish to give some idea of the industrial and social history of the area that it celebrates and of the background to the setting up of the museum. I also wish to draw lessons from the work of the volunteers and pass on their suggestions about recording and documenting our heritage and how the Government can assist in the process.

On the industrial and social history, I represent a constituency that was literally and metaphorically built on iron—the Cleveland ironstone field. Iron fuelled the appetite of the blast furnaces and steelworks that lined the River Tees. Industrial archaeologists have lost count of the number of shafts that were sunk and drifts that were excavated in east Cleveland in and around the 1850s and 1860s, but there must have been hundreds.

Large mines employed many hundreds of people. The local communities that sprang up in east Cleveland nestled on the pit side. Small hamlets that once were home to a few lonely shepherds became boom towns with shops, taverns, railway hotels, churches, reading rooms and row upon row of small terraced houses and cottages for miners and their families.

The miners came from the four corners of the United Kingdom. Experienced miners came from older mining areas such as Staffordshire, Durham and, above all, Cornwall, the county that supplied the mining engineers and expertise for the Cleveland ironmasters. Indeed, one of the villages, Carlin How, became known as "Little Cornwall". The muscle power used to man the mine came from elsewhere: from East Anglia, which at that time was undergoing a rural recession, and Ireland, from where people were fleeing famine and poverty.

The mines were part of what people today would call a vertically integrated industry, which meant that the mine owner was also the ironmaster, and the ironmaster was also the shipbuilder or steelworks engineer. Large combines dominated the Cleveland ironstone field; for example, firms such as Bolckow, Vaughn and Company, which at one time was the largest manufacturing firm in the world, and Pease and Partners, which was built on Quaker virtues but run with a fist of iron under the velvet glove.

Mining shaped the life of east Cleveland for more than 100 years. It dictated the life chances and lifestyles of entire communities. In some ways, it could be a liberating force. It provided a way into the technical professions for many industrious young men wishing to learn mining technology but it was also a brute force, meaning illness and shortened life expectancy for many miners. The chance of sudden death was ever present.

The industry engendered a social response from its miners in the shape of a disciplined and well-organised miners union in Cleveland. That union avoided the splits that characterised sections of the miners federations elsewhere, and from it sprang representatives of miners and their families on local councils and boards. In Parliament, the first Labour Member to represent what has become my constituency was a typical miner. Billy Mansfield came to Cleveland as a young man from Suffolk to work in the local Grinkle pit. A check weighman, he became active in the Cleveland Miners Association and became a sponsored candidate. He was the MP from 1929 to 1931.

The decline of mining in Cleveland came with the decline of manufacturing in England. It became cheaper to import ironstone from huge opencast sites in Norway and Australia than to extract it from deep mines in Cleveland. Gradually, the iron mines dwindled until the last one, in North Skelton, closed its doors in 1964.

Having said that, the mining tradition is not dead in east Cleveland. At the same time that the headstocks and spoil heaps of the ironstone mines were being removed and flattened, a new deep mine, designed to extract potash, was being sunk at Boulby, at the extreme eastern end of my constituency. That mine still flourishes and employs, directly and indirectly, some 900 men. It was visited by Lord Sainsbury, Minister for Science and Innovation, only yesterday.

I shall say a few words on the birth of the museum. At the same time that the ironstone mines were being closed, a diligent analyst of the east Cleveland area was determined to see that the society created there was not lost to posterity. The late Tommy Leonard, a local man, was the east Cleveland reporter on the Middlesbrough Evening Gazette. Over the years, he collected artefacts and memorabilia from the mines and local households and amassed a collection that began to overwhelm his home. In the mid-1970s, with a friend, Tommy Robinson, a haulage contractor with close links with the mining industry, he rented a small shop from the local council in the market town of Guisborough. In that shop, he ensured that his artefacts could be put on display to a wider public.

Over the coming years, the collection that Tommy Leonard had started to amass grew through donations until it was clear that a proper museum would have to come into being. Luckily, Tommy Robinson had a long lease on parts of the old Loftus mine in Skinningrove valley, overlooked by a still surviving steelworks and facing the grey North sea. By the early 1980s, the museum had been set up in the old mine's surface workings. During the next few years, the mine became a flourishing institution. Funding was secured from different sources, including the Manpower Services Commission, the then Langbaurgh borough council and Cleveland county council.

The museum moved from being an essentially personal collection to having a more stable basis. It was run by a management board and overseen by another key player, Alan Chilton, the mine manager at Boulby potash mine. The next step forward was in the late 1980s and early 1990s when a section of the original Loftus mine drift was re-excavated. It was only a few hundred feet, but it was enough to give visitors the experience of a mine and the darkness and stillness that typified the mining experience.

The mine is now really in business. It gets, on average, 5,000 people a year through its doors. Over the years, it has attracted thousands of local schoolchildren whose teachers have brought them to the mine as a living part of their history curriculum. It shows them that history is not just about kings, queens and wars but concerns the lives of their fathers, grandfathers, mothers and grandmothers. Many adults visit the mine in summer, including local people who want to discover their roots, tourists from other parts of the United Kingdom and from across the globe. People often come to visit the birthplace of their parents or grandparents and we have had distinguished visitors, such as the Prince of Wales in 1997. The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Scunthorpe (Mr. Morley), came, at my invitation, to see flood defences in the constituency during the last summer recess.

The museum now has its own staff and more than 30 voluntary helpers: local people with a mission to explain and to interpret their home area. It has gained full accredited status with the Museums and Galleries Commission, which the museum committee hopes will open new funding streams and opportunities.

The Tom Leonard mining museum may be a minnow when viewed against the great national and regional collections, but it is based on the lives of the people of east Cleveland and it is run and managed by the sons and daughters of miners. The board that manages the museum is considering ambitious expansion schemes. It wants it to become a repository of family and social life for the whole of east Cleveland, a signposting facility for other attractions in our area, a virtual history faculty for local schools and colleges, and to be at the forefront of the regeneration drive that is transforming east Cleveland. Those are ambitious plans for a locally based group but it is determined to succeed.

That brings me to the issues that the museum's management board believes the Government should consider. It points out that it is a small operation compared with average local authority museums. It operates only between April and October and has a modest budget of some £50,000 a year, which is augmented by funding from sources such as the single regeneration budget and the European regional development fund. However, the present funding rules for accessing such external funds are incredibly complex and the board believes that those complexities have been built into the system by the Government and the European Commission. Accessing the single regeneration budget for a small grant for a small project can sometimes be uneconomic because of the time and costs involved in complying with the demands of the monitoring procedures. The costs can sometimes equal the amount of money drawn down and using European funds means having to master labyrinthine rules and regulations.

Peter Tuffs, the chair of the museum committee, told me that he recently looked up the regulations for accessing regional objective 2 funding on the web and found no fewer than 2,000 pages. He told me that he believes
"that many small groups have the vision of what they want to develop and where they want to go, but do not have the ability or the contacts to find a way through the bureaucracy."
That is a particular problem, as is the speeding up of the application process to clear the regional objective 2 funding backlog. Bigger and better resourced regional agencies may be better able to process claims.

Peter Tuffs also told me that such small groups are effectively outside the London loop and do not have the lobbying, or lunching skills that many wealthy institutions in the capital possess. Ideally, the museum would like dedicated annual support from the Department for Culture, Media and Sport and some offsetting funding to replace European regional development funding when the current eligibility criteria for the Untied Kingdom ceases in 2006. It believes that regional bodies set up by the Department for Culture, Media and Sport, such as the North East Museums, Libraries and Archives Council, are a step forward. Such regional bodies can argue for small projects more effectively than the scattered groups that previously represented the world of regional museums. Such new regional institutions need to be better integrated with other regional agencies such as the regional development agencies, Government offices for the regions and regional chambers.

There is a feeling—I stress that it is only a feeling—that the DCMS is putting in place a regional structure that stands proud of the other Departments of State. I hope that the DCMS will be able to overcome that perceived handicap by making sure that its regional agencies are funded locally to provide properly managed and staffed help desks with the expertise to coach and to guide small, local groups through the funding maze.

I praise the DCMS for its work in bringing new life to Britain's national museums network. It has managed to get rid of a stain on our culture by bringing back free entry to the national museum network. In conclusion, I ask the Minister to listen to my constituents' views and to visit the Tom Leonard mining museum.

3.46 pm

It is a great privilege to respond to my hon. Friend the Member for Middlesbrough, South and Cleveland, East (Dr. Kumar), who, in taking us down memory lane, has given us a good historical snapshot of his constituency. I know that he has been trying to initiate the debate for a long time, and the Chamber is grateful for his persistence. He has graphically explained the worth of the Tom Leonard mining museum, which should be treasured and developed. In the next few minutes I will point out that such museums throughout the country are important in informing us of our heritage. They allow young people—thousands of them have gone through this particular museum—to examine the history of their area.

I thank my hon. Friend for giving me the opportunity to highlight the significant support that all regional museums are receiving for the first time from central Government. As he said, over the years national museums have received the bulk of central Government funding for the sector, which was because of the responsibility to maintain some of the richest collections in the world. We hold those projects in trust for the nation and they are now available for all museum visitors to enjoy free of charge, which has been a huge success. In addition to the £831 million that we are investing in our national museums as a result of the 2002 spending review, we have committed about £70 million from 2002 to 2006 to support the development of high quality services in our regional museums and galleries, which is about a 200 per cent. increase in central Government spending on regional museums.

My hon. Friend and others have read the document "Renaissance in the Regions: A new vision for England's museums", which is a comprehensive piece of work carried out for the Government. It is a national programme, and we intend it ultimately to benefit all English regions, museums and galleries. The Bowes museum and the Tom Leonard mining museum are examples of such benefits in my hon. Friend's region.

On the Tom Leonard mining museum—I do not want to be too cynical about this—it is good to see a journalist doing something good in this world. At least the journalist, Tom Leonard, brought his collection to be the core of the museum. I also acknowledge the staff and volunteers. As has been indicated, had it not been for their dedication, obviously the service would not be available to the region and the nation. I recognise all the free time that they give to the museum. It is incumbent on us all to thank them; we hope that such work will continue.

The Tom Leonard mining museum is supported not only locally and regionally, as has been indicated, but also nationally, by central Government. Three years ago, a project funded by the European regional development fund, One NorthEast, and Redcar and Cleveland council modernised the visitor facilities and helped to conserve the museum buildings. One NorthEast is the regional development agency for north-east England and comprises Northumberland, Tyne and Wear, Durham and Tees valley. It was established by the Government to further economic and business development and regeneration in the north-east.

I take on board the points that my hon. Friend made about bureaucracy in relation to applications for the grant regimes. We have tried to streamline most of the regeneration moneys by means of the single pot that is now going to RDAs. RDAs also have greater influence over the spending of European regional development moneys. Obviously, the venture in question has had difficulty with the complexity of the application forms. I will raise the matter with One NorthEast to ascertain whether something can be done about that and other applications. It is unacceptable that relatively small amounts of money are subject to such bureaucracy, particularly when an organisation such as the museum has stood the test of time and has been found to be responsible.

The greatest support that the Government give to regional museums, such as the Tom Leonard mining museum, is through the implementation of "Renaissance in the Regions", which is a comprehensive approach to museums and galleries. Although the core funding for regional museums comes from local authorities, universities and other sources, which will remain the case, the new funding will be used in a focused way to improve the quality of services provided by our regional museums. In particular, it will he used to develop programmes of education for children and to bring museums closer to the communities that they serve. My hon. Friend has provided a good example of how that can be carried out and how best practice can be developed. The funding will also enable museums to reinvest in research and scholarships on which all new services ultimately depend.

The Tom Leonard mining museum is included in the area administered by the north-east regional hub, which has just been selected, along with the south-west and the west midlands hubs, to spearhead the first phase of the "Renaissance" initiatives. The north-east hub has been allocated £6.7 million for 2003 to 2006 to deliver the vision set out in the document "Renaissance in the Regions". That will include work relating to communities, inclusion, scholarships, collections and research and, importantly, access.

From that funding, £2.7 million has been specifically allocated to help the region expand on and develop its services for school-age children—again, a point made by my hon. Friend. The north-east region also stands to benefit from our programme of national-regional partnerships. We have set aside roughly £10 million to support closer working relationships between national and regional museums. Both programmes will be supplemented with funds from the Department for Education and Skills, and will build on the experiences that we have gained through our earlier funding programmes, including the DFES-led museums and galleries education programme. The current phase of that programme has seen £100,000 of funding granted to each of the regions through Resource, which is the body dispensing the funds in the nine regions.

So what does "Renaissance in the Regions" mean for small independent museums such as the Tom Leonard mining museum? Through our investment set out in that document the hubs will be expected to develop and disseminate best practice and to offer support to other museums in the region. Through significant additional funding for national regional partnerships, our national museums will be able to work with their regional counterparts to support the delivery of cultural policies in the regions. In passing, it might be useful if there were a coupling between the mining museum and the iron museum in Yorkshire. That would create a complementary approach to the whole question of mining, which dates back to the beginning of the past century and is moving into the 21st century.

Through the museum development fund, a network of regionally based museum development officers will support small and medium-sized museums in developing the agenda of "Renaissance in the Regions". When those people are put in place, I hope that they will be able to ensure that there is good practice and that the proper networking of those museums can be brought more effectively to the regions.

For such museums, grants and advisory services will continue to be available from the new regional agencies. Those agencies are building on the work of the former area museums councils and will provide strategic leadership for the whole of the museums, libraries and archives sector. Given the big investment in the wiring up of all our universities, we must make sure that all the assets in our communities are working together.

We are keen as a Government, and in my Department, to ensure that such facilities are working not just as institutions or buildings to visit, but as a living part of that community. They should be major resource and educational centres, and particularly following the debate about "Renaissance in the Regions" and the wiring up of our libraries, they are becoming living institutions to a greater extent than has been the case in the past.

The North East Museums, Libraries and Archives Council was the first regional agency in England, and its support for the north-east museums' bids for heritage lottery funding contributed to the highest success rate of all the regions for applications. The agencies will be involved with museums at all levels. For example, NEMLAC and its predecessor body have been involved in the improvement of the care and preservation of the collections of the Tom Leonard mining museum to which my hon. Friend referred.

Another initiative that we support and fund is the creative partnerships project, which gives schoolchildren in deprived areas throughout England the opportunity to develop creativity and learning, and to participate in cultural activities. The pilot programme is based on the development of long-term partnerships between schools and cultural and creative organisations, including museums.

The benefits for museums, even small ones like the one in my hon. Friend's constituency, are significant. Creative partnerships give museums a chance to build relationships with local schools and to develop and enhance existing programmes and projects, bringing them to new audiences. Funding can be available for some of the costs associated with working with participating schools, and the partnership gives the museums the opportunity to build links with other participating cultural organisations.

Cleveland, which includes part of my hon. Friend's constituency, is part of the Tees valley creative partnership. Tees valley, Durham and Sunderland are working closely with their regional agencies and NEMLAC to create two new posts to facilitate new projects and policies in museums and galleries' work in all the schools in those areas. In addition, the Tees valley creative partnership is examining ways to partner individual schools with museums and galleries in curatorial projects.

Museums and galleries throughout the country will also benefit from the Department's plans for the culture online initiative. That is an exciting new initiative that will use new technologies ranging from the internet to digital TV, and mobile phones to CD-ROMs, to extend the reach of arts and culture. We hope that it will give children and adults better access to cultural assets and activities throughout the country.

Culture online has a budget of £13 million over the next couple of years, which will support 20 to 40 imaginative projects. We have heard about the museum in my hon. Friend's constituency, and I have said that it is now part of the riches of that region that can be linked not only to that region, but to every other region in England and the UK. By linking that with the network that we are introducing in the libraries and the cultural consortium, many more people will gain access to some of the delights that my hon. Friend outlined in his opening remarks. Again, I congratulate him on bringing them to the attention of the Chamber.

Financial Advice

4 pm

I am grateful for the opportunity to introduce this subject, which is a big one and might have benefited from a longer debate. Given the limited time, I shall try to concentrate on three topical issues. The first is financial advisers and polarisation, the second is the role of financial health checks where the Government have some interesting ideas that may come to fulfilment and the third is the role of simple products for low-income consumers and the role of financial advice in that.

1 have not sought the debate in a party-political spirit. I am increasingly concerned as an ordinary Member about the number of people who come to me with serious financial problems arising from failings in the systems of financial advice. Clearly in a falling market more people find themselves in financial distress, but many of the difficulties that our constituents have arise from deficiencies in the advisory system. I shall quote one or two typical examples.

A gentleman came to me last week. He had an endowment mortgage that he was probably ill advised to take that will not be remotely adequate to redeem his mortgage in a few years' time. He wants restitution. He cannot go back to his financial adviser because he has gone out of business. He cannot therefore go to the financial ombudsman either. There is a special fund to help people like him whose financial advisers have gone bust, but the cut-off point for using that fund was two months earlier than when he took out the policy many years ago. He is completely bereft of any potential recompense and faces a difficult financial situation.

Two weeks ago a lady came to my regular weekly surgery. She is a well-organised, highly intelligent woman but she admitted that she was not terribly clued up on financial services and she therefore entrusted decisions on her financial future to an adviser whom she trusted. He had advised her some time before to put all of her savings into Aberdeen split investment trusts, which she did. Most of it is now completely worthless. She admits that it was not an intelligent thing to have done, but she was unsophisticated and trusted the adviser. The matter is now with the financial ombudsman and may or may not come to realisation.

Like most other Members, I have a clutch of Equitable Life investors. There is a long story there and I do not intend to go into it now. Many of them were people who took out Equitable Life policies in good faith after the House of Lords ruling on the advice of financial advisers who did not point out the implications of that. Again, the financial ombudsman is involved, and there are many similar cases. I am sure that the Minister has many low-income consumers among her constituents who were persuaded to take out private pensions, endowments and other investment products when they would have been much better advised to have cut their consumer or housing debt or simply to have held cash. There is a big issue about the quality of financial advice.

The other aspect is that we do not have a very good forum for discussing and debating these matters in Parliament, despite the fact that they affect many of our constituents. It is partly because many of the policy issues have passed to the Financial Services Authority. Many of the issues that I will raise today are currently subject to consultation papers by the FSA. They rarely come back to us through financial statements by Ministers. Even the Select Committee on the Treasury has not, as far as I can see, got into this subject. The Minister may have some ideas about how we will get some report back from the FSA on these issues that so affect our constituents.

The other general point that I want to make by way of introduction is that we are in a potentially dangerous position in which there is an increasing demand—certainly an increasing need—for financial advice, at a time when the provision of professional financial advice is contracting. The point about need is illustrated well by a recent survey carried out by the Association of British Insurers, the results of which suggested that about 45 per cent. of low-income consumers, and about 23 per cent. of middle-income consumers, would invest only if they had had access to advice from someone who they trusted. If we, as a society, want to address the problem of the savings gap, better provision of financial advice will be needed.

The problem is that the availability of professional financial advice is declining markedly. There are still independent financial advisers, but it is estimated that approximately 11 million people are now out of their reach—people whom financial advisers consider it is not worth their while to service because they are not sufficiently reliable or have too low an income. That figure has increased from 8 million a decade ago. Those 11 million people are out of the range of the financial advice professionals. That is partly because financial advisers' costs are increasing, due to the increased amount of time that they have to spend with individual clients, and the cost of regulation and of necessary training.

Many independent financial advisers are experiencing difficulty in obtaining professional legal immunity, and many have suffered extreme demoralisation by being made the scapegoats—in some cases, justifiably—for some of the mis-selling scandals that have occurred. I occasionally look at their literature and for the past year a quotation has been reverberating round the profession, which has probably been taken completely out of context, but is attributed to Howard Davies. Mr. Davies is alleged to have said:
"I am trying to get all the IFAs into a barrel and shoot them one by one."
He probably did not say that, but the independent financial advisers seem to believe that he said it and have circulated it widely. That reflects their sense of persecution and demoralisation.

Thus there is the problem of increasing demand for financial advice and diminishing supply. The issues that I wish to raise with the Minister all arise from that. My first point concerns polarisation in relation to financial advice. The Financial Services Authority has been running a consultation, which finished yesterday. How do the Government see their role? Do they have a view and if so, will they express it, perhaps by making a statement? Do the Government see the issue as one that is purely for the financial services regulator?

As I understand it, the current system divides financial advisers essentially into two groups: those who are tied to a particular product, and those who are completely independent. That model was found to be defective by the competition authorities and, as a result, the FSA has had to devise another model, which will require companies to become multi-tied: they will sell multiple products, but will be tied to a group of particular suppliers.

It has become clear from the consultation feedback that many of the consumer groups, which have the wider public interest at heart, are alarmed by the implications of what the FSA has proposed. One of their concerns is that there will be severe conflicts of interest, in which so-called independent financial advisers will be owned by a bank which will, in turn, be selling the tied products of that bank and of other suppliers, and that the consumer—the purchaser of financial advice—will not be aware of where the linkages are. There will be a great deal of confusion.

Moreover, the consumer groups make the point that financial products are not like baked beans, sold as competing items in supermarkets, but are sophisticated, complex products that do not lend themselves to that sort of competition. They also fear that the number of independent financial advisers may contract considerably, and that we will be left with a small elite that will earn their living not, as now, from commission, but from fees to high-income consumers.

The debate is somewhat technical, but its implications are important, because we could face a situation in which the supply of professional financial advice is even more restricted than it is now and is virtually unavailable for low and lower-middle-income consumers.

That leads me to my second point, which concerns the Government more directly and is about the idea that there should be a system of providing generic advice to individuals. In other words, if a member of the public wants advice not on the question "Should I buy insurance product A or B?" but on basic questions such as "Should I be saving, paying my debts or putting the cash under my mattress?", to whom can they go for advice? I know that the Government have toyed with the idea of encouraging community-based systems of advice to help, in particular, low-income consumers with those questions and managing their affairs better.

In July last year, the Financial Secretary to the Treasury made a statement on the Sandler review, which encouraged that idea. She said:
"Those on lower incomes also have a need for financial advice. Citizens advice bureaux and other money advice centres…offer good-quality, impartial advice to many people in financial difficulty. I am pleased to say that the FSA has offered to fund research into extending the role that those organisations might be able to play. I welcome that, and look forward to seeing the results."—[Official Report, 9 July 2002; Vol. 388, c. 746.]
Shortly after that, the Green Paper on pensions was introduced by the Secretary of State for Work and Pensions. Somewhat to my alarm, and the alarm of many in the consumer sector, he seemed to rationalise the problem differently. He said:
"To broaden access to advice, we will work with the Financial Services Industry to develop mass-market financial advice in high street banks".—[Official Report, 17 December 2002; Vol. 396, c. 695.]
It does not require a great deal of imagination to see that banks have a potential conflict of interest and that any advice that they offer is unlikely to be disinterested. I am not being paranoid and suspicious; the National Consumer Council, which is a great deal more professional than I am on such matters, expressed a warning, to which I hope the Minister will respond specifically. It said:
"We are concerned that the Treasury may assume the financial health check will be delivered by banks and lead seamlessly to the purchase of stakeholder products. We do not think that this is a good starting point for developing an advice service to meet the needs of low-income consumers."
I want to pose a series of questions to the Minister. I know that research is being conducted and that the FSA will present its thoughts, but it would be useful to have some indication of the Government's position. I should point out that the Financial Secretary wrote to me on Monday, so I have some of this in print. Do the Government see a major role for the voluntary services, including the citizens advice bureaux of this world, in performing the services, or are they leaning more in the direction of encouraging the commercial provision of generic advice? There is clearly a role for both, but where will the emphasis be?

If the future lies with organisations such as the National Association of Citizens Advice Bureaux, who will fund them? I would have thought that, given the damage that has been inflicted on their reputation recently, the banking and insurance industries would be interested in building up generic advice to sell more products, even if they were not necessarily their own. It should not be too difficult to secure their agreement to a small levy to fund such a service, so have the Government tried that and what feedback have they had? Have they considered the post office network as a possible outlet for such a financial advisory service? I know that they have toyed with the idea of a sort of general practitioner information service but they have not pursued it, and that could be one possible outlet. Will the Minister give some indication of the Government's current thinking? Do they have serious ambitions for the development of a generic system of financial advice, and what form would it take?

I want to raise a particularly topical issue in my final two minutes. The Government have promoted the idea of simpler investment products for low-income consumers. The basic thinking is that by fixing a cap on charges and having products with less investment risk, it will no longer be necessary for them to be so tightly regulated—the Government have used the phrase "light-touch regulation". The concept emerged from the Sandler review. As a result of the FSA consultation some serious worries are beginning to return about what the new approach could lead to for low-income consumers. Although the Government-promoted, low-risk, simple products could be less risky in some respects, they could be highly risky in others. The jargon is "suitability risk", which goes back to the question whether it is desirable for many consumers to buy investment products or whether they would be better using their money in other ways, as cash or for debt reduction, for example, and who will provide that advice. Linked to that is the worry about potential mis-selling. If the products will be lightly regulated, particularly if they will be taken out of the FSA framework, consumers will no longer have recourse to the financial ombudsman and they will not enjoy even the current relatively limited consumer protection. What is a very good idea could be undermined because of lack of attention to the serious problem of financial advice.

Financial advice, as opposed to products, is a big subject and I want to raise with the Minister how we might progress the debate in Parliament and how the specific concerns might be addressed.

4.15 pm

I congratulate the hon. Member for Twickenham (Dr. Cable) on securing the debate. As a Member of the House, he closely follows what are important issues for our constituents.

The Government, the Financial Services Authority and the Financial Ombudsman Service all recognise that what we are discussing is a serious problem for many people. I note the hon. Gentleman's opening remarks about the ability of the House, given the regulatory framework, to be kept informed and to have the opportunity to consider these matters. I hope that he will forgive me if I say that I want to reflect on the points that he raised and that I or my hon. Friend the Financial Secretary will write to him about them.

The Financial Services Authority is taking proportionate and well-directed action to protect the interests of people whose endowments may deliver disappointing returns. The FSA is also ensuring that people are told if their endowment is unlikely to deliver the cash sum originally expected, a point highlighted by the hon. Gentleman in his opening remarks. It is a matter of great concern for many of our constituents and by taking action now the FSA is helping people to plan alternative means to meet their financial objectives. When firms have been at fault and policy holders have lost out, the FSA, with the industry and the Financial Ombudsman Service, is taking action to help to put it right.

The hon. Gentleman raised several specific issues with regard to new developments in the industry, to which I shall refer briefly now. He referred to the many different consultations taking place showing the diversity of the financial industries and the ever-increasing importance of financial products in our constituents' lives. They need to know how to gain access to appropriate advice from an adviser who clearly understands what the individual is looking for, the product that they want and the basis of risk.

The hon. Gentleman also raised some specific questions about what is known as the health check and the polarisation rules, and I shall deal with each in turn. On polarisation, the hon. Gentleman knows—this was reflected in his contribution today and in many other of his contributions—that the financial services market is experiencing change and innovation. One area in which change is taking place is the polarisation rules, which have hitherto restricted the ways in which investments can be sold, limiting business innovation and choice to just two business models. After a long—I stress the word "long"—consultation exercise, the regulator has made it clear that it will proceed with reform by liberalising the market and making it possible for the vast majority of consumers to have access to a greater range of products. That should be good for consumer choice.

The hon. Gentleman referred briefly to the split between independent financial advisers and tied advisers. I can let him have my figures on this. When we look at the representation of such advisers through the years from 1998, when the consultation was announced, we see a decline in tied advisers and an increase in independent financial advisers. There had been a clear concern that somehow independent advisers would be undermined, or that tied advisers would be given an unnecessary advantage in the market, but that does not appear to have been the case. That said, the hon. Gentleman was right to flag up those concerns.

The reforms will allow a greater choice of investment products to be offered to the overwhelming majority of consumers, who hitherto have been offered products by only one group. For instance, 80 per cent. of consumers use a tied distribution channel. The reforms should make the basis of remuneration clearer, encouraging advisers to be more transparent and competitive about the price of their advisory services. The reforms are the result of an exemplary consultation process. The regulator listened to criticism and amended the proposals accordingly. It is important to recognise all that.

The hon. Gentleman touched on the complexities of this issue, the problems of mis-selling and how consumers should gain access to advice. He knows from the work already undertaken by the FSA and the financial ombudsman that great strides have been made. The hon. Gentleman goes to the heart of the issue with the interaction between specific and generic financial advice, particularly in relation to those who for one reason or another are excluded from obtaining specific advice. They may not know that such access is available or, in some circumstances, they may not be able to afford it. The routes through which they seek financial advice and the reasons why they do so in the first place are also relevant. For instance, the hon. Gentleman referred to citizens advice bureaux.

Clearly, there are now a wide range of advice activities, supported by central and local government and the regulator. Community and voluntary groups are also leading participants in delivering trusted and effective advice. The Government have been working to see how the work of community groups might be supported, allowing them to enhance the services that they offer. For example, citizens advice bureaux have an excellent reputation for offering debt advice. The hon. Gentleman rightly raised how that might help consumers to avoid problems associated with over-indebtedness and how that might be built on to extend access to financial advice generally.

The hon. Gentleman touched on the financial health check, which has interesting potential for the coexistence of the different types of advice to which people need access. Since the financial health check was set up, the FSA has developed successful consumer information through its comprehensive range of publications and websites. That includes the comparative tables, which give detailed factual data on key financial products, and the firm check service, which allows people to verify a firm's authorisation status. As the hon. Gentleman said, however, the FSA is keen to see how its service to consumers could be developed further to help people to plan their finances, and it is working on an interactive programme for the web or a CD-ROM that would provide people with a financial health check.

The idea of a health check is that people would input specific information about their circumstances in response to questions. The programme will generate suggestions for priorities and where action might be taken in the short or long term. The health check will provide generic advice, not specific financial advice. I believe that that is what the hon. Gentleman is trying to get at: where is the missing piece, or rather, where can the service be extended? Specific financial advice would fall within the regulations. However, it will include directions on where to go for further help, and could include seeking professional advice where appropriate.

The health check could be used in several ways. It could be used by individuals in their own homes or by general money advisers. Firms might want to offer it as an additional service, which relates to the hon. Gentleman's point about whether there is a false divide between the "commercial sector" and the generic sector, and whether there could be a tool that all could use.

It is important that the health check concept is developed in consultation with those who might use it. Her Majesty's Treasury recently hosted a useful seminar where representatives of consumer groups, the voluntary sector and firms could view a prototype. Feedback was generally very positive, although, as always, there are many practical and technical issues that need to be resolved. With the benefit of this and continuing consultation, the FSA has now taken those ideas forward with potential users, with a view to having a fully developed health check available early next year.

I am sure that the hon. Gentleman can now see that with that sort of access and product, the role of generic advice, whether it be through debt advice services, CABs or local authority-run benefit services, can begin to take on a different dimension. However, we must still balance it with regulation where necessary and direct the consumer to the right, basic advice. Such advice does not need to be regulated, but is sound because it has come through the FSA.

I will give the hon. Gentleman an example of the potential of such a service. A financial inclusion project in Newcastle brings together local credit unions, CAB money advice, individuals who give advice on debt cases that the CAB has referred to them, and financial support and education, and offers all that to the local community. Added to that is the financial health check. So there is interaction between regulation, where appropriate, when a product is being sold, and proper advice, which is available on a generic basis.

I do not have time to answer the hon. Gentleman's other detailed questions now, but I promise that I will respond to him at some point. However, I must tell him that there is no false divide between what the Secretary of State for Work and Pensions said and what the Financial Secretary said. They go together. The question is what must be regulated and what machinery is useable for people who want access to generic advice. That is how the Government are trying to make progress, and I again congratulate the hon. Gentleman on securing the debate. I know that he will secure many more, as he is an assiduous pursuer of issues that are very important to our constituents.

Question put and agreed to.

Adjourned accordingly at twenty-nine minutes past Four o'clock.