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Commons Chamber

Volume 406: debated on Wednesday 11 June 2003

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House Of Commons

Wednesday 11 June 2003

The House met at half-past Eleven o'clock


[MR. SPEAKER in the Chair]

Private Business


Order for Second Reading read.

To be read a Second time on Wednesday 18 June.

Oral Answers To Questions

International Development

The Minister of State was asked

Hiv/Aids (South Africa)


What discussions the Department has had with representatives of the South African Government about tackling HIV/AIDS in South Africa. [118377]

Officials from the Department's Pretoria office hold regular discussions with their South African counterparts about the problems of HIV/AIDS in South Africa. Helping to tackle HIV/AIDS is one of our main priorities in the country, and we have recently approved a new £30 million programme.

I congratulate my hon. Friend on his new position. As I am sure he knows, many people in South Africa believe that the true number of people with HIV/AIDS is well above the known, published figure, which is itself high. Many in the country also believe that the link between HIV and AIDS is not yet fully established, which makes our task of trying to help and to tackle this appalling problem even more difficult. What can we do to make such people face up to the issue and tackle it head on?

I thank my hon. Friend for his kind words. Let me also take this opportunity to thank my right hon. Friend the Member for Birmingham, Ladywood (Clare Short) for the integrity, commitment and passion with which she led the Department for six years. The esteem in which the Department is held in the House and across the globe owes a great deal to her achievements, and we are very grateful to her for all that she has done.

My hon. Friend is right to mention the difficulties created by attitudes to HIV/AIDS in some quarters in South Africa, which are preventing an effective response to the problem. According to our best estimate, about 5 million people in South Africa are currently infected with HIV—one person in nine—although there have been changes in recent months, not least following last year's court ruling that pregnant women should have access to neverapine. That has now been implemented.

I agree with my hon. Friend that we must work continuously with the South African Government in responding to the challenge, and that is what we are seeking to do. There is a good plan on paper, and we must provide support, along with other donors, so that it can be delivered in reality.

Let me also welcome the Minister to his post, and wish him well.

I was in South Africa with the hon. Member for Burnley (Mr. Pike) in South Africa very recently. We visited Khayelitsha in Cape Town, which has grown from nothing to an area with a population of 1.2 million since 1985. We heard about the work of a woman dealing with child abuse—and its obvious consequences, including sexually transmitted diseases—in a desperately overworked clinic. Will the Minister ensure that the Department's money is spent on supporting such clinics at the grass roots, so that the message about HIV/AIDS and other sexually transmitted diseases reaches those in the greatest need in South Africa? Sometimes those people are away from the public eye and away from the established clinics. Work needs to be done to help those who are moving into shanty towns: that is where the need may be greatest.

I agree with the hon. Gentleman about the importance of ensuring that the message reaches all levels of society, especially those that are the hardest to reach. We are working on a national and provincial programme, in partnership with the South African Government and other organisations. Evidence elsewhere in Africa—Uganda being the best-known example—shows what can be done through a concerted effort by the Government and all parts of society to convey the message about the steps people can take to protect themselves, which in the long run is the most effective thing we can do to reduce this terrible scourge in South Africa, and indeed throughout sub-Saharan Africa.

I welcome my hon. Friend to his post. Does he agree that women play a key role when it comes to dealing with HIV/AIDS in South Africa and other countries? They can convey their knowledge of the illness to children, in the family and in schools. Can the Department take that into account, through its relationship with the Government and at other levels?

As my hon. Friend says, it is important to work with all parts of society but particularly with women, given their important role in the family. The court judgment that I mentioned, allowing access to antiretrovirals for pregnant women, will be widely welcomed.

As my hon. Friend knows, an important part of the Department's work wherever we are to be found in the world involves working with women and giving them more opportunities to take control of their lives. Their contribution will also be important to the tackling of HIV/AIDS in South Africa and elsewhere.



If he will make a statement on humanitarian aid to Ethiopia. [118378]

The humanitarian situation in Ethiopia continues to cause serious concern, with 12.5 million people affected. High levels of malnutrition are reported in parts of the southern, Afar and Somali regions because of problems with the allocation and targeting of aid, and limited capacity to deliver medical supplies and food to those in need. DFID has provided £48.3 million since the start of 2002, and we are now focusing effort on improving delivery of support on the ground.

I warmly welcome the hon. Gentleman to his new position.

I do not want to emulate the language of Sir Bob Geldof, but is it not appalling that 14 million people are suffering from drought, 12.5 million need food support and 2 million have HIV/AIDS? Apart from the immediate support that we can offer, is there not a need to deal with the structural problems of Ethiopia, which means providing fair prices for its principal commodity, coffee, and fair access to the markets of the west? What are the Government doing to achieve that?

The hon. Gentleman is right about the situation in Ethiopia, although it needs to be said that, despite the serious concern about the situation there, we have not seen a repetition of the famine of 1984. Despite the difficulties that there have existed until now in getting support in, particularly from the European Union, which was an issue that Bob Geldof raised, that aid is now going in, although there are problems with supplementary feeding for those who are suffering from acute malnutrition.

The hon. Gentleman is right. There is a perennial problem in Ethiopia and, as well as dealing with the immediate humanitarian need, all of us must focus our efforts on trying to solve the longer-term problem. The Department is trying to do that through its programme in Ethiopia, but the hon. Gentleman is right that the biggest single step that we could take to help poor people in poor countries is to open trade, particularly agricultural trade. That is why the talks in Cancun in September will be so important.

I welcome my hon. Friend back to DFID.

I congratulate my hon. Friend and the Department on their contribution to the present crisis in Ethiopia but will he and his colleagues seek to influence the European Union towards preparing a strategy for long-term sustainable development, so that the problems in Ethiopia do not simply recur?

That is part of the programme that we are seeking to undertake. All donors who are working with the Government of Ethiopia have a responsibility to deal not just with the short-term but with the long-term problems. That will require a concerted effort. As I say, it is central feature of DFID's country assistance plan for Ethiopia, which was published in March.

I congratulate the Government on the aid that they have provided to Ethiopia, but when I spoke to the Ethiopian ambassador just a few minutes ago, he told me that about 30 per cent. of the aid that has been pledged across the world has not yet reached Ethiopia. Will the Minister do what he can to speed up the delivery of that aid to Ethiopia? He is right to talk about achieving food security on a long-term basis in Ethiopia but, as he will appreciate, that country has a problem not of water shortage but of water management: irrigation systems are essential if it is to avoid famine.

As the hon. Gentleman rightly says, water management is a key issue for the future of the country. I assure him that we will continue to keep a very close eye on that and to ensure that the aid that has been promised is delivered. According to the World Food Programme, food needs for the remainder of 2003 are about 90 per cent. Covered, if all the pledges are confirmed—that is the crucial point. That is why we need to maintain the pressure. We will look to other countries to help to cover the remaining gap. The UK has provided the £48 million to which I referred earlier.

I visited coffee farmers in Ethiopia a few weeks ago. The collapse in commodity prices has had an enormous impact on them and their livelihoods. It is true—I hope that the Minister will be able to do much more—that the target has not been reached; there is a 30 per cent. shortfall. I am sure that the hon. Gentleman will do his best to ensure that not just this country but the international partners reach that target. Will he assure me that water management will become a key aspect of the Government's policy in Ethiopia because, as the hon. Member for Tewkesbury (Mr. Robertson) said, it is a question not of water shortage but of what is done with the water that is already there?

Indeed, and it is precisely for the reason that my hon. Friend outlines that a significant part of DFID's programme is devoted, so far as water management is concerned, to making sure that countries have in place the structures and systems to manage water effectively. It is a question of making supply available in parts of a country where there are difficulties, but in the long term it is even more important to ensure that Governments have the structures and systems in place to provide and maintain water, to replenish the system and to ensure that investment continues to be made in wells and other supply methods that have been put in place so that the problem can be dealt with in the long term.

It is my pleasure, on behalf of the official Opposition, to welcome the hon. Gentleman back to the Department for his first Question Time since his rebirth there; I am sure that my hon. Friend the Member for Meriden (Mrs. Spelman) will have more to say about that later, if the opportunity arises.

On humanitarian aid in Ethiopia, does the Minister recall the words of the Chief Secretary to the Treasury in Africa at the end of May? He said:
"The EU undoubtedly has to do better on the delivery front."
The Minister has been reminded of the words of Bob Geldof, who described the response of the EU as "pathetic and appalling". But does he remember that Bob Geldof was then slapped down by Glenys Kinnock, who speaks for Labour on international development in the European Parliament, for being "unhelpful and misinformed"? Who does the Minister think is correct: the Chief Secretary and Bob Geldof, or Mrs. Kinnock? And will he assure the House that the food supplies that are so desperately needed by the 12 million starving Ethiopians will reach them, and quickly?

I thank the hon. Gentleman for his kind words on my appointment. I am not sure that the conversation between those esteemed individuals is one with which I should necessarily join in, but what I will say is that everybody recognises that there have been delays in the provision of aid by the European Community. However, it has pledged 465,000 metric tonnes—a substantial amount and about a third of the total requirement—which is now beginning to come through. The reports that we have received demonstrate that the situation is improving, but the hon. Gentleman is entirely right: we need to maintain vigilance and pressure to ensure that the promised aid is delivered, and that the reform process in the EU, on which both sides of the House are in agreement, is carried forward so that we can deal with these problems more effectively in future.

Drinking Water


If he will make a statement on the efforts being made in co-operation with the international community to increase the availability of clean water in the developing world. [118379]

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

One in five people currently lacks access to clean water worldwide. My Department is spending £87 million on bilateral programmes, focusing on improving water management and health education. We are also providing at least £40 million for multilateral initiatives to increase access to water.

Given the Government's commitment to humanitarian aid for Iraq, can the Minister tell me whether there is a time scale for the delivery of fresh water?

We have taken substantial steps, which my hon. Friend will be aware of, to ensure that we provide aid to Iraq. Extensive work, supported by us, has been undertaken to ensure that the power supplies, which were a real problem, were reconnected so that the people could get water. I believe that the water supplies are now getting back to pre-war levels.

Given that 6,000 children die every day because of poor water supplies and poor sanitary conditions, and given that this week, reports from Oxfam, Care, and Save the Children have highlighted problems with the water supply to the children of Iraq, what will DFID do to deliver for those children?

I have already set out what we have done about the water supplies, and the steps that have been taken to reconnect the power to ensure that such supplies get through. We have also provided aid to several non-governmental organisations, including, I believe, UNICEF, to meet some of the needs of the children in Iraq. The hon. Gentleman is entirely right to point out the connection between water and child health—a problem that affects not only children in Iraq but children world wide. Some 2 million children die each year, quite unnecessarily, from diarrhoea-related diseases, which are almost entirely due to poor water supplies. It is not just about the supply and management of water; hygiene and sanitation needs are absolutely crucial. That is one reason why we are putting so much effort into tackling the need to improve sanitation levels, as well as into tackling the worldwide shortage of clean water.

My hon. Friend will be aware that the World Trade Organisation is currently discussing the liberalisation of services, including water distribution and supply. Does she agree that any negotiations must ensure that sufficient safeguards are in place to protect supplies to the poorest people in the world, and that the WTO should now adopt the millennium development goals?

My hon. Friend has set out some important issues in her question. It is entirely for Governments of individual countries to decide how to manage and organise their water supplies. Figures so far show that, by and large, virtually all the investment in water in the developing countries—about 68 per cent.—is in the public sector. Despite fears about the consequence of the liberalisation of water, comparatively little investment by the private sector in the developed world has taken place. When investment has been made, it has tended to be in management rather than infrastructure, about which most people are concerned. The main concern of the Department in increasing access to water is precisely to ensure that the most poor and marginalised people gain access to it. I can give my hon. Friend my complete assurance on that.

The Minister will be aware that Malawi has plenty of water, but needs to improve its water management. On the other hand, throughout all sub-Saharan Africa, local villages and small communities need that help. Is it not a fact that DFID is not too happy about supplying funds to some of the non-governmental organisations working in those areas, because the sums that they are looking for are too small? I understand, for example, that £2 million to help an education, AIDS and water programme was considered too little.

I am surprised at the hon. Gentleman's remarks. If he wants to make specific points, I would be grateful if he would make them afterwards and I shall ensure that they are followed up. The Department's approach to water deals extensively with management and education programmes rather than infrastructure. Our experience would go against what the hon. Gentleman says. I shall ensure that he receives a detailed reply to any specific points that he wants to raise.

It should come as no surprise to the Minister that hon. Members on both sides of the House are drawing her attention to the chronic problems of securing a clean water supply in Iraq. At the International Development Committee yesterday, non-governmental organisations warned that there are already clear signs that cholera, dysentery and diarrhoea are on the increase. According to the former Secretary of State, the Government ignored the need to keep basic humanitarian services running when they were planning for the war. Will the Department now launch an inquiry into why preparations were so poor?

The issue of the Department's preparations has been covered many times. The hon. Lady knows how much finance was provided to NGOs specifically to prepare for the eventualities of war. She also knows that much of the money went into making preparations to deal with refugees and displaced people, though, mercifully, that problem has not arisen. We are aware of several cases of cholera and other diseases on the basis of information supplied by the World Health Organisation and other organisations operating on the ground. We examine such information closely. Without wanting to sound complacent, we are aware of the health problems that can arise at this time of year in Iraq, and we are taking stringent steps to improve services, particularly water. I understand that both power and water supplies are more or less back to the position that obtained before the war.



If he will make a statement on aid to Cuba. [118380]

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

DFID does not have a bilateral programme in Cuba. There is a £120,000 small grants scheme, administered by the Foreign Office, which supports civil society projects. The EU currently provides $12 million of aid, and the Commission is reconsidering its engagement with Cuba, in the light of the human rights crisis there.

While much progress needs to be made in Cuba, not least in the field of human rights, the island has started on the road to reform. I do not condone recent events, but demonstrable progress has been made in the past 20 years. Would not that be built on by facilitating entry to Cotonou and by the development of a bilateral aid programme? Is it an instance in which the broad policy of aid for the poorest prevents us from helping a country that is making progress in development?

I acknowledge the work that my hon. Friend has done to promote relations between this country and Cuba. However, the issue—especially in relation to the EU—rests very much with Cuba itself. As he may know, it was Cuba that withdrew its application to join the African, Caribbean and Pacific group. We are currently supporting civil society, and the Cuba initiative deals with non-aid relations. It is for Cuba to deal with the human rights abuses and to reapply, perhaps at some future stage, to join the ACP group.

Would not the most important thing that we could do to help the people of Cuba be to use our newfound influence with the American Administration to persuade them to drop their trade and diplomatic embargo on that island—an embargo that should now be consigned to the dustbin of history? Would not that be the best way to ensure that the people of Cuba could look forward to the prosperity and stability that they so richly deserve?

If we are talking about aid from Europe, it is important that Cuba deals with the human rights abuses. A major project involving EU technical assistance is coming up on 26 June and, at present, the focus is very much on that. It would be a major step towards tackling some of the financial and banking issues on the island. One would hope that once the situation improved, the country could rejoin the international development community.

Order. There is too much noise in the Chamber. [HON. MEMBERS: "Hear, hear."] I thank all those who cheered. Perhaps they will now be quiet.

Occupied Territories


If he will make a statement on humanitarian needs in the west bank and Gaza. [118381]

Two and a half years of violence and closure have caused rapid economic and social decline. Many families have endured long periods without work or income, and many Palestinians now depend on food aid for their daily survival. Humanitarian assistance is helping to alleviate immediate suffering, but only a just political settlement will resolve the situation.

I thank the Minister for that answer, but one of the areas that is often overlooked is the issue of the new security fence. A World Bank report has shown that as many as 10,000 people have already been affected by disruption to water supplies and agricultural land. Some 95,000 Palestinians will be affected by the time the wall is completed. Will he please turn his attention to the humanitarian needs of those people who, once again, face dispossession in their own land?

My hon. Friend is right. The building of the fence is a symptom of the problem. It is estimated that it will leave 290,000 Palestinians on the wrong side and will cut communities in two and separate people from their livelihoods. That reinforces the point that I made earlier: only a political solution will deal with the problems that the Palestinian people are experiencing.

I welcome the Minister back to this brief, but I wish to place on record the fact that we would have liked the Secretary of State to be a Member of this House. However, I congratulate him on his promotion.

The real progress now being made on the road map for peace in the middle east has taken Ariel Sharon and Abu Mazen to positions that their supporters might never have imagined being achieved. We need to support those who share the common ground of wanting peace against the extremists on both sides who would like to derail it. Does the Minister agree that the Government must do all in their power to buttress that delicate process, and that our aid must strengthen the negotiators' fragile position?

I thank the hon. Lady for her kind words—not least because they give me the opportunity to congratulate my noble Friend Baroness Amos on her much-deserved appointment to the post of Secretary of State. We are looking forward to working with her. I agree with the hon. Lady when she talks about the importance of supporting the road map process. As I am sure she will recognise, my right hon. Friend the Prime Minister has played a very significant role in supporting that work, as has President Bush.

Prime Minister

The Prime Minister was asked


Q1. [118362]

If he will list his official engagements for Wednesday 11 June.

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

Will the Prime Minister confirm that the Minister for Europe spoke for the Government when he said that the prospect of a deal with Spain over the sovereignty of Gibraltar was simply zero?

The Minister certainly did speak for the Government. However, what he actually said was that there could be no question of any deal going through without the consent of the people of Gibraltar. We have always made that clear. That remains the position. I have said it myself, and the Minister for Europe said it too.

Change is often difficult to handle, for our constituents and for those delivering public services. Does my right hon. Friend agree that the deal struck between West Sussex county council and Crawley borough council to deliver a stunning new secondary school and new facilities for leisure in my constituency represents the sort of change that will deliver our public services?

The investment in my hon. Friend's constituency is matched by investment across the whole country. In terms of capital funding, we as a country are now spending about four or five times what was being spent when this Government came to office. As a result of that, we have the best school results—at primary level, and in GCSEs and A-levels—that the country has ever seen.

The Chancellor said on Monday that he would wait until next year and then see whether his tests on the euro had been met. Surely the Prime Minister would agree that his policy is now wait and see?

It is, as the Chancellor described, to take the preparations necessary to make sure that Britain is in a position, should the economics be in the right place, to join the single currency.

So the Prime Minister confirms that the policy is now wait and see. I remind the Prime Minister of what he used to say about the self-same policy. He said that it led to

"paralysis in the Government—even the big man of the Cabinet cannot get his way. The Government are weak, divided and are being pushed around by their factions."
So there it is. In his own words, the Prime Minister's policy is weak and uncertain. However, British business needs certainty. Will the Prime Minister now tell us whether his deal with the Chancellor means that next year's Budget will be the last chance of this Parliament to trigger an assessment of the euro?

We set out the measures that will be taken over the next year, and said that we would return to the assessment in the Budget. [HON. MEMBERS: "Answer!"] Well, I am absolutely amazed that the right hon. Gentleman should return to the scene of the last Conservative Government, because who was the person creating all the trouble? I thank him for this question—I do not know whether it was planted by my right hon. Friend—as it gives me the opportunity to read out what he was saying at the self-same time. He said:

"The public is ready to go for Britain repatriating its powers from the EU"—
I see Opposition Members nodding in agreement—
"which could eventually mean pulling out."
That was the right hon. Gentleman's policy then. The truth is, it is his policy now.

The only person in this House who has stood on a manifesto to get out of the European Union is the Prime Minister. Having attacked the last Government for their policy of wait and see, it is he who has now adopted the very same policy. His failure to answer the specific question of whether next year will be the last chance to trigger an assessment shows that we will have exactly what the Chancellor foretold six years ago—a running commentary that will damage British business.

Let me remind the Prime Minister that he used to say that we can have unity without clarity, or clarity without unity, but we cannot have both. Has the Prime Minister at last discovered the third way—no clarity, no unity and no credibility at all?

What we have set out is why the benefits of the single currency are very clear. We have set out the obstacles remaining to British membership, and we have set out a way of removing those obstacles.

The right hon. Gentleman talks about the evidence for British business. Let me tell him what would be a disaster for British business—withdrawing from the European Union. If he says that that is no longer his policy, perhaps he will explain why he was a member of CAFE—Conservatives Against a Federal Europe—which said:
"If it is not possible to attain these ends by negotiation, we must withdraw from the European Union".
He was a member of that organisation, was he not? This is what it says on its website now:
"Conservatives Against a Federal Europe has closed down and will remain closed while Iain Duncan Smith is leader of the Party."
In other words, the only reason it has closed down is that the lunatics have finally taken over the asylum. The disaster for British business and Britain is the policy that the right hon. Gentleman actually believes in.

My right hon. Friend will be aware that issues such as antisocial behaviour and policing levels are important to communities such as mine. Will he set out his policy on how he will reduce crime and ensure that the police on our beats are increasing in number, not just now but in future?

The most important thing, which is why I hope that the Anti-social Behaviour Bill gets the support of the whole House, is to give the police the powers that they need, and, in particular, to put in place fixed penalty notices for those who commit antisocial behaviour and to support drugs proposals that, in the country's main crime areas, will mean that we have a proper testing facility for all those people who are arrested for the main criminal offences. If they are tested positive, they can then be referred for treatment; if they refuse to take treatment, that can be taken into account when bail is applied for. I hope that the whole House will support those proposals, which will be important in giving the police the powers that they need.

As and when the Select Committee on Foreign Affairs conducts its investigation into Iraq's weapons of mass destruction, if the Prime Minister and Alastair Campbell are invited to give oral evidence, will they?

There are two inquiries. One is in relation to the Intelligence and Security Committee, and I met it yesterday and made it clear that we will co-operate in any way at all. In relation to the Foreign Affairs Committee, in accordance with convention, I will not, and nor will officials, attend that Committee. The Foreign Secretary will, as will the permanent secretary to the Foreign Office. That is entirely in line with convention, but I may point out that, by dint of appearing in front of the Select Committee on Liaison, I am the first Prime Minister to have appeared before a Select Committee?

Given the massive and understandable interest in all that, if the principal players involved do not appear in the public gaze to give their evidence, will that not simply underscore the view, which has wide support in all parties in the House, that there should be an independent judicial review?

The proposal that the Foreign Secretary and the permanent secretary should go to the Foreign Affairs Committee is entirely in line with convention and practice. Again, let me say to the right hon. Gentleman in relation to the allegations that have been made that, as I pointed out in the House last week, there is not a shred of truth in any allegation—

He could have fooled me. He has been making a few allegations. The fact is that there is no truth in them whatsoever. If there is any evidence to justify those allegations, it should be brought forward.

When the Berlin wall was constructed, the international community protested vigorously. Why have its protests been so muted about the building by the Israelis of a 217-mile-long wall on Palestinian soil? Does my right hon. Friend agree that if the Israelis are really serious about peace they should stop building that wall now?

It is precisely because we want to see the situation change, including removing security measures like that, that we are engaged in discussion with the Israelis and the Palestinians to try to ensure progress. I am sure that my hon. Friend would also agree that it is important, as part of that peace process, that the Israelis be given proper guarantees about their security. It will be very difficult to make progress in that area, but I am sure that the only way to do so is the way that President Bush described, so that we have an end point, which is the two-state solution, and a series of measures in respect of both security and then lifting the restrictions to enable law-abiding Palestinians—the vast majority—to go about their daily business. However, that has to be negotiated. I understand the concerns about the security fence, but the only way to make sure that those things are off the agenda is to get a proper peace process moving forward.

Q2. [118363]

Does the Prime Minister believe that the risk of terrorism in the UK is greater or less since the war with Iraq?

I think that there is a risk of terrorism the whole time, irrespective of the war in Iraq. The best evidence and proof of that is where some of the most recent appalling terrorist acts have taken place. As far as I am aware, Morocco was not a great supporter of the war in Iraq, but it was subjected to brutal terrorist assaults. There is no way in which those terrorists can be appeased. Trials of people connected with al-Qaeda are happening all over Europe, in countries that supported the United States of America and in countries that did not. By hiding away at the back on any of these issues, we are not going to stop the terrorists; we shall only stop them when we confront them and defeat them.

Q3. [118364]

On Monday, among other events, a new block of school buildings opened in Swadlincote, in my constituency. More than half the schools in my area have received capital investment over the last six years—compared with the misery of Tory rule. However, in a fast-growing area such as South Derbyshire, which is attracting more and more people to it, we desperately need to sustain that investment. Can my right hon. Friend assure me that that is what we can expect?

The investment will be sustained, as a result of the measures that the Government have put in place in the comprehensive spending review. In Derbyshire, for example, capital spending has increased from about £5 million to well over £60 million. That is precisely the difference between a Labour Government who believe in investing in education and a Conservative party with a policy of 20 per cent. cuts across the board.

Given the Prime Minister's answer to his hon. Friend the Member for South Derbyshire (Mr. Todd), perhaps the right hon. Gentleman will tell us how many teachers are facing redundancy right now?

According to the Department for Education and Skills, there are about 500 net redundancies. We are looking carefully at each of those, however, to see where the local education authority or the Department can help. I point out to the right hon. Gentleman that there are about 25,000 more teachers in place than when we came into office.

I remind the Prime Minister that the figures that he has given are from only the third of schools that have declared their position so far. The estimates show that at least 800 teachers face the sack as a direct result of the funding crisis. When the Secretary of State for Education and Skills said that

"the overall level of redundancies…will be of the same order as in past years"—[Official Report, 22 May 2003; Vol. 405, c. 1136.]
will the Prime Minister confirm that he was not telling the truth?

I will not confirm that at all. It is correct that every year there are teachers who are made redundant, and the estimates that I have given are the correct estimates. Of course it is true that certain schools in certain parts of the country have faced real funding problems, partly as a result of increasing costs, partly as a result of the changing of the formula. However, overall the position is as I have described, which is that there has been a very large increase in school funding.

Increases in national insurance, problems over the funding—it is down to the Government. And the Education Secretary was simply not telling the truth. The reality is that the figures for redundancies are that, this year, three times as many will face the sack as last year. So the Education Secretary, as ever, first tried to blame schools, and then when that failed he tried to blame councils. Surely he now has only himself to blame.

Six years ago the Prime Minister promised to make education his first priority. Now the Government are sacking teachers. Should not the Prime Minister immediately get to the Dispatch Box and apologise to parents, teachers and governors for this, his crisis?

First, as I say, it is important to get the issue in context. Actually, it is a small minority of the schools that are affected but some have been affected seriously. We are looking, with their local education authorities and those schools, at what we can do to help. The right hon. Gentleman says that we have let down the education system over the past few years, but let me remind him that, by contrast with the situation that we inherited in 1997, we have not just 25,000 more teachers but 80,000 more support staff. We have the best primary school results that we have ever had, the best GCSE and A-level results and the largest ever capital programme.

It is true that, as a result of the pressures on costs, not least the one-off payment on pensions, there have been real difficulties for some schools, but the answer to that cannot be the right hon. Gentleman's policy of opposing the extra investment in schools and imposing a 20 per cent. cut across the board. Perhaps he can tell us how such a policy could possibly help any of the schools in financial difficulties.

Q4. [118365]

While visiting new mums at the new maternity ward at the Luton and Dunstable hospital on Friday, we were delighted to hear of an extra £1.6 million Government funding for a new operating theatre. However, is my right hon. Friend aware that Luton has one of the highest levels of child mortality and heart disease and inherited one of the lowest levels of funding? Will he, when he reviews the fair funding formula, ensure that it is fair, and in the meantime, encourage his health colleagues to dish out some extra dosh so that we can more rapidly tackle the legacy of health deprivation and underfunding that we inherited from the Tory Government?

My hon. Friend will know that the primary care trust had a real-terms increase of, I think, almost 8 per cent. in its funding, but obviously there is still a lot more to do, which is why that substantial funding increase is to be maintained in future years. But it is worth pointing out that her story of improved facilities at her local hospital is replicated in many constituencies in the country, and that whatever the difficulties, both on out-patient waiting and in-patient waiting, all the indicators are in better shape than in 1997. In the cardiac and cancer fields in particular, there has been massive improvement, and overall the NHS is performing more operations and seeing more people than ever before. There is a long way to go, but it is simply not true to say that the NHS is not making progress.

Does the Prime Minister agree with the assertion that the fundamental moral and legal justification for the invasion of Iraq was the possession by that country of weapons of mass destruction, posing an imminent threat to its neighbours, and that whilst regime change is very welcome, of itself it is not justification for the invasion of a sovereign country?

It is precisely for those reasons that we set them out in United Nations resolution 1441 and that we passed the resolution in the House. I have to say to the hon. Gentleman, as I have said to other hon. Members, that the Iraq survey group, which is the body charged with looking into the issue of weapons of mass destruction in Iraq, is starting its work now; surely the best way of dealing with this is to wait until it has accumulated the evidence and then we can discuss and debate it.

Q5. [118366]

My right hon. Friend the Prime Minister has delivered many extra resources to education, and in my part of the world—in Staffordshire and specifically in Tamworth—we no longer have leaking roofs or outdoor toilets and conditions have been far, far better. However, will he explain to the parents of children in Staffordshire why Staffordshire is still at the bottom of the education funding league and why teachers are still having to be made redundant? If we sent the cash, what is the problem?

I think that my hon. Friend would allow that we have increased investment in Staffordshire very considerably. He knows the debates that will always continue about the proper way in which the grant is distributed, and I also know that there have been particular problems in particular schools in Staffordshire. Again, I think that he would agree with me that when taken as a whole over the past few years, there has been a massive increase in capital and revenue spending in Staffordshire. We will obviously look at the problems to which he has drawn attention, but it is worth pointing out that in Staffordshire—and elsewhere—as a result of that investment, we have had record school results throughout the county.

Can the Prime Minister explain to the House what damage is being done to Britain from remaining outside the euro?

If the economic conditions were met and Britain did not go into the euro, Monday's assessment spelled out very clearly what the damage would be in terms of lost trade, lost investment and lost living standards for our consumers. But, of course, the economic conditions have to be met.

Q6. [118367]

May I remind my right hon. Friend that hundreds of people are killed needlessly every year in accidents at work and that many others have their lives claimed by transport disasters? The public are outraged by the failure of the justice system to bring those responsible before the courts. I welcome the Home Secretary's recent announcement of a draft corporate manslaughter Bill. Will my right hon. Friend do all that he can to ensure that that Bill becomes law as quickly as possible so that we can create a powerful incentive for big business to take health and safety as seriously as the need to make profits?

That is important, obviously, and the Government will publish proposals for legislation by the end of the year. It is important to point out that the proposals are directed at the corporations themselves, which is the area of weakness in the current law. The criminal liability of individual directors will not be targeted by the proposals. However, I must tell my hon. Friend that I know the strength of feeling on the issue, which is why it is important that the proposals be brought forward.

Q7. [118368]

Does the Prime Minister understand the widespread concern expressed to me by a number of my constituents about the need for equal treatment of parents in access disputes? Is he aware that some fathers have had to go back to court 30 or 40 times to have straightforward access agreements honoured? Will he ensure that the new powers to deal with the issue that were proposed to the Lord Chancellor by the advisory committee some 16 months ago are implemented without delay?

I will certainly look into the point that the hon. Gentleman makes. Obviously, the primary responsibility is on the courts to decide on access, but certain proposals were put to the Lord Chancellor for change. I shall find out the precise state of those proposals now and write to the hon. Gentleman about that.

Has my right hon. Friend read the Treasury documents on the euro—[Laughter]—that say that if we had joined the euro in 1999, unemployment would now be higher but that if we ruled out joining for all time, we would lose out on trade and growth benefits valued at £3 billion a year? Does he agree that he was therefore right to reject the policies of both the Liberal Democrats and the official Opposition?

I do agree with my hon. Friend. Leaving aside the Liberal Democrats' policy, it would be absolutely disastrous for this country to be in the "never" position of the Conservatives. They are now in the position that even if it were shown to be in the interests of the country to join in terms of jobs, stability, industry and trade, they would refuse, as a matter of dogma, to do so. That is not a serious policy for government.

Q8. [118369]

The Prime Minister will be aware, with respect to the European constitution, that there are current proposals to endow, by constitution, exclusive competence to the EU on fisheries. Have the UK Government written to the EU to oppose the proposals? If they have not done that, why did Scotland's First Minister tell the Scottish Parliament two weeks ago that they had?

We have had a common fisheries policy for many years, as the hon. Lady knows. Although some say that it would be good for Britain to withdraw from it, I do not believe so. There are real problems with the depletion of fishing stocks, which have to be addressed by the policy proposals that are being put forward. The common fisheries policy has always been decided in Europe.

Q9. [118371]

A recent report by the European Central Bank called for a comprehensive review of the state-funded health service. It also called for a move towards an insurance-based health service. Is that not another case of bureaucrats—unelected, faceless—telling member states what to do and what not to do?

I am not entirely familiar with the report to which my hon. Friend draws attention, but I can assure him that the health spending of this Government is well protected thanks to the proposals in the comprehensive spending review. It is just as well to point out that our aim is to get this country up to the level of European health spending. So I think it would be rather odd if people were to suggest that high levels of health spending were somehow inconsistent with membership of the single currency.

Q10. [118372]

The Chancellor has reaffirmed that there will be a referendum on the euro eventually. Why then is the Prime Minister ruling out in advance a referendum on the European constitution, whatever the constitutional changes or implications may be? What is the logic or sense in that?

What I am saying is that the Convention does not in fact put forward proposals that fundamentally alter the constitution of this country. [Interruption.] No, they do not. What I have also said, which is true, is that people like the right hon. Gentleman, who as a matter of fact is advocating a referendum irrespective of the outcome of the intergovernmental conference, see that—he has to be honest about this—as the first stage to getting Britain out of the European Union.

Let me read what the right hon. Gentleman, who is a member of the European Convention—is that not right?—said just a few weeks ago:
"The very nature of the European Union is incompatible with democracy and accountability".
He also said that it was time for Britain to step back and become an "associate" member of the EU. He nods. That is the true agenda of a very large part of the Conservative party today. They should have the honesty to come out and say that that is their position. Perhaps then we could have an honest debate in this country about the European Union.

Q12. [118374]

Will my right hon. Friend give priority to an issue that is making the lives of some of my constituents a misery, especially on these long, hot summer nights? Despite a very welcome decrease in overall crime in Stevenage, youth nuisance is still causing a great deal of trouble.

I am pleased that my hon. Friend says that crime overall has fallen. Measures on antisocial behaviour will be taken forward by the legislation that we will introduce in the House. I do not know whether these apply in Stevenage, but last year, for the first time, we ran throughout the country summer schemes for young people. As a result, the number of robberies declined by more than 30 per cent. in the areas where the schemes applied. It is important that this year we extend those schemes as far as possible throughout the country.

Q13. [118375]

With respect to the European Convention, how can something that sets up a single foreign policy, a single defence policy, a single economic policy, a single social policy, a single police force, a single judiciary and a single Convention be a tidying-up exercise?

Because it does not: that is the central point. Foreign and defence policy is going to remain with member Governments. It is not going to be transferred to the European Commission. It will still be dealt with by unanimity. Therefore the case that somehow we are about to hand over British foreign policy or defence to the European Union is simply not true.

The truth about the hon. Gentleman's position is that he too is someone who wants to renegotiate Britain's essential membership of the European Union. That is right—he nods. At least he is honest about it. Let us be quite clear about this. The reason why some Opposition Members want a referendum on the Convention is not that they seriously believe that it is about to give away foreign and defence policy, but that they want to paralyse the European Union as the first step to getting this country out of Europe. That is the true argument. Labour Members are going to join in that argument with relish, because it is not patriotic. It is not in the British national interest; it is a betrayal of the British national interest.

Q14. [118376]

Given that it is the season of reshuffles—[HON. MEMBERS: "Give him a job."] Not in the running. However, I would like to ask a question about the future position of the Secretary of State for Wales. There is a lot of talk about retaining a voice for Wales in the Cabinet, and I would like an assurance that that will be done by keeping an independent Secretary of State in any reshuffle. Who has the job is a different matter—that is for the Prime Minister—but the process is more important than the person.

I am afraid that in relation to all those questions my hon. Friend will have to wait.

Occupational Pensions

12.30 pm


Thank you, Mr. Speaker. With permission, I wish to make a statement on action that the Government propose to take on occupational pensions following the Green Paper.

Our proposals build on the historic strength of the UK's voluntary system—the partnership between Government, individuals and employers which has seen pensioner incomes rise faster than average earnings over the past 20 years, but which now faces real challenges as people are living longer at a time when birth rates are falling. Although the UK is well placed compared with other countries to deal with that, still more needs to be done. People need to be able to plan for their retirement and make informed choices about how and when to save, and how long they work so that they get the income in retirement that they expect. We will make further announcements in due course on the suite of Sandler products; a better deal for those who take their state pension later; and on the proposals outlined in the tax simplification review.

Today, however, I want to focus on occupational pensions because they are under pressure now and we need to take early action. I am therefore setting out a balanced package of reform that better focuses regulation on things that people are most worried about so that we can cut burdens on business and increase member confidence in pensions. We will strengthen the protection of pension rights that people have built up to make sure that rights promised are rights delivered. Getting that balance right means taking a tough look at areas where regulation has grown out of all proportion. It also means taking action to deal with the demands of an increasingly dynamic economy in which companies are taken over and people move between jobs more frequently.

In February, we tackled the challenge of two-tier work forces to extend protection of pension rights to new starts working in many previously public enterprises. However, it must be wrong that solely because of a takeover workers in any private company have their rights scrapped. That is why I can announce that we are extending the protection of pensions provided by TUPE—the Transfer of Undertakings (Protection of Employment) Regulations 1981—to private sector transfers. We will insist that where pension rights have been established, the new employer will need to match employee contributions up to 6 per cent to a stakeholder pension or offer an equivalent alternative. That is a fair adjustment. It builds confidence in pensions and reflects company best practice. To provide security for a more mobile work force, we will help people build up rights in short-stay jobs by enabling them for the first time to take with them the full pension that they have built up to another scheme.

I am clear that in a voluntary system, such protection of rights must be balanced with measures that make it easier for companies to set up and run good schemes for their employees. As I have stressed before,
"Pensions simplification has to be at the heart of any strategy to encourage greater pension provision."—[Official Report, 11 July 2002; Vol. 388, c. 1053.]
In a voluntary system we must be mindful of the costs for providers. Over the years regulation has built up, often for the best intentions, into a layer cake of complexity. That cannot be right. If we are to make the voluntary system work more effectively, we need to make sure that regulation is well targeted and effective.

That is why I can confirm today that we will be driving ahead with measures to cut regulations and costs on companies running schemes. We will replace the minimum funding requirement with scheme-specific funding arrangements. We will simplify and consolidate legislation in key areas to make it easier to administer pension schemes and, taking account of consultation responses, we will go further than we signalled in the Green Paper. We will radically reform section 67 of the Pensions Act 1995 to give schemes more freedom to adapt to changing circumstances without closing or even having to wind up. I am also taking forward a raft of specific simplification measures, such as streamlining the requirements on member-nominated trustees, improving dispute procedures, ending the requirement to offer additional voluntary contributions, and introducing less bureaucratic reporting arrangements.

I have received submissions from the Pickering review and others that we should abolish compulsory inflation indexation because the requirements are too onerous and expensive. Although some important points have been made about the knock-on effects of costs putting schemes at risk, I do not believe that we should do away with indexation. However, guaranteed indexation of 5 per cent. was proposed in 1995, when market long-term expectations of inflation were at 5 per cent. Today, because of the stable macroeconomic environment that this Government have put in place, inflation has been driven down to average just 2.4 per cent. over the years since 1997. That means that under present arrangements, we are effectively forcing purchase of more than full inflation cover, which may be disproportionately expensive.

I therefore propose that the cap on mandatory indexation will now be set at 2.5 per cent., giving schemes and their members more flexibility to agree together on the form of pension that suits them best, easing funding pressures and helping to keep schemes open. I stress that there will be no effect on the value of today's pensioners' rights. It is a measure for future accruals only, to give more freedom to design schemes in the most sensible way. I can tell the House also that we will keep survivors' benefits—the requirement for contracted-out schemes to provide for widows, for example—because making any change here would have a bad effect on women's pension prospects, in particular.

With increased flexibility, we need to make sure that employees' rights are protected without employers winding up their schemes as a result, so I can announce today that we will set up a new, proactive pensions regulator to focus on tackling fraud, bad governance and poor administration. It will adopt a more proportionate approach, making sure that members are protected, while reducing burdens on well-run schemes.

Pensions are a voluntary partnership and it is for workers and employers to decide on what type of scheme suits them best. We have seen welcome examples in recent months of employers and trade unions deciding together how best to ensure continuing high quality provision, and we set out in the Green Paper a proposal to require employers to consult scheme members before making changes. I can confirm that, working with my right hon. Friend the Secretary of State for Trade and Industry, I will be taking this into effect, requiring consultation to strengthen partnership in pensions.

Examples of good practice are too often overshadowed by cases where employers have gone back on promises, causing anxiety. People also worry about the get-out clause that lets solvent companies which could afford to keep their pension scheme running wind it up with inadequate compensation.

In the cases where firms have done that, it has inflicted untold damage on confidence in the whole system. People worry that other schemes will follow suit. We need to act to make sure that a pension promise made by employers is a pension promise honoured by employers. We will therefore strengthen member protection where solvent employers decide to wind up their pension scheme.

I have placed in the Library draft regulations to apply to schemes that are winding up from today. As from now, trustees will have the power to make solvent employers who choose to wind up their schemes buy out members' accrued rights in full. That will greatly increase security for members of solvent schemes. But there is one further issue that we must tackle.

Sometimes, when firms go bust, the money is not there to meet pension commitments. Recent cases have shown the terrible injustice when that happens, and the public are right to demand action. We should not accept that just because a firm goes out of business workers can find that a pension that they have saved in for all their working lives becomes worth next to nothing.

Our Green Paper set out options for sharing out assets more fairly. Today I can announce that we will change the priority order to give greater weight to those who have been in schemes and making contributions the longest. We will lay draft regulations on that shortly. I hope that the hon. Members for Havant (Mr. Willetts) and for Northavon (Mr. Webb) will welcome the cross-party agreement that I believe that there is on that point.

But we need to go further. Ever since I started looking at this I have asked why, if people expect their holiday provider or motor insurer to be covered if the firm goes bust, there is no cover for something as important as an occupational pension. We will therefore legislate to set up a pension protection fund. That fund will take over the schemes of insolvent companies to ensure not only that pensions in payment are protected, but that those still working can be sure of getting 90 per cent. of what they were promised. It will be paid for by a fixed-rate levy and an additional risk-related premium, which, together with a salary cap, will minimise perverse incentives and moral hazard. The fund will be a non-Government body. It will meet its obligations through the power to set and vary the level of charge without recourse to public funds. Taken with the other measures, that is a big extension of pension security, for the first time guaranteeing protection if a company scheme goes bust.

I have always said that my aim is to build a wide and deep consensus in this country that embraces employers, employees and pensioners. This is a balanced package to reduce costs and complexity of regulation, making it easier for employers to run schemes while ensuring that pensions promised are pensions delivered. Many of the proposals will require legislation, which the Government will bring forward as soon as parliamentary time allows.

These measures will protect the pension rights of millions of pensioners and employees throughout Britain and I commend the statement to the House.

I draw the attention of the House to my entry in the Register of Members' Interests.

I regret that the House has had no opportunity to debate the Government's proposals in their Green Paper last December. We have regularly called for such a debate. My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) pressed the then Minister for Pensions, the right hon. Member for Makerfield (Mr. McCartney), in the days when we had such a Minister, for such a debate, but he was told by the Minister, in his inimitable style:
"Don't be so silly. The Government are committed"—[Official Report, 20 January 2003; Vol. 398, c. 58.]
to a debate on the subject. We have not had a single debate in Government time on pensions for three years. We have had debates in Opposition time and in the House of Lords, but for three years the Government have not come to the House to debate pensions, and that is something that we very much regret. There has been no debate because there has been no policy, and now, of course, there is no Minister for Pensions either. Meanwhile, the crisis in pensions has been getting steadily worse. In fact, since the Secretary of State took on his responsibilities, 41 per cent.—nearly half—of all pension schemes have closed to new members. That will be the judgment on his tenure in office. One of the saddest features of that is manifested in the many invitations to conferences on pensions that pass across my desk. Unlike the Secretary of State, I actually go to them. They have titles like "Effectively Closing and Winding up Pension Schemes", which took place in January at the Park Lane hotel, and "Closing and Winding up Pension Schemes for Solvent and Insolvent Employers", at the Café Royal, London. That is a sad commentary on the state that occupational pensions have reached.

All that we have had from the Government is an endless flurry of activity, while nothing changes. There have been 39 consultations, including Myners, Sandler, Pickering and Turner, targets, reviews and taskforces. Meanwhile, the inexorable process of the collapse of one of our great post-war successes—funded occupational pensions—has carried on apace. That is because of the weight of regulation and taxation that the Government have imposed. Why did the Secretary of State say nothing about the problems that the Government have themselves created over the past six years, particularly—I see that the Chancellor has already headed off—the £5 billion a year tax that they imposed on our pension funds? It is no good talking about security now: it was the Government who created the insecurity that is the problem.

Can I ask the Secretary of State for a straight answer on the most basic question of the lot? Does he accept that there is a crisis in British pensions? I am not even asking him to say that it is all the Government's fault, but does he recognise that there is a problem? Will he acknowledge that we face nothing less than a crisis? The "Crisis? What crisis?" mentality that we have had from the Government for the past six years has made a bad situation worse.

Does the Secretary of State recognise the overwhelming consensus from all the leading organisations that responded to his Green Paper that the Government need to reform state benefits? Many of those organisations, including Age Concern, Help the Aged, the National Association of Pension Funds, the National Consumers Council, said that unless the spread of means-tested benefits is tackled, people will have no incentive to save for their retirement. Why, yet again, did the Secretary of State say nothing about that fundamental need to reform state benefits?

Why, also, did we hear nothing about the need to improve incentives to save? There is no point in imposing extra obligations unless people can see that they will be better off for saving. The statement contained nothing about incentives. Instead, we heard a range of specific proposals, some of which we can welcome. Some are old favourites that have been around for a long time. The Secretary of State got a cheer from his Benches for his proposals on TUPE, which were in the Green Paper—not the December 2002 Green Paper, but the December 1998 Green Paper, in which the Government said that they plan to place new regulations before Parliament in 1999. Four years later, he gets a cheer for something that he proposed five years ago.

Of course, we welcome the proposals for a new regulator. We also welcome the practical proposals on section 67 of the 1995 Act. However, let me ask the Secretary of State about his very significant proposal of a much tougher regime for wind-ups if a company is solvent. I understand the desire that lies behind it—to make life better for those many workers who are understandably angry about the loss of their pensions when the company remains viable—but does he accept that there are two significant dangers? First, there is a danger that companies will stop accruing pension benefits to existing members of their schemes in order to reduce the cost that he is imposing. Can he assure the House that he has considered that risk and is confident that companies will not now close their schemes for existing members as well? There is a danger that the proposal will worsen that risk.

Secondly, what about the risk of financial engineering? I heard about that when I was in America last week, studying schemes there. It means that companies shed their pension responsibilities to a different legal entity, like a snake shedding its skin, and emerge as a new company without pensions. They are happy for the former legal entity to claim pension insurance, which the Secretary of State announced today. We need to be confident that he has tackled those significant risks in his proposals.

In fact, the Secretary of State identified the risks in the Green Paper and I invite him to assure hon. Members that he remains confident that he has covered them. The Green Paper stated:
"We can see arguments for and against"—
the Secretary of State was in his "for and against" period, which has lasted a long time—
"increasing the amount that employers are required to put into the pension fund if they choose to wind up the scheme. The Government will be guided by the aim of not increasing the overall burden on employers providing pensions."
Can he assure hon. Members that he stands by that aim, which he included in the Green Paper only last December?

The Secretary of State also mentioned pension insurance. Again, I can understand its appeal in principle. However, in practice, there are serious objections. Have the Government considered them? What about the danger of good schemes paying for bad schemes? The Secretary of State gave no indication of the cost of the premiums. What about the danger of that cost being another burden on companies that provide occupational pensions? What about the danger of the insurer going bust? Is the Secretary of State confident that that will not happen and that the Government will not have to bail out the insurer?

Those objections are not made on the spur of the moment. I have the back catalogue of the Government's consideration of pension issues over the past six years. A document from September 2000, entitled "Security for Occupational Pensions—A consultation document" states that
"insurance brings with it the clear moral hazard of some employers neglecting their obligations in the knowledge that, in the event of their insolvency, their pension liabilities will still be met."
That was the Government's view in September 2000. How and why has the Secretary of State changed his mind?

What about the Myners review? Paul Myners, the Chancellor of the Exchequer's favourite adviser on pensions, who continues to have an advisory role on institutional investment, produced a report in March 2001. It stated on insurance that
"it would represent an additional cost for providers of defined benefit schemes—at times, possibly a considerable one—and as such would create additional incentives for employers to move away from such schemes. This is not an effective way of meeting the objective of protecting members of defined benefit pension schemes."
The report continued that
"it would be much more difficult for pension funds to take a long-term view, as any short-term investment underperformance would be likely to lead to a rise in their premium…The review therefore did not recommend insurance as a way forward."
The Government have regularly commissioned reports on the subject and every one has concluded that the risks of insurance outweigh the benefits. Does the Secretary of State acknowledge that danger?

The Secretary of State has announced not planning for success, reform of benefits or new incentives to save, but insurance for failure. Someone's house is burning down, yet the Secretary of State is not sending for the fire brigade, but saying that he will consult about the need for better fire insurance in future. That is not good enough given the scale of the crisis in our occupational pensions.

The opening remarks of the hon. Member for Havant (Mr. Willetts) somewhat misjudged the mood of the House, because as I was speaking, I could see several Conservative Members nodding assent to my arguments and proposals.

The hon. Gentleman mentioned debates in the House. On how many Opposition days have the Conservatives chosen to debate pensions? We debated them last Thursday, thanks to the Liberal Democrats. The key matter is the remedy for the insecurity that people are experiencing about their occupational pensions. The hon. Gentleman presented no alternative remedy for that. Again, he dragged out dividend tax credits, yet whenever he is challenged about whether he would reinstate them, he will not make a commitment. What credibility can the public give a party whose members spend all their time attacking a policy but cannot make a pledge to reverse it?

The hon. Gentleman referred to incentives, but the most important incentive that we can currently offer is to rebuild security and confidence in the system. I am sure that he would throw that at me if we had not presented such proposals. We are, of course, addressing the questions that he asked about the technicalities of wind-up and insurance. As I said in the statement, we want to deal with perverse incentives and moral hazard with regard to risk-related premium and the operation of a cap on the eligible pensionable salary. Of course, we shall consult on the implementation of our new proposals on wind-up and the changed priority order.

Conservative Members will make a mistake if they do not seize the opportunity to respond to my challenge to build a consensus between employers, trade unions, individuals, the financial services industry and, as far as possible, between parties in the House. Pension policy and protection is for the long term, and the hon. Gentleman makes a big mistake in not welcoming the insurance proposals, which have been strongly urged upon us, by not only trade union representatives and individuals but the financial services industry and many employers.

The hon. Gentleman asked whether I had considered the overall balance of costs on employers. That is an important question. As I said in the statement, it would be self-defeating if the costs of loading on more protection led people to wind up schemes. We have therefore been careful to produce a balanced package. When the hon. Gentleman has the opportunity to examine the summary regulatory impact assessment, which forms part of the relevant document, he will realise that our best estimate of the overall impact is between zero—a balance of no additional cost—and some £150 million-worth of savings. That comes about because of the extent to which the reduced requirement on the mandatory indexation cap offsets the cost of pension protection. Of course, we must consider distribution issues. However, if we examine the matter in the round, and consider not only the savings from our changes to limited price indexation but those from tax simplification—our replacement of the minimum funding requirement with scheme-specific proposals and other simplification measures—our approach to a pressing problem is balanced and sensible.

The country will take from the hon. Gentleman's contribution the single point that the Conservatives have no alternative proposal. He goes around conferences pledging to end contracting-out, thereby denying some £11 billion in income to pension funds. I do not believe that that is the best way in which to secure pension protection. Hon. Members and all the interested parties should come together to forge consensus in order to offer pensioners the protection that they deserve.

I thank the Secretary of State for his statement because today's workers are experiencing a crisis of confidence in their pension funds and some of the measures that he has announced will help to alleviate it. We welcome the proposal to crack down on solvent firms that try to wind up underfunded schemes. That is a welcome change.

We also welcome the proposal to give workers who have worked for their company for a long time better pension protection if the firm becomes insolvent. It is immoral that someone can put a lifetime's savings in a pension scheme and find that they have been taken away. As the Secretary of State said, there is all-party support for that. It is therefore all the more regrettable that, six months on from the publication of the Green Paper, no concrete proposals have been published. Can the Secretary of State confirm that he has not yet put on the table exact details of how the proposal is going to work? The longer this process is delayed, when insolvent employers wind up a scheme, the more workers will be vulnerable.

I have a number of concerns about the measures that the Secretary of State has proposed. Can he confirm that he is watering down the protection that future pensioners will get against inflation? Inflation is running at 3.1 per cent. today, which is higher than the 2.5 per cent. protection that company pensions will get in the future. If those circumstances repeat themselves in the future, will every company pensioner in the land see a year-on-year fall in their real living standards? Does this not also mean that the oldest pensioners, after years of falls in their living standards, could yet again be the poor relation?

By far the most substantial announcement today is the proposed pension protection fund. I absolutely sympathise with the Secretary of State's desire to give people security, but there is a real problem here. Insuring pensions is not like insuring holidays or cars. If a holiday firm goes bankrupt, a few hundred pounds of compensation might be required; if a car crashes, a few thousand might be needed; but if a major company pension fund winds up, we might need a few billion. Is the Secretary of State really saying that the insurance scheme will be allowed to borrow billions of pounds—and, if not, will the Government guarantee to stand behind it? If they will not, this could be a cruel deception. Workers could find that they have lost not only their jobs but their pensions as well, despite having paid for their insurance. We will look positively at proposals for insurance, provided that they are backed by the Government. Without that backing, this could be another cruel con-trick on the work force.

I thank the hon. Gentleman for his positive welcome—for the most part—for our proposals. He put it to us last week that he might be applying for the job of Pensions Minister, and if that was his first interview, perhaps he is making some progress—but it is still a case of "Don't call us, we'll call you." He asked about the timing of the measures. As I said in my statement, as far as the proposals on the wind-up of solvent companies are concerned, we are publishing the regulations today and they will, after consultation and due process, take effect from today. He will understand that that is an essential corollary to bringing in the pension protection fund. Firms will have to meet their obligations in full if they wind up their schemes. We shall be laying the regulations relating to the priority orders shortly.

Yes, of course there will need to be a period between now and when the legislation takes effect in which to set up the pension protection fund. As I said, we will introduce those provisions just as soon as parliamentary time allows. No one is more seized than I am of the importance of getting on with this. To return to a point raised by the hon. Member for Havant (Mr. Willetts) about a pensions crisis, I have to tell the House that I would not be introducing these wide-ranging radical measures if I did not accept the scale of the challenge, and the scale of anxiety that is afflicting pensioners in this country—[Interruption.] We are taking action, whereas the Conservatives have no alternative remedy to offer.

The hon. Member for Northavon (Mr. Webb) asked about inflation protection. As I explained in my statement, the 5 per cent. mandatory cap was brought in at a time when long-term market expectations of inflation were running at 5 per cent. They are now running at 2.5 per cent. This is therefore a reasonable adjustment. To put it in even more commonsense terms, I believe that the person in the street would readily trade some of their inflation protection for the knowledge that they have security for their pension scheme, which they do not have at the moment. People are worried that other firms will go the way that some already have, and that they will lose their pensions altogether. That is why it is so important that the Government act to introduce these proposals.

The hon. Gentleman referred to the analogy of holiday protection and motor insurance, but I think that he actually reinforced my argument. If people can count on the fact that firms providing that kind of insurance will be covered if they go bust, surely it is much more important that we have protection for pensions. Yes, the pension protection fund will have to deal with very large sums of money indeed. I am confident, however, having learned from the American experience—rather than replicating it—that we an make the fund work very successfully here on the basis that I have set out.

Will the Secretary of State allow me to congratulate him again on having such a clear idea of what he wants to do, and on coming before the House and setting out his proposals in less than 10 minutes? If only some of his colleagues could learn from him, our proceedings could advance much more quickly. Does he also accept that, of all the statements that he has made, this is probably the one that our constituents will be following most closely? While they will be interested in his ideas on adding to the superstructure of pension provision, many of them will be concerned about the foundations of pensions—particularly those of their own pensions—that they see collapsing.

May I suggest that, in building a consensus across the House, the Government give some of their own time to discussing the Pensions (Winding-up) Bill, which will come before the House on 20 June? Will the Secretary of State also tell us his ideas for people who will not be covered by anything that he has said today—those of our constituents who have already lost all or part of their pensions? Will he consider putting a levy on the £13 billion in unclaimed assets held by banks and building societies, so that we can deliver justice to that group of workers, as well as planning carefully—as he has outlined today—for any of our other constituents who might find themselves in the same awful pit as those people who have been made to save for more than 40 years and have lost every penny of their savings?

I thank my right hon. Friend for his kind opening remarks, and for what I take to be a general welcome for the Government's proposals. As he says, the content of today's statement really means something to our constituents. All hon. Members know that when people see that the pension that they have been paying into—which they assumed would afford them some protection—is not there, they are shocked, horrified and very angry. This touches the lives of our constituents in a very real way, and I am proud that it is this Government who are introducing protection for occupational pension schemes, and protection under the TUPE regulations for transfers within the private sector.

As for the creation of the pension protection fund, it has been a long-standing aspiration of the trade union movement that something such as that could be put in place. In terms of my right hon. Friend's metaphor about foundations, I hope that he and our constituents will see this as a substantial building block for rebuilding confidence. He raised the agonisingly awful issue of people who have already lost their pension entitlements. Nothing would be more cruel than for me to come to the Dispatch Box and raise false hopes about what might happen. If we are legislating for the future, in terms of establishing a pension protection fund, that would apply in the future and not retrospectively.

I have taken note of the proposals of my right hon. Friend the Member for Birkenhead (Mr. Field) about orphan assets. The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), pointed out in the debate last week that just because those assets are unclaimed does not mean that they do not belong to anyone. She also said, however, that she and I stand ready to meet people and to engage constructively with any sensible proposals on the subject. The experience of workers at Allied Steel and Wire and others who have suffered so cruelly shows why it is so necessary that we introduce these protection measures and get on with it.

Like many hon. Members, I have constituents who have seen their pensions disappear when a company has gone bust. I therefore welcome, on the face of it, what the Secretary of State has said about changing the priority for creditors in such situations. I want to ask him a specific question, however. After the recent scrapping of priority for the Inland Revenue and Customs and Excise, exactly which interests will be leapfrogged by the interests of pensioners, and will pensioners really have the full protection that they deserve in such circumstances?

There are essentially two aspects to the priority order proposals that we are introducing. This is a sort of interim measure that we can bring into effect quite quickly—because it can be done through regulations—pending the establishment of the pension protection fund. There are two kinds of changes to be made. The first is to give more priority to those who have been contributing to a scheme longer, and are therefore more likely to be those closer to retirement. My right hon. Friend the Member for Birkenhead has advocated this proposal in the past. By definition, therefore, there would be a relatively lower priority for those who have not been contributing for so long.

We are also bringing forward the introduction of measures that were expected to take effect in 2007, to alter the balance and place the protection of active members who are contributing to a scheme over the indexation requirements for pensions in payment.

As my right hon. Friend knows, ASW workers in Sheerness were made redundant last July and their pension funds were put into administration. Although they will be pleased to learn of the protection measures, there will be heavy hearts in Sheerness and Cardiff, for 1,350 have lost their pensions. If my right hon. Friend cannot accept the recommendations of my right hon. Friend the Member for Birkenhead (Mr. Field) in relation to the capping of banks and building societies, will he find another solution? I know of 41 companies in the UK in which the same thing has happened during the last 18 months. Two billion pounds would be needed. That is not much money, and this is a very serious matter. It was a condition of employment for ASW workers that they would have both the jobs and the pensions. They thought that they would receive pensions, but they will not.

I understand how my hon. Friend feels, and, more important, I understand how his constituents feel. A number of my own constituents were affected by the Maxwell pensions saga. As I have said, it is because of the seriousness of those people's position that we are introducing the measures that I have described. As I told my right hon. Friend the Member for Birkenhead, I stand ready to engage in meetings and to consider any constructive proposals, but I do not want to raise false hopes.

Presumably the Secretary of State agrees that occupational pensions cannot flourish unless the state system is stable. What will the measures that he has announced do to clear up the confusion between what the state second pension seeks to do and what the minimum income guarantee does? A person receiving both the full second state pension and the basic pension will still not be lifted clear of the minimum income guarantee. Does the Secretary of State accept that unless he can solve these serious problems, occupational pensions will not be able to flourish as he wants them to?

No, I do not. My statement concerned the specific issue of insecurity affecting occupational pension schemes; but I think that the extension of cover through the state second pension, and what we have done not just in relation to the minimum income guarantee but in introducing the pension credit, will protect those on low incomes and help the important cause of tackling pensioner poverty. I will not take lectures from the Conservatives, who oversaw not only pension mis-selling but the entry of many more pensioners into poverty, and imposed VAT on fuel. They are not in a strong position to lecture us now.

I welcome much of what my right hon. Friend has announced. It will strike a chord with the employees and deferred pensioners of Kalamazoo in my constituency, whose company has been taken over, split up and finally put into voluntary liquidation. The pension scheme was wound up and today, like many others, the employees stand to lose at least 50 per cent. of their entitlement. I understand what my right hon. Friend said about not raising false hopes, and I applaud his honesty, but I agree with others who have said that we need to consider the issue of retrospection in one way or another. I commend the Bill promoted by my right hon. Friend the Member for Birkenhead (Mr. Field), but if the Secretary of State does not feel able to back it, I nevertheless welcome what he said about talking to people. Let us hope that we achieve some results, because those employees deserve it.

I thank my hon. Friend for his welcome for the proposals. As I have said, I stand ready to discuss the issues, although I do not want to raise hopes on any false basis, and I am happy to extend that invitation to my hon. Friend.

I echo the welcome given by other Members, and I think that the statement will repay careful study. I am also grateful for the Department's positive response to the recent report of the Select Committee on Work and Pensions on this important subject. But the devil is in the detail, and I want to press the Secretary of State on the issue raised by my hon. Friend the Member for Northavon (Mr. Webb) about the insurer of last resort. The Pension Benefit Guaranty Corporation in America has turned a $7 billion surplus to a loss of $3 billion or $4 billion in the space of 12 months. If this scheme is to have any credibility, that issue must be dealt with explicitly at the outset.

I also want to make a bid for some pre-legislative scrutiny, which the Government appear to have set their face against. Action is important, of course, but does the Secretary of State accept that if the devil is in the detail, the House and its Select Committees must have a chance to look at the small print before announcements are made that are vital to all our constituents?

I thank the hon. Gentleman for what he said about our proposals, and commend the work of the Select Committee. Today we are publishing our responses to its recommendations, which are very helpful.

The hon. Gentleman mentioned the insurer of last resort. There could be an additional element of moral hazard if people felt that the Government stood behind such an institution. As for the financial position of the Pension Benefit Guaranty Corporation in the United States, of course its balance sheet will have shifted given the swings in the stock market, but it is still 90 per cent. fully funded to meet its obligations. At this stage of the economic cycle, that is not a weak position for such an institution to be in.

The hon. Gentleman asked about pre-legislative scrutiny. We engaged in a lot of consultation, and I detect among the public, as well as in the House, a feeling that we need to get on with introducing legislation—having considered it fully and having scrutinised it in the usual way.

In view of the severe injustice suffered today by workers at Wardles, Bangor in my constituency, I welcome my right hon. Friend's proposals to extend the TUPE regulations. Does that mean that in future all workers who have made pension contributions will be given a guarantee that their pensions cannot be stopped if their firms are taken over?

I thank my hon. Friend for welcoming my statement, and extend my sympathy to her constituents. Following a takeover and a transfer, no pension to which a worker is entitled can be scrapped. At the very least, the employer would have to match up to 6 per cent. of the employee's contributions. In some cases, that could improve the pensions available.

Like many other Members, I have constituents whose financial security has collapsed in their retirement years—employees of Kalamazoo and UEF, for instance. I agree with the right hon. Member for Birkenhead (Mr. Field) and the hon. Members for Birmingham, Northfield (Richard Burden) and for Sittingbourne and Sheppey (Mr. Wyatt) about the need to find a solution for deferred pensioners who have lost security for their old age.

What plans has the Secretary of State for the insuring of company pensions, which I think is a good idea? Will the premiums be paid by the employer, or will the Secretary of State allow the employer to pass the contribution on to the employee, who will also be making pension contributions? Given the fact that his Government increased taxes on pensions by £5 billion in their first year of office back in 1997, why should they not share some of the liability that he rather optimistically estimates to amount to about £150 million a year?

I am stacking up a lot of meetings today, but I am happy to extend to the hon. Lady the invitation I have already extended to Labour Members to discuss the position of workers in their constituencies. As for the payment of flat-rate risk-related premiums, economists may say that employers always pass on contributions in some way, but we intend the employers to meet the cost. It will, as I have said, be offset by savings made through the reduction of the mandatory cap on price indexation.

Like my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt), I have many constituents who were employees of Allied Steel and Wire. While they may gain some comfort from having inspired the statement today, it is cold comfort to know that their experience means that others may not suffer as badly as they have. I plead with the Secretary of State to consider what my right hon. Friend the Member for Birkenhead (Mr. Field) has said and to find some mechanism to help those poor people out.

I hear my hon. Friend's pleas, as I have those of other hon. Members. As I have said, I feel for the workers who are affected. Equally, I am sure that my hon. Friend will accept that it would be wrong for me to raise false hopes—but I will engage constructively with sensible suggestions.

As the Government looked into the idea of a pensions insurance system four times and, by the Secretary of State's own admission, in rejecting it on those occasions they got the decision wrong, do they not have a moral responsibility to those at ASW, Blyth and Blyth and other companies? I urge the Secretary of State to look at the experience of the US Pension Benefit Guaranty Corporation, which we are led to believe is the template for his proposal. When it was established in 1974, it brought more than 200 companies retrospectively under its provisions. Surely natural justice dictates that rights promised be rights that are also delivered for the workers who have inspired the Government to change their policy.

As I said, the legislation has yet to come forward. The insurance fund is yet to be established. Therefore I cannot give the undertaking that the hon. Gentleman is seeking, but I listen carefully to the points that he makes, and will reflect on them.

My right hon. Friend will have cheered millions of people with his announcement, but can he look into the role of the managing trustees and how quickly they bring about the winding-up of insolvency schemes? The money that they take out of schemes is a scandal. Can he consider the way in which European directive 80/987 was put into legislation, because many of today's problems would not exist if the previous Government had met their responsibilities under that directive?

I thank my hon. Friend for his remarks. We intend, through our simplification procedures, to speed up the processes, which, as he rightly says, can take too long and consume too many resources. We have detailed proposals to improve dispute resolution procedures. I shall look at the European directive to which he draws my attention.

We have all been shocked by the losses that have been incurred by some individuals and it is right that the Government should deal with the issue, but does the Secretary of State agree that all he has done today is attempt to set out a portfolio for sharing the grief more widely and perhaps more fairly, and to introduce some more regulation? He has done nothing to diminish the size of the crisis over which the Government have presided.

I do not accept that, because I believe that our proposals on the protection fund, on wind-up, on TUPE and the other simplification measures will increase security. I believe that that will rebuild confidence in the system and offer the protection that people desperately want. As I have told hon. Members, the thorough analysis is aimed at reducing costs where those can be reduced, so that the overall impact on business will be to reduce costs. At worst, there will be a neutral impact.

I congratulate my right hon. Friend on his statement, but can he tell the House more about his plans for the pension regulator? If funds are to be properly managed and not to be misappropriated, thereby avoiding insolvencies, do we not need to know more about the range and depth of the regulator's powers? If my right hon. Friend has not yet considered including pension liberation schemes under the purview of the regulator, can he consider doing so, so that people are not ripped off by those scandalous schemes?

I thank my hon. Friend for her welcome. We envisage a much more proactive pensions regulator. The existing regulatory body was given a job under the legislation and has done it well, but with the benefit of experience, it is clear that it has had to be rather too much of a process-driven, check-box regulator. It has not been able to get proactively involved in cases of maladministration, fraud and incompetence. We want the regulator to be much more active, as my hon. Friend advocates. I will consider the points that she makes about pension liberation.

I warmly welcome the proposals on solvent wind-ups. How would that work where the solvent profitable company is a foreign corporation and the British workers are in a separate legal entity? That has been the case with rogue American companies such Parsons Engineering, EMC Corporation in south-west London, and the former Lufthansa subsidiary GlobeGround, which have effectively stolen a substantial part of their employees' pensions, and also charged them the cost of the wind-up. Employees would have no comeback. In those cases and others, what happens when the trustees cannot act in the interests of the employees because they are effectively stooges of their management?

The best laid plans need to be proofed against abuse by those who ingeniously engineer things fraudulently to avoid their responsibilities. We will look—we will have teams of high-powered lawyers to look—at how we can best safeguard against precisely the situation that the hon. Gentleman describes. I make it clear that foreign-owned companies will not be allowed to escape their obligations in that way, and we will put measures in place to ensure that those responsibilities are met.

Is the position not well illustrated by the case, which I raised at Question Time on Monday, of my constituent who at 57 has lost all his pension rights, as have other employees at the company that has closed in Wolverhampton? Is that not a disgraceful position? Do not people such as my constituent face a totally uncertain future? Will my right hon. Friend therefore think again about whether the position of those who have already lost out, too, should be seriously considered, as many Labour Members have pressed him to do? I trust that he will do precisely that.

I share the concerns of my hon. Friend and other hon. Members who have raised pressing and distressing constituency cases, and I have to give him the same answer. I will listen to and meet hon. Members and look at sensible and constructive suggestions, but I am not raising false hopes.

Will the review of the wind-up of insolvent companies look at the cases—this comes out of a constituency case—in which companies manage to declare the business insolvent but still profit from the sale of the land by separating the ownership of the two? Does the Secretary of State agree that in such cases the members of the pension fund understandably feel very let down?

Yes indeed. We will have to introduce protection against engineering designed to circumvent the intent of our proposals.

I warmly welcome my right hon. Friend's statement, particularly the extension of TUPE protection to pension rights. He will be aware that many people feel anxious that they may lose their pension entitlements not only when their firm goes under but when it is taken over. May I ask for an assurance that one element of his proposals—the reduction in compulsory indexation—will not be retrospective, and that that will not affect existing pensioners or the rights already built up in pension funds?

I thank my hon. Friend for his welcome for the TUPE proposals. I share his enthusiasm for ensuring that protection is extended to people who are presently very worried about their position. The 6 per cent. match is a fair and reasonable way of settling an issue that our constituents have long been worried about. As I said in my statement, the changes on indexation will not be retrospective. They are only for the future, so they will not affect existing pensioners or existing approved rights.

Order. I am conscious that we are going into Opposition time, but there are only a few hon. Members standing. There should be only one question and if questions are brief, I will call all Members who are standing.

I am grateful to the Secretary of State for giving very short answers. He will be aware that many small firms will welcome at least part of this package, because they obviously want more portable, more flexible pensions for their employees. But how can he guarantee that the new pension protection fund will not turn out to be yet one more burden on businesses, and how will he protect very small businesses?

The premiums charged for the protection fund will be risk-related and therefore proportionate to the size and potential liabilities of the business. Our employers taskforce, the membership of which is listed in the document published today, is made up of a very experienced and good team of people, including representatives from small business. I have already asked them specifically to look at how we can better facilitate pension provision by small businesses.

Today's Government response to the Select Committee report refers to the £13 billion that tax incentives are costing the Government in encouraging people to save for pensions. The amount of money saved for a pension and the vehicle through which it is saved are key to security in retirement, yet there is precious little evidence—including from my right hon. Friend's Department—that tax incentives encourage saving, rather than merely redistributing savings. What research is his Department undertaking into tax incentives for retirement saving and how they might be changed?

My hon. Friend makes a good point, and an important conclusion of Ron Sandler's report was that the main effect of incentives is to redistribute saving, rather than to add to the total level. We need to make people more aware of the benefits of long-term saving, and of the existing considerable incentive in the system—my hon. Friend mentioned the £.13 billion—for saving through a pension. That is why informed choice, our information campaign and our work with the employers taskforce to identify and promote good practice in company pension provision are so important.

Scattered across the country, including my constituency, are Maxwell pensioners who suffered first the theft of their pensions and now further reductions in entitlements under the restructured scheme. Do today's proposals contain anything that will help in what is a clearly defined special case in which the Government have directly intervened? If not, can the right hon. Gentleman look into the matter and introduce some proposals?

As I said earlier, I have Maxwell pensioners in my area and I have met them in my constituency capacity. As I pointed out, today's proposals look to, and provide protection for, the future; I am not holding out the prospect of retrospective effect. Of course, the Maxwell pensioners' situation arises from an agreement made between the trustees and those who were providing funds, superintended by Lord Cuckney. The matter was dealt with explicitly on a scheme-by-scheme basis.

I congratulate my right hon. Friend on his statement, the contents of which I welcome, particularly the pension protection fund. He mentioned the problems that we inherited through mis-selling in respect of the state earnings-related pension scheme and private pensions, which hugely undermined public confidence in the pensions industry. Does he agree that the insurance scheme that he referred to will ensure that ordinary people can have full confidence that, when they put money into pension schemes, they will get it back in the form of a pension for the rest of their lives?

I thank my hon. Friend for his comments. He is right: when implemented, the proposals will ensure better protection, which is an important reassurance to working people and an important incentive to pension saving.

I welcome my right hon. Friend's statement, but I ask his Department regularly to remind women that it is in their interests, regardless of the reliability and generosity of their husband's pension, to build up their own occupational pensions. If widowed, they may have to choose between a lonely old age with a widow's pension, or remarriage and the loss of the widow's pension to which they indirectly contributed through child care.

My hon. Friend makes a very important point. Of course, in addition to what we have already done through the extension of the state second pension and the introduction of the pension credit—measures that themselves greatly advantage women—today's proposals offer further help. In summary, proposals for those who have been in jobs for a short time will disproportionately benefit women, and the simplification of the arrangements for pension splitting on divorce will enable more women to benefit, in pension terms, from their divorce settlement. Moreover, having listened to consultation, we have decided to retain survivors benefits—a decision that is of enormous consequence for women.

I add my voice to those who have welcomed today's statement. The pension protection fund obviously applies to funds that got into trouble because the employer became insolvent, but will it also apply to funds that got into trouble because they were badly run and therefore could not meet their obligations?

Where questions of fraud are involved, our proposals will strengthen protection from 90 per cent. to 100 per cent. On cases that do not involve fraud, I shall write to my hon. Friend.

I welcome my right hon. Friend's proposals, but I express my deep disappointment that they do not appear to cover the steel workers from Allied Steel and Wire in Cardiff and Sheerness, many of whom are my constituents. Will he look at a possible way of helping those people, who invested their life savings in pensions and are now likely to get nothing? Is there any possibility that they might benefit from this legislation if, by the time that it is introduced, their pension fund has not been wound up?

I understand how my hon. Friend and her constituents feel about this issue but as I have said, nothing could be crueller than for me to say that this legislation will offer them help when I do not envisage at this stage that it will apply in the way that she advocates. Every hon. Member knows of the difficulties in introducing such proposals and then applying them retrospectively—not the least of which is the very difficult question of where we draw the line. I am afraid that we will always find tragic cases that fall the wrong side of any line that we draw.

The Pensions Act 1995 failed to protect my constituents, who suffered through the scam undertaken by H. H. Robertson. Ministers promised that they would learn lessons from that, and everyone will undoubtedly welcome the fact that it is clear from today's statement that Ministers have indeed done so. However, I want to pursue a point made by my right hon. Friend the Member for Birkenhead (Mr. Field), who must have had H. H. Robertson in mind. If my right hon. Friend the Secretary of State is unable to levy orphan funds, he might be able to borrow from them. Doing so would be cheaper than the cost of the benefits that the state has to pay people as a result of fund failure.

I hear what my hon. Friend says, and I said that I would engage with sensible suggestions. The prospect of finding money at no cost without depriving people of their rights can be seductive, but such a prospect does not always stand scrutiny and further investigation. We have to be careful in this area.

The statement contains some welcome proposals, but they arise from a wave of recent and current problems. For people whose funds have been hit, are not the only avenues open to them an appeal to the Office of the Pensions Advisory Service or the pensions ombudsman, which have very limited powers to assist them? Members such as my right hon. Friend the Member for Birkenhead (Mr. Field) have suggested an additional avenue for tackling the problem of firms that have gone into administration, such as Coalite in Bolsover. Should not the pension fund itself be a first-line creditor, so that its funds are protected? My hon. Friend the Member for Bolsover (Mr. Skinner) would undoubtedly have been present for this statement if he had been around and about, and I assure the Secretary of State that he has been pursuing this issue with vigour through other means.

I thank my hon. Friend for welcoming the statement. His comments underline the importance of taking this opportunity to rebuild the pensions partnership, so that all parties—employees, the financial services industry and, yes, employers as well—meet their obligations. The proposals announced today include measures to strengthen as well as clarify the role of the pensions ombudsman, and plans to introduce a newly proactive regulator who could investigate the sort of problems that my hon. Friend describes.

Point Of Order

1.40 pm

On a point of order, Mr. Speaker. You are the custodian of the rights of the Opposition parties as well as those of Back Benchers, and you will be aware that, on page 271, Erskine May says:

"Standing Order No 14 provides that on 20 days in each session, proceedings on business chosen by the opposition parties shall have precedence over Government business."
That raises a long-standing issue in the House: protection—so far as it is possible these days—for Opposition parties. You will also know that it is a convention beyond that Standing Order that Governments do not bring forward Government or ministerial statements on Opposition days. However, on at least two other recent occasions as well as today, the Government have done precisely that.

Mr. Speaker, you have generously and properly allotted considerable time to today's important statement to allow Members to express their concerns and those of their constituents. However, the Opposition's time has now been reduced as a result of the Government statement, which, by any reckoning, could have been given on any number of days before or after today. What can be done to protect the Opposition from that sort of casual action, which eats further into the time available to hold the Government to account? I hope that you will agree that that cannot be allowed to go on.

I have some sympathy with the right hon. Gentleman, but the matter should be dealt with through the usual channels—[Interruption.] The right hon. Gentleman was kind enough to remind me of Erskine May, and I have consulted page 307, which states:

"Prior notice to the Speaker is necessary, but neither his permission nor the leave of the House is required"
to make a Government statement. The usual channels will take note that I would prefer it if, on Opposition Supply days, we do not have Government statements. That is the best comfort that I can provide to the right hon. Gentleman.

Bill Presented

Children's Commissioner For England

Mr. Paul Burstow presented a Bill to establish a Children's Commissioner for England; to make provision for the Commissioner's duties including monitoring complaints procedures for children, overseeing arrangements for children's advocacy, monitoring legislation to ensure that the needs of children are taken into account, overseeing child death reviews and carrying out inquiries into major child abuse cases and child deaths; and to make provision to ensure that the work of the Commissioner is compatible with the UN Convention on the Rights of the Child: And the same was read the First time; and ordered to be read a Second time on Friday 11 July, and to be printed. [Bill 121].

Village Halls (Grants)

1.42 pm

I beg to move,

That leave be given to bring in a Bill to make provision in relation to grants from the Community Fund for village halls.
England's 8,900 village halls play a vital role in community life. In villages such as those in my west Oxfordshire constituency, they are the focus of community life. They provide the venue for the parish council meeting, the pre-school playgroup, the amateur dramatic group, the youth clubs for the young and the lunch clubs for the old. They host public meetings, surgeries, fund-raising events, dance classes, computer training and much else besides. If we want a neighbourly society, where people can do things together for the common good, village halls must play an essential part. If anything, village halls are becoming more rather than less important. As a parish councillor in Hailey in my constituency wrote to me

"The loss of village post offices and village shops more generally makes it more important that there is a focal point in the village for the community."
I should like to explain what my Bill will do, the worrying situation that it is designed to overcome, and the advantages that it will have. Is it framed in such a way that the Government could pick it up and pass it through this place tomorrow? No. But does it contain the germ of an idea that they and my own party should take on and enact? Yes, absolutely.

The Bill amounts to a very simple proposal. If a village hall project for either refurbishment or rebuilding can raise 25 per cent. of the funds required, and if it can get the district or county council to match it with a further 25 per cent., the Community Fund would, under my Bill, have to provide the rest. I am not immovable about the percentages and I recognise that some villages would struggle to raise 25 per cent. I also understand, as a resident from Fifield reminded me, the importance of the small refurbishing projects as well as the larger rebuilding ones. What I am certain of is the need for an automatic mechanism, at least for a part of the project's total. There would also have to be a maximum level of funding and I would seek to consult on the level at which it should be set.

That is a powerful concept. At a stroke, village halls would have a simple, automatic way of accessing funds. It would simplify the endless form-filling necessary to win a lottery grant and focus the lottery on what most of our constituents believe it was set up for—the social fabric of our country. Village halls are perhaps the most visible example of that. Dare I say it, it would make the lottery popular throughout the country as people would see a more direct link between buying a ticket and seeing the beneficial results.

The lottery has achieved great things and I believe that the greatest have been the smallest—not the dome, but the parks, the halls, the cricket pavilions, the small public spaces that have been vastly improved. I believe that that was the essential part of the vision that lay behind the decision, taken by the Conservative Government, to set up a national lottery in the first place—and it was supposed to be nationwide. I am grateful for the help of the Oxfordshire rural community council, which does such excellent work, and of its national body—Action with Communities in Rural England.

There is a backlog of village hall projects. In Oxfordshire, 50 are being planned, with total costs of more than £6 million, but the lottery is moving away from funding them. Between 1999 and 2002, our county had 20 successful applications—an average of six a year. In the last 12 months, we have had just two. There have been at least 10 unsuccessful applications since 1999 and many others have been discouraged. The Community Fund is now quite explicit about that. Funds are now targeted on certain geographical areas and groups. Areas such as mine are losing out and people feel that it is not fair. By all means, favour the inner cities and the most deprived overall, but the lottery must be available to all.

According to the Countryside Alliance, funding for village halls is being cut by £17 million. As ACRE put it,
"Major capital projects such as rebuilding, refurbishing and the provision of new community halls are most likely to be unable to access sufficient funding."
There is also a squeeze on the funding of village halls from other angles. Lottery tickets sales are down and other sources of funding are drying up: the landfill tax credit money may be replaced.

The Countryside Agency has a large cost overrun for its mapping exercise for the right to roam. What a waste of money that has been—and costs are increasing all the time. Village halls have to meet all the required disability legislation. I know how much those things matter: disabled access and disabled loos, for example, are essential if disabled people are to take part in all the activities that I have spoken about. However, many village halls were built long ago and the costs of refurbishing and meeting all those requirements are substantial. Salford village hall in west Oxfordshire is planning to spend £140,000, most of it to meet disability legislation.

Let me expand on some of the advantages of an automatic funding scheme. First is the simplicity. One fundraiser from Stanton Harcourt in Oxfordshire, described dealing with the lottery bodies as "disheartening". Another told me that it could take 20 working days to fill in an application form. As a constituent in Northmoor wrote to me, saying:
"A clear straight forward funding path … would be a tremendous boon."
The second advantage would be that it would focus the lottery on such projects. A fundraiser from Fulbrook wrote to me, saying:

"All our hard earned funds will be to no avail without a change in lottery allocation policy. We do not know where else to turn."
Finally, there is the popularity of the lottery. We all know from our postbags that people feel that the lottery has lost its way. I make no comment about the grants to asylum seeker groups, Venezuelan farmers or anyone else, but why do we not renew the concept that the lottery is about improving the social fabric of our communities—and where better to start in rural areas than village halls? I see the Foreign Secretary in his place, a resident of Minster Lovell in my constituency, and I am sure that he will support me.

I should not paint an entirely depressing picture. There are some fantastic projects going ahead. In Tackley, the community has come up with a very enterprising all-in-one concept of building a new hall that will include a village hall, a shop, information technology facilities, sports facilities and much else. It received a grant of £50,000 from the Department for Environment, Food and Rural Affairs, alongside grants from the district council and others. In North Leigh, where the memorial hall costs huge amounts of money in repairs and maintenance, planning consent has been obtained for an innovative replacement for use by residents, the school and others. The parish and the district council have committed £200,000 between them, but without lottery funding the benefits will be lost.

In summing up, I have to admit that one or two voices in response to my local consultation that took a slightly different view. Some remained sceptical about the lottery itself. One, a weaver from the Filkins, who provided the late Sir Hardy Amies with some of his finest cloth, wrote to me as follows,

"If there is to be a lottery, the funds should be spent entirely on public fripperies: statues, follies and parks … either very beautiful things or very useless ones, but preferably both. This would discourage people from buying tickets and fill the country with eccentric wonder paid for by the remaining diehard gamblers."
That proves that in west Oxfordshire we have wonderful eccentrics, as well as beautiful villages, churches and halls. I commend my Bill to the House.

Question put and agreed to.

Bill ordered to be brought in by Mr. David Cameron, Mr. Nicholas Soames, Mr. Hugo Swire, Gregory Barker, Hugh Robertson, Tony Baldry, Mr. Adrian Flook, Mr. George Osborne, Mr. Paul Goodman, Mr. Andrew Turner and Mr. Andrew Lansley.

Village Halls (Grants)

Mr. David Cameron accordingly presented a Bill to make provision in relation to grants from the Community Fund for village hall: And the same was read the First time; and ordered to be read a Second time on Friday 11 July, and to be printed [Bill 122].

Opposition Day


European Treaty Referendum

I must inform the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

1.51 pm

I beg to move,

That this House believes that any Treaty providing a constitution for the European Union should only be ratified by Parliament once it has received the consent of the British people, democratically given in a referendum.
This is a straightforward and democratic motion that I hope will win widespread support across the House. It is also a timely motion, as it is being debated on the eve of the national referendum on a referendum that is being conducted by the Daily Mail. [Interruption.] I congratulate the Daily Mail on its initiative, and it is not alone. A referendum is also backed by The Sun, The Daily Telegraph, the Yorkshire Post, The Birmingham Post, The Scotsman and many other newspapers, but, most importantly—as shown in opinion poll after opinion poll—it is massively backed by the British people.

Let us quickly get back to the mountain heights, rather than the lower hills, of this debate. Does the right hon. Gentleman accept that as most Labour voters are in favour of a referendum, and as there is a slight division between some of our leadership and the rank and file, the best course of action today would be for us to have a good debate and to call for many more debates, but for the right hon. Gentleman not to push the motion to a Division? If we divided on the issue, hon. Members would have to take a position in the early stages of this debate, but I am sure that once their constituents had got hold of them they would change their minds.

I listen with interest to the right hon. Gentleman's comments. The calling of a referendum has been Conservative policy for some six months—[Laughter.] The Foreign Secretary will recall that I announced that call in the House and that he asked me whether it was party policy. It has been our policy for six months, and it remains so. In that light, we will have to consider the comments of the right hon. Member for Birkenhead (Mr. Field). We welcome his Bill, and we hope that the Government will give it a fair wind, so that the House may play a part in ensuring that people have a right to decide on this important issue in due course. We will try to assist him in any way that we can.

I apologise for missing the right hon. Gentleman's opening remarks. Does he realise that he makes pursuit of the Bill promoted by my right hon. Friend the Member for Birkenhead (Mr. Field), and sponsored by me and many others, more difficult by turning it into a party political issue, when it can be portrayed—as it was at Prime Minister's Question Time by my right hon. Friend the Prime Minister—as a blocking attempt? Does the right hon. Gentleman accept that a wiser course would be the one proposed by my right hon. Friend the Member for Birkenhead? We could have the debate, which would allow hon. Members and—above all—the Government to think about the issue, so that a policy that is six months old is not made worse by a Government policy that is three months old.

The hon. Gentleman was kind enough to apologise for not being here for my opening remarks. Had he been, he would have realised that I have not mentioned the Government so far, and I agree with him that the matter should—as I said at the beginning of my remarks—win widespread support across the House. The terms of the motion are simple and straightforward. They are as politically neutral as possible, and I hope that the hon. Gentleman will reflect on his position when we reach the end of the debate.

I hope that as many people as possible will register their opinion tomorrow, if only to show the Government that the British electorate will not readily be sidelined on major issues that involve the transfer of powers from this country.

I shall not give way at the moment, because this debate has been severely curtailed by the Government statement. I must make progress, because several of my hon. Friends wish to take part in the debate. At a time when referendums have become an instrument of our political system, and when popular involvement in decisions has become part of our national culture, it would be wrong for an important decision affecting the future of our country to be taken without reference to the people. We should provide them with the opportunity to choose,

"And then the people will decide".
Those are not my words, but those of the Secretary of State for Wales on the "Today" programme on 27 May when he thought, perhaps unguidedly—until he was required later to unthink—that next year's elections could be used as some sort of surrogate referendum.

The words of the Secretary of State for Wales are important, because they reflect the purpose of this motion, which is to enfranchise the people, not through the European elections but through a referendum. I hope that the right hon. Gentleman, who—I am sad to see—is not in his place today, will have the intellectual integrity to support us in the Lobby later.

What of the Liberal Democrats? I was pleased to hear the right hon. and learned Member for North-East Fife (Mr. Campbell) say that
"If Convention proposals have constitutional implications, there should be a referendum."—[Official Report, 21 May 2003; Vol. 405, c. 1053.]
That sentiment is broadly reflected in the amendment that they have tabled today. Our motion refers to a
"Treaty providing a constitution for the European Union".
It is impossible to see how a constitutional treaty providing a constitution can, by definition, be said not to have constitutional implications. I cannot see how even the Liberal Democrats can, with integrity, avoid supporting our motion today.

We will be told that when we were in office we did not propose referendums on European matters of constitutional significance—that attack has been made on previous occasions—but was not it John Major who promised a referendum on the single currency? After six years of commitment from this Government, we are still waiting for that referendum.

I shall give way to the hon. Member for Leicester, East (Keith Vaz), because he was Minister for Europe.

Why did the right hon. Gentleman not support a referendum on the Maastricht treaty?

I shall come to that point in my own time. I hope that the hon. Gentleman has lifted his eyes higher than The Beano since he last intervened in the debate.

There was a chance for people to exercise a view on Maastricht, because it was negotiated before a general election, in which it formed part of the Conservative party's manifesto, and implemented after it.

I am grateful to my hon. Friend for making that point. I will address the issue in due course, because it is important, but I am reminded that during the debates on Maastricht the Labour party—including the shadow Cabinet—was not exactly united in its view on the need for a referendum.

We are told that we will still get a referendum on the euro, but we will have to wait and see. All that we are getting at the moment is the Tony and Gordon roadshow—the Government's answer to our ill-fated Eurovision entry Jemini, being ill matched and out of tune. After six years of being told that the single currency was simply an economic decision, with no constitutional significance, suddenly we are told that it has achieved constitutional significance again.

The Prime Minister said in Warsaw on 30 May that

"if we recommend entry to the euro, it would be a step of such economic and constitutional significance that a referendum would be sensible, and right, which is why we have promised one."
The Prime Minister used the phrase "constitutional significance", but what about the Convention? At Question Time today, the Prime Minister said again that he did not believe that the Convention was constitutionally significant, but I ask the question again: if a constitutional treaty providing a constitution for the EU is not of constitutional significance, what on earth is? Surely it would be as sensible and right to have a referendum on the constitution as on the euro?

On the Government's judgment about whether joining the euro has constitutional implications, I and many other Opposition Members have questioned Ministers over a long period of time about their evaluation and judgment when they determined that there was no constitutional case to answer and that the argument for joining the euro was purely economic. In fact, we demanded that they put the relevant papers in the Library of the House. If the Prime Minister is now saying that there is a constitutional case to answer, should he not place the relevant papers in the Library immediately?

My hon. Friend makes a very good point. The Government have changed their position on the matter. We were told for a long time that the issue was solely a matter of economics. However, in order to justify a referendum on the euro and not on the forthcoming treaty, we are suddenly told that the euro has constitutional significance. It would be helpful if the papers relating to that change of view were placed in the Library of the House.

I want to make progress, as the debate was severely delayed by the Government statement that preceded it. Many Opposition Members want to take part in this debate.

I am sure that we will also hear the usual attacks for not backing referendums in the past. The answer is straightforward. Ten or 12 years ago, we did not have referendums. Even Labour Members argued in many debates—and I can give the House examples, if necessary—against referendums. However, nowadays we do have referendums, and that is because this Government have made them readily available as a political and constitutional device for allowing people to decide. There has even been legislation on the systems of referendums.

The Government have used referendums with gusto. There have been 47 referendums since 1997, on matters ranging from the Belfast agreement and devolution for Scotland and Wales to the London Mayor and Assembly and the much-canvassed mayor of Hartlepool; many more are promised on regional assemblies. This Government love referendums, as they have shown over and over again—but not on this matter, the most important and far-reaching issue of the lot. It is their instant ruling-out of one on the European constitution that stands out.

Why this matter? What are the Government afraid of? If the people's consent to set up a mayor of Hartlepool is so important, why is it to be denied for the setting-up of a European president of a European political Union? The answer, we were told by the Prime Minister again in Warsaw, is that neither the Convention nor the IGC represents
"a fundamental change to the British Constitution and to our system of parliamentary democracy".
How does the Prime Minister know what an IGC that has not yet begun is going to represent? On that basis, how can he rule out a referendum now?

In a moment.

Today's amendment changes the criteria. Out goes the phrase
"a fundamental change to the British Constitution",
and in comes the phrase
"do not involve a fundamental change in the relationship between the EU and its Member States".
Those are two very different sets of criteria. In a sense, it is perhaps all about words, but what matters is the reality.

The right hon. Gentleman is making eminently logical points about a constitution being of constitutional significance, and that therefore citizens should be able to vote on the matter. The Government entered into the Convention process for two reasons, one of which was to reconnect with citizens of the EU. Surely the best way to reconnect with citizens is to give them a choice—in this case, whether they are for or against a constitution?

I fully agree with the hon. Gentleman. In my later remarks, I shall produce some interesting quotations to underline that point.

I was saying that it is the reality that matters, not the words. We are at the moment part of an albeit imperfect Europe of nations. I believe that the European Union is in need of reform, but if the Convention proposals as they stand were ratified in a treaty we would be part of something fundamentally different.

I do not mind whether we call it a superstate, a federal power or—the Prime Minister's preferred option—a superpower. I do not care whether we call it a politically united Europe or even Romano Prodi's "advanced supranational democracy". All I know is that it will not be what we have now. It will be a step change away from that. I do not understand how can the Government can claim that that does not involve a fundamental change of the relationship between the EU and its member states, because it changes that relationship: member states would go from being partners to being subservient components.

If we look at the overall result of the Convention's proposals, we begin to see what is happening. The proposals will lead to a legal personality, a constitution, a president and a foreign secretary. It will involve fundamental rights, including the right to strike, legally enforceable at a European level. There will be a common foreign and security policy, and a European prosecutor. European law will have explicit primacy, and it will have an increasing role in criminal law, especially in procedure. There will be shared competence over immigration and asylum, with no veto, and Europe's powers will be expanded into vast areas, from transport to energy. There could even be—who knows?—a common currency.

Each of those elements diminishes our existing national sovereignty in one way or another. Together, they build a new and distinct political entity that has many of the attributes of a country. That is the truth, however hard the Government seek to disguise it. To call this a tidying-up exercise is laughable, and simply not true.

One of the Convention's leading members, the former Italian Prime Minister Lamberto Dini, said in The Sunday Telegraph of 1 June:

"The Constitution is not just an intellectual exercise. It will quickly change people's lives … and eventually will become an institution and organisation in its own right."
That may not suit the Government's agenda, but Lamberto Dini is on the Convention, and that is what he believes will happen. That is the reality.

That is the point of view of that politician, but the right hon. Gentleman anticipates the result of the IGC. Does he not accept that Europe already has a constitution in terms of its working arrangements? If our Government handle our national interests in the IGC as I expect them to, the document that will emerge will not involve a surrender of crucial national powers to a federal structure in Europe, or whatever the right hon. Gentleman cares to call it. Would it not be wiser for us all not to be dogmatic at this stage? If a question arises of a fundamental transfer of power, there should be a referendum. However, should we not refrain from taking dogmatic positions on the point until we are presented with that question?

I was trying to suggest to the House that we look at the totality of what is being done. I used to practise in the courts, and one could take little bits of evidence and say that none of them amounted to much on its own. What matters is the eventual result of putting them all together. I am suggesting to the House that what is being created, whether one wants it or not, is very different from what we have now. If that is the case, it is of constitutional significance, and it should be the subject of a referendum.

Has my right hon. Friend seen the proposals for a European foreign minister? Will he try to tell us what that is all about? What would that minister do, and to whom would he be answerable?

Perhaps I missed the foreign minister out, but I meant to include him in the list of components that will be available at the end of the process. I believe that those components will change the nature of the EU. My hon. Friend makes the point that an EU foreign secretary and a common foreign and security policy would mean that the circumstances of the EU would be very different from what they are at the moment. We must consider that point as we determine whether a referendum is necessary or not.

The Government know that the proposals are far reaching. The Treasury's own single currency assessments published on Monday state:

"Many of the issues being considered by the European Convention could have far reaching consequences for the future performance of EU economies whether they are part of the euro area or not."
That means us, and it does not sound to me like tidying up. It sounds much more like the Prime Minister's criteria of economic significance as well as constitutional significance, about which he spoke in Warsaw, where he said that they make a referendum sensible and right. His words also apply to what we see coming from the Convention.

My party opposes the constitution, but that is not the point of the motion. The point is to give the British people the right to decide whom they believe and what choice they want to make about how this country goes forward in Europe. That is why we are pressing for a referendum. Parliament is sovereign, but, in my view, that sovereignty is granted to it in trust by the people. Parliament should not be able to alienate sovereignty permanently and irreversibly without the express consent, democratically given, of the electorate. In the absence of a general election, such authority can be given to Parliament only by a referendum.

Authority has not been given, nor have the Government sought it. There was no mention of a European constitution in their manifesto. That is another reason why a referendum is necessary. That is not just the view of the Conservative party or our country: the hon. Member for Moray (Angus Robertson) reminded us of the origins of the Convention, and I shall quote what Valéry Giscard d'Estaing said on 28 February 2002 when he launched it:
"Treaties are made by states and agreed by Parliaments, but constitutions are created by citizens and adopted by them in referendums."
That was his view then; I believe it remains his view today. The Danish Prime Minister, Mr. Rasmussen, was reported as saying on 28 May:
"What is at stake is so new and so big that it is right to hold a referendum".
From all corners of the debate in Europe, people are telling us that the constitution is a significant move forward and that it is a subject fitting for a referendum. The case for a referendum is compelling.

The motion refers carefully and deliberately to
"a treaty providing a constitution for the European Union".
That makes it even more difficult for me to understand how, without their knowing the eventual shape and contents of the treaty, the Government are able instantly to rule out a referendum. If they do not know what they will be looking at in the long term, how can they say that there will be no referendum? Why are the Government so frightened? Are they frightened that their smokescreen will be blown away, and is that why they dare not let the British people decide? Other countries will let their peoples decide. Denmark and Ireland will let the people decide. France, Portugal, Sweden, Finland and Austria may, in various ways, let their people decide. The Netherlands has just decided on a non-binding referendum. Only Britain, Germany, Belgium, Luxembourg and Greece refuse point blank to let the people decide.

I have taken enough time.

The Government's position insults the British people. They continue to play what I call the "big lie" card, saying that the debate on Europe is about going right in or coming out of Europe, and that they want in and we want out. That is dishonest spin of the worst sort—the kind of spin that has already brought them into disrepute, a lesson from which I hope they learn. The real Europe debate, which the Government are so keen to avoid, is the debate about the sort of Europe that we want to be in. Is it a Europe of sovereign nations that we seek, or is it the European superpower that the Prime Minister proclaimed in Poland in October 2000 and in Cardiff in November 2002? That is the real choice.

This motion is about trusting the people. It is a democratic motion. It exposes the arrogance of a Government who will not let the people have their say. What is the betting that the Leader of the House will shortly tell a newspaper that there are rogue elements in the electorate, let alone in the House, who are seeking to undermine the Government, and that that is why we cannot have a referendum? Only six years ago, the Government asked us to trust them. What we are saying is: "Trust the people." Why do they continue to say no?

We will trust the people. We will not take no for an answer. We will let the people decide. I call on the House to support the motion.

2.14 pm

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

"notes that previous governments rejected referendums on previous constitutional treaties such as the Single European Act and Maastricht, both of which involved greater change than the draft Treaty proposed by the Convention on the Future of Europe; believes that since the proposals of the Convention do not involve any fundamental change in the relationship between the EU and its Member States, there is no case for a referendum; and notes that any proposals from the Convention are a matter for unanimous agreement by an Inter-Governmental Conference, and then endorsement by the Parliament of the United Kingdom."
The heart of the case made by the right hon. Member for Devizes (Mr. Ancram) is that changes proposed by the Convention are of such a scale that a referendum to endorse them is necessary. We take a different view. What the Convention is proposing—and what the intergovernmental conference is likely ultimately to agree—will not alter the fundamental constitutional balance between the European Union's institutions and the member nation states.

An important prior point should be made. The Convention can only make recommendations; it cannot decide. The draft constitutional treaty, which the Convention will submit next week to the Heads of Government at the European Council in Thessaloniki, has no legal status whatsoever. Like any draft, it is open to improvement and amendment. Like every other draft treaty in the EU's history, it will be subject to intense negotiations, in this case at the intergovernmental conference later this year, at which all decisions will be taken exclusively by the nation states on the basis of unanimity.

The main part of the Foreign Secretary's argument that there should not be a referendum is that the constitution as drafted by the Convention does not alter the fundamental relationship between the Union and the member states. I take it from that that if he were to conclude that it did alter that relationship, he would find it difficult to resist a referendum, and I suggest that the incorporation of the charter of fundamental rights, which makes basic individual political rights justiciable by the European Court of Justice, and thereby enforceable on member states, does fundamentally alter that relationship.

I will come to the detailed issue of the charter. I simply say that the horizontal provisions in article II-51 provide a significant number of safeguards against the hon. Gentleman's anxieties.

Given that both major parties rightly offered a referendum on the most crucial part of the Maastricht treaty—the common currency—why will the Government not offer a similar referendum on the common foreign and defence policy and the common immigration and justice policy in the draft treaty? Does he understand that I-39 of the draft gives the EU a veto over our foreign policy, which it does not enjoy today?

The reason is exactly that given by the right hon. Gentleman in April 1993 for voting against a referendum on Maastricht, which, on any basis, significantly changed the relationship between the European Union and its member states to a far more fundamental degree than is ever likely to be proposed in the Convention.

The Foreign Secretary is speaking about changes of a fundamental nature. Does he agree that if and when Parliament were to implement the proposed constitution, that constitution would effectively acquire a greater constitutional superiority over this Parliament?

No. I shall come to the label to be accorded to the treaties: we propose, quite sensibly, to call them a constitution; the Tory party, so far as I know, has a constitution, and that does not, thank God, make it a nation state. The shadow Attorney-General is raising the spectre, which has haunted him for years, of EU laws being able to override the laws made in the House of Commons. That has been a fundamental part of our relationship with the European Union, and in our constitution, since 1972, as shown by section 2(2) of the European Communities Act 1972. There is nothing in the proposals from the Convention that alters or extends that fundamental fact.

Would my right hon. Friend accept that one way of allaying justifiable fears on both sides of the House and, indeed, in the country would be for Parliament to examine the text of the document—whether it is a constitution or a convention—prior to a final decision at the intergovernmental conference. In that way, as well as being executive-led, the constitution would have received serious parliamentary input, provided, of course, that we allow the Executive to negotiate properly at the IGC.

I completely agree with my hon. Friend. There should be the maximum parliamentary involvement and examination that he seeks in the final text for the Convention. I also pay tribute to the Government representatives and especially to the parliamentary representatives, the right hon. Member for Wells (Mr. Heathcoat-Amory), my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart) and to the right hon. Lord Maclennan for the way in which they have represented in the Convention their parties and the national interest. Week by week and month by month, they have tried to ensure that Parliament is engaged, but I entirely agree with my hon. Friend the Member for Nottingham, North (Mr. Allen) that there should be extensive discussion, engagement and examination of the Convention's proposals, both on the Floor and upstairs in committees, and we shall be making proposals for that.

Will the Foreign Secretary veto any proposals that come before the IGC in the autumn for a single or common foreign policy?

There is an issue about whether qualified majority voting should be extended, which we are resisting. The hon. Gentleman has a terribly short memory. Common foreign and security policy is not being put into EU treaties by the Convention; it has been in those treaties since Maastricht, like the requirements for co-operation and so on. We are talking about the collapse of the pillars, but that is a distinction without a difference, as we are excluding what normally goes with pillar 1, namely the justiciability of decisions in the European Court of Justice.

No. This is only a short debate and, if there is time, I shall give way later on.

Every decision that we take over the next month, in the run-up to the IGC, and in the IGC, will be based on the national interest. What matters is that we secure the right text. Parliament will be the judge of that. Once a draft has been agreed, the House will have the final say. That was the approach adopted by the Governments of the day in 1986 on the Single European Act and again in 1993 on the Maastricht treaty.

I will give way later.

Maastricht is important, because what happened then tells us so much about today's Tory party and its attitudes towards Europe. Just 10 years ago, the Conservative party was led by someone who at least recognised the need for Britain to maintain a constructive relationship with Europe. He was supported in that—then—by the right hon. Member for Devizes whose speech during the passage of the European Communities (Amendment) Bill—the Maastricht Bill—sang to the tune of engagement with Europe. The right hon. Gentleman said:

"I fear that those who say that we should turn our backs on Maastricht are taking a tremendous risk—the black risk of a centralised Europe, the risk that Europe will go on without us if necessary, and even if we are part of it, our colleagues will say, `You've had your chance. In future you can take it or leave it."'— [Official Report, 4 November 1992; Vol. 213, c. 343.]
The real battle then was not between the Conservative Government and the Labour Opposition; it was a fight within the Tory party between those such as the right hon. Gentleman who—then—wished to see the United Kingdom play a constructive role in the European Union and those who, in truth, wished to see Britain's progressive detachment from Europe. Of course, in those days, the right hon. Gentleman and the sane tendency were in the majority. Not any more: for what 10 years ago was a marginal group of zealots, determined to undermine the UK's position in Europe and to wreck John Major's Government, now constitutes the leadership of today's Tory party. What was once a marginal militant tendency is in control, and the prejudices, myths and fantasies about Europe are confirmed party policy.

In an excellent speech in the House on 21 May, only two weeks ago, the hon. Member for Esher and Walton (Mr. Taylor) described the then Maastricht wreckers as "nutters" I quote directly from Hansard. Well, the nutters have well and truly taken over the asylum.

I am very grateful to the Foreign Secretary for giving way. I have two brief questions. First, did he stand in 1983 on a manifesto that committed him to withdrawal from Europe, and what has happened to his view, which I am sure that he held sincerely at the time?

Secondly, in relation to his comments about our current position, he will have heard today and during the past few months that we have a consistent view: it is right for the people of this country to have a chance to say whether they want to go into a fundamentally different Europe or to stay where they are at present. I am surprised that the Foreign Secretary is using this opportunity to launch a smokescreen political attack, which is part of an agenda that has been running for some weeks, trying to pretend that the argument is about staying in or getting out of Europe. When will he understand that this is a serious debate about the democratic rights of the people of this country and that he should concentrate on that?

The manifesto that I stood on in 1983, along with many other loyal members of the diminishing band of Labour MPs from that era is a matter of record. It proposed that we should leave the European Union. To respond to the right hon. Ge