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Westminster Hall

Volume 407: debated on Tuesday 24 June 2003

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Westminster Hall

Tuesday 24 June 2003

[MR. FRANK COOK in the Chair]


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

9.30 am

A 9.30 am kick-off is a pleasant way to start a Tuesday morning. Even the best Sky schedulers could not have arranged such an early start.

I start by declaring an interest in Northampton Town football club. I realise that it is unusual to include Northampton Town football and interest in the same sentence but, on this occasion it is best that I do so. We are in the Chamber to talk about the financing of football. It is widely accepted and appreciated that there is a crisis in the game today, the extent of which has been widely discussed in the football family, the national press and the business world. It has even been suggested that we could lose up to half the league clubs that participate in leagues in the United Kingdom.

I hope that today's debate will focus on some of the problems faced by football clubs, especially in the Nationwide league, but I also want to spend much of the time available to us examining the negotiations on, and the debate surrounding, the sale of the television rights to the UK premiership, and the European Commission's insistence that the deal is anti-competitive.

I address the Chamber today as an elected director of the Northampton Town supporters trust. Northampton Town was the first football club to create a trust some 11 years ago. The trust movement has, more than anything else, acted as a bond, bringing football supporters together as a common football family. When we, as hon. Members, contribute to the debate, we speak not from the point of view of one football club—our own—but for the many. We accept that an injury to one football club is an injury to all, and that football clubs could go out of business and communities lose their access to them. None of us wants that to happen, but it might unless a concerted effort is made that includes intervention by the UK Government.

In 1992, the face of British football changed for ever. The premier league was born, and it has been an incredible boost to those clubs that have been sufficiently fortunate, good and skilful to be in it. However, the rest of the football league has experienced difficulties. Television rights are probably the most significant factor in explaining the impact on football and the reason why there is such a gap between the richest and the poorest in football in this country.

It is estimated that 20 clubs are in danger of going out of business. Every day, more clubs go into administration, and it becomes more and more difficult for them to see a way out because of spiralling debts. The position is so serious that, in a recent report, the accounting firm, Grant Thornton, stated:
"Based on the current scenario what we are likely at best to witness, is even more players being placed on the transfer market with many not being offered renewed terms … a major restructuring of the Football League with many clubs having to act radically in the short term … having to consider merging with a local rival, relocation, and … possible extinction".
Many people share that view, because everything that could be done to save clubs has already been done. Clubs have sold their grounds to property developers to ensure that they can repay accumulative debt. Clubs have long since dreamed of entering the transfer market, but they have had to try to get teams together on the basis of free transfers made in the close season.

I repeat that I am not here to plead poverty on behalf of Northampton Town. We are in an interesting position and one that we have not been in for many years. We are reasonably financially healthy. Credit for that must go to our new chairman, David Cardoso. He is a rare beast in football: a liked, respected and much loved chairman. He is popular with supporters of Northampton Town, and I have no problem in saying that he has the best interests of the game at heart. We are fortunate, because we are in a position of relative strength compared with the teams that we play against week in, week out.

I am a director and have visited grounds in the second and now the third division, so I get to talk to fellow directors about the state of the game. What strikes me is that many clubs exist week to week, deciding which cheque to send to which creditor and wondering whether they can pay the wages this week. That can result in a crazy scenario. Last year, Huddersfield went into administration at the request of its players, because they were not being paid. Wages are a huge issue. The spiralling cost of wages is a factor that needs to be taken into account when we consider how football has got itself into the state that it is in today.

An example of the wages problem is that even a second division club in the Nationwide league will have a wages bill of between £1.5 million and £2 million, yet those clubs play, in some instances, to gates as low as 4,000, 5,000 or 6,000. The turnover of those clubs floats around the figure of £2 million, but the players' wages swallow up an ever-increasing proportion of that turnover. If we take into account the other costs associated with running football, which include policing, stewarding, ground and pitch maintenance and the need for ever more complicated safety regulations for stadiums, we find that most clubs are in deficit and are continuing to lose money.

We see that problem even at the top end of the game. John Hartson was recently sold from Coventry to Celtic for £6.5 million, but that deal involved an additional £3 million in wages, which equated to about £30,000 a week. The total cost to Celtic should have been £9.5 million, but in fact it was £15 million, because Hartson's arrival broke the embargo in respect of players' contracts. In other words, as soon as he arrived, he broke Celtic's wage structure, leading to other players' agents making demands on behalf of their clients. That led to increases of £500 or £1,000 a week just to keep other players happy. That £6.5 million transfer ended up costing Celtic £15 million. Those are incredible figures that result from the salary of one player. It would be wrong of me to mention individual players at Northampton Town, but last year certain players earned more than £2,000 a week. A Member of Parliament's salary looks rather small in comparison.

I have explained the problem with wages, but I shall concentrate on the problem with the negotiations between the European Commission and the premier league. Let me give a few figures to set the scene. The value of television rights for the premiership has increased since 1992 from around £280 million for a five-year deal to £1.1 billion for 2001–04. That is a huge inflationary increase. Mario Monti of the European Commission has called the collective selling of TV rights
"illegal, anti-competitive, consumer-unfriendly and tantamount to price fixing".
I do not agree. I referred to the football family and if there were ever a need for collectivism, it is in the selling of TV rights. If we simply allow clubs to sell rights individually, we know what the results will be. Those at the top of the game will have no problem selling their TV rights, but others will have no chance of agreeing a deal. Only through the collective selling of rights will benefits be fed further down the chain and distributed more widely.

Let us examine in more detail the problem with the European Commission. I hope that, in this debate, we shall consider the consequences of its ruling and ask for Government support and intervention to ensure that the Commission understands the Government's view of the impact of its decision on the game and communities throughout our country. That is best summed up with a quote from Jonathan Michie of Birkbeck college who said:
"The commission doesn't like the fact that the Premier League clubs band together to sell the TV rights to Premiership games. It smacks of the collusion that Adam Smith warned was always close behind any meeting of business people."
The Commission does not
"like the collectivity, or exclusivity—with rights going to a single broadcaster. But we've been here before. In the illustrious history of the office of fair trading, the OFT has only once suffered defeat in the restrictive practices court. That was when it took on the Premier League. Witness after witness testified that the OFT simply did not understand football. You can't organise a successful league without colluding. But the Premiership's victory was bought at a price. It agreed that 5 per cent. of the TV money would go to support non-league football—the 'grassroots' of the game. Could a similar deal be struck with the European Commission?"
Two points from Jonathan's Michie's comments are vital to this debate. First, he said that
"the OFT simply did not understand football."
I maintain that the European Commission simply does not understand football. Secondly, the victory was bought on the basis that 5 per cent. of the TV money would be distributed to grassroots football and £20 million went to the Football Foundation, which is spending the money on improving stadiums and providing community support and facilities for clubs throughout the land. I am extraordinarily grateful, as I am sure are all hon. Members, for the contribution made by the Football Foundation to junior and smaller clubs. It is of huge benefit to the game. That 5 per cent. was won as part of the OFT ruling. At the moment, the European Commission and the premier league are locked in discussions and trying to reach a decision that will not, unless there is a strong voice from fans and the Government, best serve the football family and allow for wider redistribution.

Torben Toft, the Commission's principal administrator, explained its position and set out a number of characteristics. He said that everybody would agree that sport forms an important social function. He added:
"The Commission therefore fully subscribes to the Declaration on the specific characteristic of sport adopted by the European Council in Nice in 2000."
So, the principal administrative executive who is responsible for the whole debate admits that sport's special place means that there is an opt-out clause in relation to the Nice treaty of 2000. As the collective selling of TV rights takes place in a sporting context, it is not illegal because there is an opt-out in respect of the Nice treaty. Torben Toft also recognises that sport is big business. That part of his argument leads him to conclude that the Commission has the right, on an individual case basis, to question whether anti-competitive practice is taking place.

In the paper, Torben Toft also agrees that there is such a thing as solidarity. He states:
"This interdependence may require certain solidarity measures to be applied among the participants in a sport, including financial solidarity measures. The Commission accepts such solidarity measures as part of the special character of sport. The Commission would not as such interfere with the manner in which solidarity measures are financed."
So, the person responsible for the Commission's inquiry accepts that sport is a special case because of the Nice treaty and accepts the principle of solidarity. However, there is still the farce of continued argument, debate and prevarication by the Commission.

I thank the hon. Gentleman for his interesting analysis. Given the similarities in relation to the Spanish and Italian leagues, which are the only two comparable European leagues, will he tell us whether there are collective or exclusive TV selling rights in those countries and how the European Commission has analysed them?

I shall certainly try to help as best I can. There is a difference of opinion between different nation states. Some have decided that collective selling is anti-competitive and have forced leagues across Europe to enter into single-club agreements. The best way in which I can describe the success of that is to say that there have not been any. In fact, there has been absolute chaos. Leagues have not been able to start on time because clubs have not been able to complete matters in relation to their TV selling rights.

Does my hon. Friend agree that it is partly as a result of that situation that the state of football in the lower leagues in European countries is considerably inferior to the thriving competition in this country?

That is an important point. Forgive me if I go off at a little bit of a tangent, but, coming from Northampton, I am quite up on the problems that our shoe manufacturing industry faced in the early 1960s when it could not compete with mass production. The Northampton shoe industry survived, and many hon. Members favour shoes made in Northampton, as opposed to anywhere else, because of their quality.

Across Europe, TV companies have concentrated on what they call quality and there has been a fallout lower down the leagues. No other European country supports 92 league clubs in the way that we do.

We have to make a decision and I hope that we make the right one. We either protect clubs in communities and allow Britain's football stock to continue to provide entertainment throughout the country in most major towns and cities, or we let it go to the market in such a way that our leagues will become similar to those in Europe, where there is a top-heavy elite structure with nothing underneath, and clubs fold.

We have to ask whether there is a special case for sport, or for football. Should we leave it to the market and allow clubs to close, or do we have a responsibility to protect those clubs as community assets? After all, they provide a tremendous quality and quantity of entertainment to people in those towns and cities.

The local council in my constituency, Northampton borough council, was responsible for the construction of Sixfields community stadium, which is the home of our local football club. It is the most visited of the leisure centres in the area. I use the words leisure centre on purpose, because every year thousands of people attend Sixfields community stadium for their entertainment, in the same way as people would go the theatre, but in greater numbers. We accept the need to protect theatre culture and places of entertainment within towns and cities.

Does my hon. Friend agree that increasingly football clubs play a major role in their local communities in providing support and activities that divert young people from potentially antisocial behaviour? They work with local authorities and other bodies in helping to improve educational standards and provide previously disaffected and marginalised young people with a sense of purpose that previously did not exist. The loss of such clubs would be very damaging in relation to the broader agenda for community cohesion.

Yes, I accept my hon. Friend's point. In fact, I would go further. I praise the Football Foundation and the premier league for ensuring that such projects are continuously funded.

One of my favourites schemes was called scribbling and dribbling—I will not embarrass the club that ran it. The scheme involved disaffected youngsters with poor attendance at school. The local football club allowed them to come in in the morning to ensure that they did their scribbling, which was English and mathematics based around football. The mathematics work was based around problems such as, "Club A wins this game, club B wins another game. Who is top of the league at the end of the week?" Their English work was based on match reports and writing articles for programmes that were actually published. As a reward for their hard work, the afternoon was spent dribbling; there was organised football training for both genders, so that they could see the benefits of their hard work.

That scheme, like the playing for success scheme, is the sort of thing that football clubs can provide for communities, but they can do so only if they have support in the wider game, and if the money is coming in. If clubs find that their turnover is low, their gates are low, their wage bills are high and they are losing money week on week, the first things that will go are the community aspects of their work. That would be a great shame. Although I applaud the premier league for its redistribution of the 5 per cent. figure, I hope that the settlement with the European Commission is not based entirely on the assumption that everything will be okay if more games are shown on television. That is the real danger.

Last Thursday the premier league issued its tenders for the new television rights package post-2004. That was based on gold, silver and bronze packages, and the concept of breaking up the television rights deal so that more companies could apply and there would be more football on television. Both the premier league and the European Commission have fallen into the trap of believing that the football supporter simply wants more football on television. That is not the case.

Torben Toft of the European Commission, who is responsible for the inquiry, said:
"Let me illustrate with an example from England. Nearly 400 games are played each season in the English Premier League. Only … 100 games are broadcast live. The remaining games are only shown as highlights—if at all. The example clearly shows that a restriction of output limits the consumer's choice".
The football season is only 30 weeks of the year. A hundred games over 30 weeks is three live games a week, and that is without games in the Champions league or highlights from the Nationwide league. I believe that football supporters have reached their limit in respect of the amount of football that they can watch on television and that some of the broadcasting scheduling difficulties have caused huge problems for English football fans.

We talk about games being scheduled at 6.30 on a Sunday.

I have the Torben Toft paper in front of me. One of the points that he makes is that he and the Commission have no objection to collective selling, but they object to one media company, Sky television, having exclusive access. That is the issue; it is not the principle of collective selling.

I accept that to a degree, but the premier league will tender its product and at present Sky has dominance in the market. I believe that the premier league is doing its best to break up the package to encourage bids from other TV companies. The hon. Gentleman is right to say that there is an inherent danger of there being one lead bidder, but we cannot blame football or the premier league for that. However, football will suffer unless we get the right deal for football clubs.

The all-party parliamentary football group has spoken to fans individually and collectively. They say that they do not want more games on TV and support the collective selling of TV rights as a league product. That is the phrase that I want hon. Members to focus on a league product. When people watch the premier league, they do not watch just one club. Their excitement and enjoyment are based on all the issues—who will win the league, who will be relegated, what impact a certain game will have on the league table and the decision. Therefore, they are watching a league product. I believe that the premier league and the European Commission are wrong to accept collective selling if there is consumer benefit, because consumer benefit does not necessarily mean more scheduled games on TV. Another way is to ensure that more money is redistributed from the TV rights deals to the game in general.

Does my hon. Friend agree that part of the problem is that the Commission's analysis limits the definition of consumer benefit to television viewers and does not consider those who consume football in all its forms, particularly those who pay to go to matches? Would it not help the debate if the Commission were to look more generally at those who pay to watch football?

I said earlier that I had the feeling that the European Commission did not understand football. Its abject failure so far to understand the needs of football supporters leads me to agree with my hon. Friend that it has not broadened the concept and benefits of consumer choice to the wider fan base.

The Commission accepts an exemption. Again in the report Torben Toft says:

"The Commission considers that an exemption pursuant to Article 81(3) would be possible where there is a proportionate balance between the restrictions created by the joint selling arrangement and its consumer benefits.
A joint selling arrangement has the potential of improving production and distribution to the advantage for football clubs, broadcasters and viewers, since it leads to the creation of a single point of sale for the acquisition of a packaged league media product. A league product is a product, which is focused on the competition as a whole, and not on individual football clubs participating in the competition. Many viewers wish to have the opportunity to follow the development of the competition as such and enabling the creation of a league media products seems to be the best way of achieving this."
In focusing on more games on television, the European Commission is creating ever-increasing difficulties for football fans following their clubs around the country. There are examples of fans having to travel the length and breadth of the country at 6.30 on a Sunday evening, when public transport is very poor and when they have to work the next morning. They must travel because of television scheduling. In the discussions, I hope that the European Commission and the premier league try to focus on the other consumer benefits that could be afforded to Britain's football fans.

There is a danger of talking percentages. Even the Football Foundation realises that the 5 per cent. deal that it secured as part of the OFT ruling means little if the TV rights money decreases to such a low level that 5 per cent. does not give it sufficient cash to support its current projects—it rightly wants £20 million. The premier league has a responsibility to the rest of the football structure. The Nationwide league is a feeder league, which enhances and improves the quality of football in the premier league by bringing on young players and allowing premier league clubs to loan young players to clubs in the Nationwide league to learn their trade. It is time that the Nationwide league was rewarded for that continued work.

I am grateful to my hon. Friend for giving way. There is a potential double whammy. If a lower bid from the successful TV company or companies arises from these negotiations and if an increased number of matches, particularly evening matches, are televised live, there will be less money for redistribution to the lower leagues. There will also be more live matches impacting on the attendances of lower league sides and, in particular, non-league sides, which means that there will be a further diminution of revenue to those clubs. It is essential that the amount of money obtained by the deal is maintained and that it is redistributed.

My hon. Friend is correct in saying that we must examine the broader picture and how the deal can benefit clubs in the lower leagues. Because of the time—I am sure that other hon. Members want to speak—I shall curtail my remarks.

As football supporters, we have an opportunity to impact on the debate. I say to the European Commission and—I support the premier league's case that the European Commission is wrong to challenge the collective selling arrangements—to a lesser degree the Premier league that here is an opportunity to widen the consumer benefit to ensure that the redistribution of TV money goes far further and to protect the game at all levels across every town and city within the UK. Clubs will fold if they do not do so. I hope that the Government agree to intervene and that they will comment to the Commission. I also hope that they will examine the impact of their actions on some clubs.

My last point concerns the Inland Revenue. It is time for an inquiry into the differential treatment of football clubs by the Inland Revenue. When Northampton Town looked for a way out of its financial difficulties, the Inland Revenue said, "No, 100p in the pound. We want 100 per cent. of the money that you owe us." It has the right to do that, but it said to Leicester City, "We will accept 10p in the pound." It has not got the right to do that when it said to Swindon Town, "We will give you a payment holiday." That holiday will probably conclude when the Exchequer loses its preferential creditor status. It is not right that York City, which was close to going out of business, should be told that it can settle at 64p in the pound, while the ruling for Leicester is 10p. There is an imbalance in the way that the Inland Revenue treats football clubs and I hope that the Government will intervene to ensure that football clubs are treated with more equity and that the Revenue's inflexibility does not drive them out of business.

The debate has highlighted some of the problems that football faces. I do not underestimate the severity of the problem; long-established and well-loved league clubs could go out of business, but we can prevent that if the Government intervene in the way that we, as supporters, demand.

Order. I remind hon. Members that it is the convention in these 90-minute Adjournment debates to commence the first of the three winding-up speeches 30 minutes before the conclusion, which leaves us 25 minutes for debate. I ask the four hon. Members who wish to catch my eye to take that into account, although I appreciate that the topic is best served by discussion rather than formal debate. I also ask hon. Members to bear in mind that comments must be brief and pertinent when they intervene or respond to the inevitable interventions.

10.6 am

Thank you, Mr. Deputy Speaker. I shall be brief and do my best not to ask for extra time.

I congratulate my hon. Friend the Member for Northampton, South (Mr. Clarke) on securing the debate and covering the issue relating to the European Commission so well that I need not cover the ground again. He outlined a crisis in football and put his finger on one of the problems relating to the role of European Competition Commissioner Monti, whose investigation could have a long-term destabilising effect on football in this country if action is not taken.

This is my first opportunity to welcome my hon. Friend the Member for Redditch (Jacqui Smith) to her new post as Minister for Industry and the Regions and Deputy Minister for Women and Equality. In a previous incarnation, she visited Port Vale football club in my constituency and opened a facility under the scribbling and dribbling football scheme. Computers were set up by the Department for Education and Skills and my hon. Friend was photographed kicking a football. She is aware of the seriousness, scope and breadth of the debate.

Many members of the all-party group on football feel very frustrated about the difficulties in getting a cross-cutting debate on football on the agenda of Government and Parliament. The last time we debated the subject it was on the topic of listed rights, which was only a pretext for the cross-cutting debate, taking into account competition and sports policy, that we really wanted. I am pleased that the Minister, who I think still has responsibility for sport, is present.

There are Inland Revenue issues to be taken into consideration. Those clubs that are subject to administration, or on the brink of it, would face further problems if they also suffered the difficulties of social exclusion that would result from clubs being put into administration and forced out of the Football league. The role of sport and exercise in our national life and the way in which we deal with the problem of obesity are part of the same debate.

Will the Minister tell us in her response whether convincing action can be taken to take forward the Nice declaration, and to resolve some of the issues that were not properly dealt with when the European Scrutiny Committee debated them? On the basis of what has been negotiated in Europe, does the Minister have the power and the remit to go back to Commissioner Monti and the part of the European Commission that deals with competition and re-argue the case that we cannot let competition policy set by the European Union undermine and destabilise football in the United Kingdom? Can the Minister also tell us what scope there is for the European Parliament to listen to the UK Government?

I welcome the fact that the Government have set up the independent Football Commission. However, there is a danger with respect to the remit and responsibilities of that commission. Unless it works closely with the Government and unless the Government and Parliament can influence the football agenda, there will be concerns about the effect of that policy. If the money no longer goes into the premiership, that will have an effect not only on the premiership clubs and their ability to compete but on the remainder of the clubs in the Football league and in grass-roots football.

The 5 per cent. extra income that was negotiated after the Office of Fair Trading inquiry was a life saver for much of grass-roots football, which also depends on the Prince's Trust football initiative and on various grants given by the Football Foundation. There are also campaigns such as "Let's Kick Racism Out Of Football". We must ensure that all those initiatives are properly funded. We must ensure that we do not consider such matters exclusively, but that we take account of the solidarity of football.

In conclusion, in the spirit of the debate, I want the Minister to tell us what the Government can do. I want to ensure that when issues are debated in this forum we give an imperative to the Government to take the necessary action. If the issues under discussion are not resolved, many more clubs will find themselves in serious trouble, and many of the Government's social exclusion policies will be undermined.

10.13 am

I, too, congratulate my hon. Friend the Member for Northampton, South (Mr. Clarke) on securing the debate and on speaking with such passion and depth of knowledge. I also congratulate my hon. Friend the Minister on her new appointment. We were contemporaries at university. Her political skills were very evident in those days. Her football dribbling skills were less evident then, but have obviously developed with maturity.

I am delighted to make a brief intervention in the debate, not least because at present I can only speak about football; I can no longer play it. Last week, playing as a five-a-side goalie, I dislocated my little finger, and had to retire hurt after three minutes. The House will, however, be glad to know that I made a save.

I take a slightly contrary view on the issue of EU competition policy and competition policy in general. I believe that its influence on football has been generally benign. In the early days of this Government, some in the all-party football group wanted a regulator for football. I believe that in the absence of such a regulator, competition policy has had some beneficial effects; not least the 5 per cent. settlement for grass-roots football that resulted from the OFT investigation. Football was way behind some of the more progressive sports in instituting such schemes; cricket did so much earlier.

We must bear in mind that if we want action rather than just talk—as my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) said—more pressure must be put on the football authorities. The only reason why we are discussing the issues today and why the premier league sends us briefings is that it feels under pressure. If we are honest, we must acknowledge that there is as much chance of the European Union insisting that every premier league football club sells its own television rights as there is of it insisting that all bananas be straight. That has not been an issue for at least some months. What has been an issue is changing the selling of the television rights; unbundling them. In the words of the Commission's press release on 20 December 2002, which draws attention to the proposition:

"One effect of joint selling, especially when coupled with exclusivity, is that only big media groups can afford the acquisition and exploitation of the bundle of rights. This leads to higher prices and shuts out competitors from key content. Football fans are also potentially harmed since they are offered less football on TV, or no coverage at all in those cases where they do not subscribe to pay-TV as there are no live matches on free TV."
Let us not forget that many of our constituents will never be able to afford subscription television. Nor will many of them—for reasons such as family or work commitments, age or infirmity—ever be able to watch live football at grounds. Under the current agreement, they are denied any access to seeing our main national sport's premier league on live, free-to-air television.

The package that the premier league offered last week bears some resemblance to the settlement reached with UEFA. We have been down this route before. The world did not cave in when the Commission insisted that UEFA offered its rights to a larger number of broadcasters.

Does my hon. Friend agree that those circumstances were entirely different from the sale of media rights to one national domestic league? In the case of UEFA, the Commission required that all matches in the Champions league be shown, yet not all matches are of interest to viewers in each of the countries. Only games concerning teams from those countries are of interest to the viewers in those countries. The comparison is not relevant.

Ultimately, television markets are national. I understand that UEFA sold games in different national markets. It did not sell them collectively throughout Europe. In the end, the British television market gave clubs more money under the new contracts than under the old ones. It is by no means certain that unbundling the contracts in the way in which the premier league has done will result in a collapse in revenue.

We heard about three packages; gold, silver and bronze. I understand that the Commission is scrutinising the premier league package to see whether the package meets its requirements. I would ask whether the package gives free-to-air broadcasting a fair chance to make a credible bid. There are 38, 38 and 62 games respectively in each package, which is a large number of games for ITV, BBC and Channel Five, who might not want to show quite so many. The Commission will scrutinise the package next week, and I do not believe that the principle behind that is terrible.

It is interesting that the premier league has not yet bowed to the admirable pressure applied by my hon. Friends the Members for Leigh (Andy Burnham) and for Stalybridge and Hyde (James Purnell), who have urged it that the matter is in its hands. My hon. Friend the Member for Stalybridge and Hyde, who is not here today, said:
"The ball is very much in the Premier League's court to come back with an offer on redistribution in the game that will allow the current arrangements to stand."
There has been no such offer. It is sticking with 5 per cent., despite pressure from the Football Supporters Association and others to raise the figure. In its briefings, the premier league talks about 13 per cent., but that includes a lot of money that goes largely to the Professional Footballers Association, not the grass roots of the game. Again, the Commission could well be looking to the premier league to increase that figure from 5 per cent.

I shall conclude by making a couple of general remarks. As well as crying foul to the Commission, the premier league would do well to put its own house in order. The premier league club nearest to my constituency is Leeds United, which has been disgracefully mismanaged in recent years. Leeds United would do well to get its own house in order rather than bleating to MPs; as could the team that I support, Bradford City, which had a glorious period in the premier league as far as the supporters were concerned but a disastrous period in terms of its financial management.

The premier league could do something to increase its revenue. I am surprised that what has been offered does not contain a package for supporters of individual clubs to buy television coverage of every game, home and away, that is played by their club in the premier league. There would be a market for that and it is one suggestion of how to ensure buoyancy in the pay-TV market and increase revenue for the premier league.

I end by saying that EU competition policy is subtle as regards football and allows for exemption. We have heard a little about the listed events that allow interventions in the market so that the big football games in Europe are available free-to-air for all football fans. I say to the Minister that it is very gratifying that next year the European championships will be available not just to those who can afford them on Sky, but to everyone via BBC and ITV. It is a bit sad that under the new Football Association deal, it appears that we will lose competitive England internationals—the games that everyone wants to watch—from terrestrial television.

The FA under Adam Crozier was very progressive on such matters and wanted the maximum exposure for the England team. It now looks as if it will sell out to the highest bidder. There is a case for listing competitive England football matches, such as that great game against Germany a couple of years ago. Such games should be available to everyone and there is a strong case for listing them.

Order. I must emphasise to the House that I may be acting as referee on this occasion, but I do not have the discretion to allow injury time. We have only nine minutes left.

10.21 am

I congratulate my hon. Friend the Member for Northampton, South (Mr. Clarke) on securing the debate today and on the knowledgeable and passionate way in which he sets out his case, which was befitting a Northampton Town director. Although he supports the Cobblers, he very rarely talks them.

Last month I joined my hon. Friend and others in Brussels at a meeting to express our concerns to Mario Monti about his challenge to the premier league deal. We did not go to represent any vested interest, other than the public interest and the best interests of football. Our argument was straightforward. People are not crying out for more football on television; the balance is pretty good. What worries football supporters most is the game's parlous finances; the gulf between the big clubs and the rest. That is the biggest issue in the game today, and the EC's intervention has to take that into account.

What grounds do we have to say that? Last year, the Football Association commissioned a huge piece of research into the state of the game. They did not ask people in the street, but 6,500 people involved at all levels of the game, from Sunday morning leagues to premier league chairmen. The survey, as reported by David Bond in The Sunday Times, revealed that there was deep concern among all groups about the financial health of the sport. Some 90 per cent. of club officials thought that premier league clubs kept too much of the money available to the game.

The then chief executive of the FA said that the report would be used as a basis for future policy, but now that he has gone it is probably safe to assume that the report is gathering dust; that is why the intervention from Brussels is so important. It could actually save English football from itself, but it could also make matters far worse. I believe that the latter will be true in this case because the policy framework for competition in sport in Europe is muddled.

In the United States, sport is big business, but is exempt from stringent anti-trust legislation. In the early 1960s, a US court ruled that the collective sale of television rights by sporting leagues violated US anti-trust law. Congress in the US acted quickly to grant an exemption, which still stands today for American football, baseball, hockey and basketball. That exemption was made because Congress realised that sports have to collaborate, share and spread resources; otherwise the product is dominated by a few, and is no longer of interest to the viewing public.

In Europe, we have a muddled policy. While the treaty of Rome cannot be faulted for building a more prosperous Europe with opportunities spread around, it has constantly come into conflict with sporting provisions and sport's internal rules. That is what the case is all about. My hon. Friend the Member for Northampton, South is absolutely right to say that the Commission has failed to take a wide view of football in this case, as the OFT did when it challenged the premier league. The Commission has made the same mistake.

If competition policy officials were prepared to widen their scope slightly, they would find strong competition arguments to back up collective selling, exclusive selling and systematic redistribution. Article 81 of the treaty allows restricted arrangements to stand if they improve the production of the product. In this case the product is professional football, and it is basically accepted that the more competitive it is, the better it is. If there were no restrictions, the big clubs would get bigger and bigger. The more that we have measures to balance out competition, the better the product becomes.

In short, the more distribution we have, the more competitive the sport. We proposed to the Commission that a figure of at least 10 per cent. should be made available to reinvest in the football league. If we enabled more clubs to compete properly, we would get a more vibrant and successful television product. If we carry on as we are, more and more clubs will go out of business. I am chair of a body called Supporters Direct and we come into contact with clubs in trouble on a week-by-week basis. I genuinely fear for the future of 20 to 30 football clubs in this country if something is not done to help them soon. There is plenty of money in professional football to see every club in this country right for the future and to give them a chance to succeed and to compete.

There may be some in premier league boardrooms around this country who want 30 or 40 professional clubs, but I do not want that and neither do supporters. The Daily Mirror deserves congratulation on taking the campaign forward by telling the competition authorities and football that we care about more than the three or four biggest clubs in this country. I call on the premier league to get the pledge on the table and, as my hon. Friend the Member for Selby (Mr. Grogan) said, increase redistribution. There should be a 10 per cent. redistribution pledge, and Opposition and Government Members would get behind the premier league in making that case to Europe. A strong premier league television package with greater redistribution is more in the public interest than breaking up the rights, which we seem to be heading towards at the moment.

10.25 am

I add my congratulations to the hon. Member for Northampton, South (Mr. Clarke). He has done us a big favour by securing a debate on this issue. Football is a big business, but it also something about which millions of people care passionately. It is important that we debate the subject in the intelligent and thoughtful way in which he introduced the debate. I also congratulate the Minister, with whom I will cross swords many times in Department of Trade and Industry debates.

Unlike all other Members who have spoken, I do not represent a major football club. Hampton and Richmond Borough football club suffered the ignominy of being relegated from the Ryman league last year, and its weekly attendance is 200; it is not in the big time. It is interesting to ask why such a team can survive and continue to be viable whereas the team with which I grew up, York City, is teetering on the brink of extinction. The team to which I graduated from York City, Leeds United, has also been teetering on the brink of insolvency. Something is fundamentally wrong with the economics of big-time football.

The paradox, which the hon. Member for Northampton, South outlined very well, is that the game is in crisis while a vast sum of additional money is flowing into it. On television rights, 10 years ago television income brought football about £60 million a year over the then five-year contract. Now it brings in £600 million a year; a massive increase in the flow of resources into the game, but an increase that co-exists with a state of extreme crisis.

Although I do not represent a football club, the headquarters of another game, the Rugby Football Union, is located in my constituency. Although rugby is a very different game, it manifests many of the same problems. It has progressed from bumbling amateurism to professionalism and business within a couple of decades. There is the same tendency for the premier league to coalesce into a cartel, which has caused the Rotherham problem. There is the same problem of salaries being driven up and the clubs being unable to match them through their income. Strong clubs—in this case Bristol and Bath—are unable to survive relegation. The same dilemmas exist, but there is one fundamental difference; in rugby, the national team dominates. If Eriksson's team had to play week in and week out in the premier league, it would probably struggle in mid-table. In that sense, the structure is fundamentally different, but there are many common elements.

I agree with the hon. Member for Selby (Mr. Grogan)—he gave a balanced account of the European Commission's point of view—that many of the things that the European Commission says about football are either innocuous or sensible. It has a legitimate role—the European Union should not interfere in many other areas of national life—because the Champions league sets the terms of trade for football across Europe and there is a European market in transfers. The European Commission is legitimately involved in football from the point of view of competition.

Although the European Commission may have a legitimate role, does the hon. Gentleman agree that the real target is the broadcasting industry, not football? The Commission is using this case to stimulate a more competitive broadcasting industry, but the result may be a less competitive football industry, and it has failed to make that clear.

:I endorse part of the hon. Gentleman's comments. The European Commission is trying to deal with competition issues in two industries at the same time; football and broadcasting. As I interpret its conclusions, it is primarily concerned with opening up broadcasting rather than closing down football, but there is a legitimate debate as to whether it has the balance right.

I have read the Torben Toft paper, too. I guess that he is the guy who determines policy. Monti is the big man at the top, the spokesman, but Toft does the thinking behind it. It is clear from his paper that he understands the economics of football and is sympathetic towards football. Several points come out clearly. He understands that competition cannot be allowed to take out the weak teams, because that destroys the game and leads to a Harlem Globetrotters situation, with one team going round giving exhibition games.

The paper also makes a strong defence of the principle of solidarity. The game needs weaker teams, for several reasons; partly because of the importance of the community, partly to provide a pool of talent—allowing young players to come up and older ones to go down—but, above all, to provide a balance. That is something that we are losing. I spent some years in Scotland, where there are now effectively two teams; it is not a competitive league. The premier league is heading the same way. I grew up watching York City, and there was a realistic prospect that if York City drew Newcastle in the FA cup on a muddy day, it might win and get through to the semi-final. The chances of that happening now are far more remote; the balance is being lost.

The Torben Toft paper makes it clear that the game needs balance and solidarity. As the hon. Member for Leigh (Andy Burnham) said, the Commission's primary concern is to deal with the problem of the broadcasting monopoly. It is right to challenge—the Government are probably more reticent about doing so—Sky television's monopoly of television rights. It is legitimate to open up that question.

There are many ways of redistributing income in the game other than by the formula adopted by the English premier league. The hon. Gentleman cited the experience of the United States, where collective selling is accepted as a principle, as it is by the Commission paper. The Commission does not question the collective selling of football rights. The United States seeks the balance in its different sports in various ways, although in many respects it is much more aggressively commercial than we are. As I understand it, in its national football league, 40 per cent. of all gate receipts and 95 per cent. of the income from television rights—which are with a multiplicity of television companies and not just one as in this country—is distributed to the other clubs, whereas in the premier league only 50 per cent. is. The distribution system in the United States game is much more progressive.

In basketball, to prevent the corrosive effect of enormously inflated salaries, the United States has imposed a salary cap. That is something that we do not contemplate in this country; however, it is conceivable on a European level, although probably not on a national level. Another innovation that the United States has introduced into its competitive sports system is progressive taxation. In basketball, the big clubs are taxed on their gate receipts and television income, and the tax is redistributed to the other clubs.

We can envisage different combinations of selling arrangements and income redistribution to produce what we all want; a healthy national game, rather than a concentration of talent and money in a few clubs. It can be done in many different ways. The suggestion by the hon. Member for Stoke-on-Trent, North (Ms Walley) that we should have a more open-minded and cross-cutting discussion of the issue is a welcome innovation that I strongly support.

In the short term, we must deal with the Commission paper. Like the hon. Member for Selby, I believe that it is an opportunity rather than a threat. If the proposed changes are limited to opening football up to three television contracts rather than one, and if they bring in their wake a more generous formula—hopefully the 10 per cent. distribution formula—our national game will he in a stronger position, rather than a weaker one.

10.34 am

I welcome the Minister to her new role. I am sure that she had a slightly heavy heart when she realised that she would have to discuss football in Westminster Hall today.

I thank the hon. Member for Northampton, South (Mr. Clarke) for raising an important issue that vexes many of us who have a passion for the national game. He and I are members of the all-party group on football, which is conducting a full investigation into financing and other aspects of the national game.

I am an unashamed soccer supporter. It infuriates and baffles many of my friends that, religiously, at quarter to five every Saturday afternoon during the season, I have to be glued to a television screen to find out the results. If I am out and about, I have to be as near as possible to a radio to find out how my team gets on. I should point out that I think that the season lasts slightly longer than 30 weeks of the year; that is what Mrs. Field would say.

Those who are not members of the soccer-supporting cult find it difficult to understand the passion. Like the hon. Gentleman, I support a club in the third division. I am sad to say that it was also in the third division last season, unlike Northampton Town. The clubs will be fighting each other next time out. Soccer is a passion close to my heart. My club, which I have supported since I was five, was one of the clubs in administration only last year, and is making a slow and gradual recovery.

The model of ownership in football is bizarre and I have some sympathy with the Minister and, to that extent, with the European Commission which is trying to develop a set of rules that are sensible, within an economic framework, for the footballing industry. In one sense, we are talking about the economics of the madhouse. Who would really want to invest in a football company? As the hon. Gentleman said, a longstanding Northampton Town fan, and no doubt a successful business man in every other business he operates, is effectively bankrolling the local club. That is the case in many of the 92 professional clubs in the English game.

Local communities also find themselves as stakeholders in the game. It has been rightly pointed out by a number of those who have contributed to the debate that football goes beyond simply the large clubs that are able to get all the television coverage. Indeed, it goes beyond the 92 league clubs. As the hon. Member for Twickenham (Dr. Cable) rightly pointed out, it goes right down to community level, with a couple of hundred people regularly—or irregularly—turning up on cold, wet winter afternoons to watch a local, semi-professional club.

The hon. Member for Stoke-on-Trent, North (Ms Walley) made a good point when she said that she wanted the Minister to see what the Government could do to ensure that there would be action in Europe. If there is not, there will be long-term destabilising effects on the smaller clubs. There is also a real worry that there might be short-term destabilising effects, with perhaps dozens of clubs going into administration very quickly.

The hon. Member for Northampton, South analysed the European aspect. He is quite right to say that, generally, clubs in Europe are left to make their own deals. One reason why there are far fewer professional clubs—even in countries such as Germany, which has got two professional leagues in the Bundesliga and regional leagues beyond that—is the nature of the sale of rights. It would be regrettable if we were to go down that route.

I hope that the Government will do all that they can to ensure that the Commission is made aware of the way in which community values are at the core of the footballing industry in this country.

The hon. Member for Leigh (Andy Burnham), in his quick-fire, 100 mph contribution, made, as ever, sensible and informed comments. As has been pointed out, he had an important role to play prior to being elected to the House.

The financing of soccer is bizarre, to put it mildly. The quaint days of the maximum wage ended about the time of my birth, which coincided with the time when Northampton Town was going onwards and upwards. I was born in 1964 when Northampton was on the way up to the first division. It later came down almost as quickly, but I shall draw a veil over that. At that time, in 1964, when "Match of the Day" was introduced, television rights were worth tens of thousands of pounds per season. The hon. Member for Northampton, South was right to identify that a major turning point was 1992. Money had increased during the 1970s and 1980s and in 1992 the premier league was created, led by the big five clubs at the time—Arsenal, Everton, Liverpool, Manchester United and Tottenham Hotspur—which wanted a much larger slice of the cake. In part and in the short term, they were able to increase the size of that cake, but we are now at a crossroads.

The hon. Member for Selby (Mr. Grogan) was right, if a little complacent, when he said that there is no crisis. Surely, one of the problems now is that some of the largest, cash-hungry, professional clubs may be tempted to unbundle, especially as the overall pot of TV money likely to diminish substantially when contract rights are renegotiated, whether with BSkyB or other operators, in the next year or two.

Spiralling amounts of cash have gone into the game during the past decade and the worry is that so much of it has ended up in the hands or pockets of the talent—the players—but also in those of agents and peripheral figures. Now that the cash juggernaut looks as though it will slow down sharply, there is a question about the future viability of TV rights arrangements.

It has been pointed out that the premier league now has TV rights deals worth £1.1 billion over the three years 2001–04. That was negotiated in 2000 and it is worth repeating the comments of Mario Monti, the EU commissioner for competition, who said that the deal was illegal, anti-competitive, consumer unfriendly and tantamount to price fixing. That displays some of the grave concerns in the minds of many people involved in football. I suspect that it would be difficult for the Commission to row back entirely from those comments when it comes to doing what it believes is right for football in the United Kingdom.

The collectivity and exclusivity of the deal that is now on the table offends many, but it is in the nature of organising a league that there will be some collective TV and other rights; that will lead to some collusion. A number of speakers have rightly pointed out that, in the past, the OFT and, more recently, the Commission have failed to understand the grass roots of the game and the way in which the economics of football operate. On this point, I agree with the hon. Member for Leigh and the Liberal Democrat spokesman that the Commission's attack is focused on broadcasters rather than the game, but I am afraid that there will be collateral damage for many of our football clubs if an arrangement is made that penalises broadcasters and results in much less money coming into the national game. We must keep an eye on how that pans out.

Looking to the future, I hope that the Minister will give at least some details of her thoughts, not just on the football industry—which is close to many hon. Members' hearts—but on one or two of the direct competition points. Clearly, the Government's competition policy has been open to question. I sat on the Standing Committee that considered the Enterprise Act 2002 and it became clear that there was a division between competition policy in many European countries and that adopted for many decades in the United States. There was an implication that the Government were beginning to look towards the US model. I would not necessarily find that objectionable, but there is grave concern that if there is no certainty about where the Government's competition policy is going, it might be difficult for them to represent the interests of football in the way we would hope.

Part of the premiership deal has been to give 5 per cent. of the TV money to the grass roots of the game. There is concern that the European Commission could find itself similarly bought out with, in effect, some sort of tariff, with BSkyB and all the other operators paying to avoid a further investigation. However, football's role as a social, sporting and cultural part of our way of life is still firmly in place, and one hopes that TV money will continue to support that in whatever framework is put in place with a new deal.

I can understand why Governments of all colours have steered clear of getting too actively involved in the professional game. Immediately after the May 1997 election, the instinct of the Labour Administration was to be more actively involved, but they quickly realised the potential pitfalls. I understand from reading Tom Bower's excellent book on the game that that was not least because one or two special advisers, such as the hon. Member for Leigh in his erstwhile life, quickly realised the pitfalls that would face any Government who interfered.

The hon. Gentleman talks about interference. Does he accept that the Government's intervention led to three important developments that improved the regulation of professional football? I am referring to the Football Foundation—a result of direct intervention—Supporters Direct, which has led to 93 not-for-profit supporters trusts owning all or part of their clubs, and the Independent Football Commission, which puts pressure on the regulators to try to improve regulation and governance of the national game.

I accept that, but it was certainly felt in the afterglow of May 1997 that the Government might try to interfere not only in the administrative side but in a more fundamental way. It is fair to say that after the Bradford fire in 1985 and the Hillsborough disaster in 1989, enormous amounts of public money went into the football industry; it would be wrong to assume that all that money could somehow be spent without a quid pro quo. It is understandable that the Government will feel that if the national game has had hundreds of millions of pounds of public money spent on it, it needs to get its house in order as far as possible. The Nice declaration recognised the uniqueness of sport as a whole and, although the European Union has little direct competency in this regard, it reflects, at the highest professional level, a not insignificant part of economic activity.

I know that the Minister will want to sum up all the contributions that have been made, but I should like to ask her two questions. First, in pure competition terms, how do the Government intend to defend the UK football industry, if at all, against the threat to its autonomy posed by the competition commissioners today and, potentially, at some future point?

Secondly, in view of the divergence from the European model of substantial dominance being the test and towards a more US-type competitiveness test, as espoused in the Enterprise Act 2002, what is the Government's general strategy on interference in football and, indeed, other industries? Is it enough to leave it to the free market or, given the deep-rooted community concerns in football, will the Government seek an accommodation with the premier league and smaller professional clubs beforehand?

10.48 am

The Minister for Industry and the Regions and Deputy Minister for Women and Equality
(Jacqui Smith)

I start by congratulating my hon. Friend the Member for Northampton, South (Mr. Clarke) on his success in obtaining the debate. It has been characterised by a great degree of knowledge and intelligent contributions, not least because football is one of those subjects on which everyone has an opinion. It always generates much interest, debate and concern.

The hon. Member for Cities of London and Westminster (Mr. Field) was wrong; I am pleased to debate football. My hon. Friend the Member for Selby (Mr. Grogan) is right to say that despite the fact that I am a patron of Redditch United girls football club my dribbling skills leave something to be desired. However, I am pretty confident about my ability to explain the offside rule and am willing to do so, although not perhaps in this debate, Mr. Deputy Speaker.

Several hon. Members referred to the financial difficulties of football clubs, particularly lower league clubs. Although that is not strictly within the ambit of the debate, I will say that hon. Members have demonstrated in their contributions to the debate, and in much of their constituency work, their commitment to ensuring the continuation of the contribution that those clubs make to the community. We have heard from my hon. Friends the Members for Northampton, South and for Stoke-on-Trent, North (Ms Walley). They themselves often raise the tricky issue of salaries. Although I am here as a DTI Minister, I assure hon. Members that there is considerable interest and concern from my colleagues in the Department for Culture, Media and Sport. As my hon. Friend the Member for Leigh (Andy Burnham) outlined, there is already considerable support for the development of football through the Football Foundation and other Government initiatives.

Essentially, today's debate is about European competition policy and its implications for football. The issues highlighted by the case are summarised by the European Commission's statement of objections, namely that the exclusive nature of the present broadcasting arrangements erects barriers to broadcasters other than BskyB that may wish to transmit live coverage of premier league matches; and the arrangements prevent clubs from exploiting the rights to those premier league matches which are not shown as part of the core contract.

Notwithstanding our passion for sport, commercial sport is an important economic operation and, as such, it cannot and should not be exempt from the terms of competition law. The Government support the Commission and the premier league working together to make the sale of football rights as competitive as possible, as that benefits the broadcasting market and fans who watch football on television.

We need to set this issue in the context of competition law, and in particular in the competition framework of the UK. The Government believe that a strong competition policy benefits consumers. In particular, we have modernised the UK's competition law to give the competition authorities independence to investigate sectoral markets under clear competition principles. We have moved away from public interest tests by taking politics out of competition decisions, which will instead be taken by expert independent competition authorities using competition-based tests. Similarly, the Government support a rigorous enforcement of the competition rules by the Commission, acting independently on the basis of competition criteria. The Commission enforces the EU's competition rules and considers individual cases under those rules. Agreements between undertakings that restrict competition between member states are prohibited.

Several hon. Members referred to article 81 of the EC treaty and have asked about exemption. Exemption from EC competition rules is possible. There are four conditions listed under article 81(3) that must be satisfied if an agreement is to be exempted from a general prohibition. I do not intend to read these out, but in summary the test is that the restrictive aspects of the arrangements in question have to be indispensable to improving the product, benefiting consumers—perhaps fans or viewers—and encouraging solidarity, which is, as we have discussed, a fair distribution of broadcasting revenues between clubs. However, in this case, the Commission does not consider that an exemption under EU competition rules is justified, because it does not believe that exclusivity of coverage is essential to those features of the present arrangements that serve to improve the premier league product. Solidarity is important for sport and I know that the Commission recognises that.

I refer my hon. Friend to the report by the Select Committee on European Scrutiny, which considered the Helsinki report and had concerns about where to draw the line in respect of competition law on professional sport. There was a view that the Minister at the time had not scrutinised the issue. Has my hon. Friend found the time to go back to it? There is an important distinction between professional sport and the economic competition aspect.

My hon. Friend makes an important point, but I want to come to the characteristics of sport and the extent to which they have been considered in the debate. In relation to solidarity, the point of a league is that there is competition, which involves more than one club, and redistribution is necessary. I welcome calls from hon. Members to improve redistribution, notwithstanding the fact that the premier league has a good record in that respect compared with similar leagues. The question is whether exclusive selling is necessary for solidarity; there is a relationship between them, and a balance must be found.

Several hon. Members raised the special characteristics of sport in relation to whether the competition rules that I outlined—not least in respect of the Nice declaration of 2001—should be predominant in these cases. Arguments in support of exemption must be made in terms of the economic facts of the case. However, the Commission has indicated that it will have regard to sport's special characteristics.

The Government believe that exemptions under EC competition rules, tempered by the Nice declaration approach, form an adequate basis for assessing competition issues in sport. The Commission indicated in the statement of objections, which opened the present case, that it had already considered the special characteristics of the arrangement in framing its overall approach. That is reasonable; it is entirely likely that any joint arrangement that had comparable restrictive elements in a different, non-sporting, industry would already have been struck down. Although I understand my hon. Friends' frustrations, it is not necessarily the case that the specific characteristics of sport have not been, and cannot be, considered in this case.

That is the nature of competition policy, but it is not the whole story. Hon. Members rightly expressed anxiety about the health of the game and the interests of the fans. The Government are aware of the wider contribution of football, and have made a substantial investment in football as a means of taking forward key policy objectives in health, social cohesion and sports ground safety.

Premier league and other football clubs are centres of local communities, and we support the widest possible distribution of television and other income to all of them. We know, too, that the success of the premier league is closely bound up with the wider health of football in England; the premier league's support for the game from the football league to the grass roots could suffer if its broadcasting revenues were substantially reduced, which could affect football at all levels.

No, I am short of time.

We should be aware of the market situation. For example, independent analysts suggest that the value of football rights for potential broadcasters may have weakened, notwithstanding the competitive circumstances in which the tenders might be made. It is for the premier league to make its case and respond to the Commission's concerns, especially on issues such as solidarity where the premier league needs to show that the link between solidarity and joint selling cannot be broken without harm to the game. It is for both parties to consider an acceptable form of the final repackaging of broadcasting rights. The devil lies in the detail of any such conclusion and the premier league and the Commission are best placed to consider the position of other interested parties, including the fans and the broadcasters.

Hon. Members pushed me on what the Government may or may not do. I have made clear our position of independence with respect to competition legislation, but we are actively encouraging the premier league and the Commission to work together to reach a mutually agreeable solution, with the game, the fans and the viewers in mind. We shall continue to repeat that message.

Although we are rightly not intervening in the case itself, my right hon. Friend the Secretary of State for Trade and Industry has spoken with Commissioner Monti to make it clear that we want an early, equitable and effective solution and that we have concerns for the game and for the interests of the fans. In particular, and in response to specific concerns, my right hon. Friend emphasised that competitive joint selling aids the game as it allows the redistribution of profits from the premier league to the grass roots. We need to take advantage of good sense to ensure that the premier league and the Commission can conclude their negotiations as soon as practicable to bring certainty back into the game and to deliver many of the objectives shared by all of us involved in the debate today.

Area Cost Adjustment (Worcestershire)

11 am

I begin by welcoming the Minister to his new role, and I make it clear from the outset that he is absolved of any responsibility for past decisions to which I may refer, and that any criticisms that I make of the Department for which he now speaks do not reflect on him.

I intend to make the case that the lack of any area cost adjustment top-up has a direct and adverse impact on public services in Worcestershire, and that if action is not taken to rectify the situation, the problem will get worse. I will refer mostly to the impact on education, but similar arguments also apply to other services provided by the county council.

I welcome the massive increase in revenue spending since 1997, especially in schools. The past few weeks have been difficult, as school funding became an issue, but it cannot be disputed that there has been a vast increase in education spending since 1997. I also want to place on record my belief that the new formula spending share, which, from April, replaced the old standard spending assessment, is an improvement, because children in Worcestershire are now treated in the same way as children from other parts of England, except with regard to the area adjustment. The basic pupil entitlement is the same wherever a child lives: the deprivation top-up applies to Worcestershire in the same way that it does elsewhere, and the sparsity factor is applied to sparsely populated areas in Worcestershire at the same rate as it is to other rural counties.

However, my welcome of the new system stops there. The area cost adjustment is added to the formula spending share in some areas but not in others. Worcestershire does not receive the area cost adjustment, but our neighbouring councils—Dudley, Birmingham, Warwick and Gloucester—do receive it. For all services in Worcestershire, the lack of the area cost adjustment top-up means the loss of some £10 million.

The area cost adjustment is primarily an adjustment to compensate local authorities that face high labour costs. The new earnings survey of average wage levels is used to calculate those higher costs. The logic applied by the Office of the Deputy Prime Minister suggests that high labour costs in a council area mean that local authorities have to pay more to attract and retain staff because the competition for labour results in high salaries.

However, when I have asked parliamentary questions of the Department of Health, the Department for Culture, Media and Sport and the Office of the Deputy Prime Minister, I have been told that they have no evidence of variations in salary levels among key public sector staff such as social workers, librarians or accountants. Without such evidence, why should those wage supplements be put in place?

Moreover, the new earnings survey is based on wages earned where people work, not where they live, and that leads to a gross inconsistency. The deprivation factor and the sparsity factor are based on where people live, but the area cost adjustment is based on where people work. The flaw in the approach of the Office of the Deputy Prime Minister means that an area that pays workers well, but to which those workers commute, can attract an area cost adjustment top-up for that local authority at the same time as that authority may attract a significant top-up for deprivation because it is relatively poor. The logic that is used does not stand up to scrutiny.

Large urban centres such as Birmingham will always attract higher salaried workers, as does the square mile in London. However, further out from the centre, in the suburbs, the wages earned will be lower, and that also tends to be where the workers live. That scenario applies to the west midlands: Birmingham and Coventry are the centre, whereas people typically live in places such as Worcestershire, but do not earn their living there. The daily traffic flows along the M5 and M42 are testimony to that. In my opinion travel-to-work areas are—[Interruption.]

Travel-to-work areas are more appropriate for calculating the area cost adjustment, but the Office of the Deputy Prime Minister ignores them. Travel time from Worcester city—[Interruption.]

Order. The fire alarm will clearly persist, so I shall suspend the sitting. I assure the hon. Gentleman that I will allow him some injury time.

11.5 am

Sitting suspended.

11.6 am

On resuming

Order. I am reliably informed that the fire alarm has been disconnected, so we can smoulder in silence. We will have one minute of injury time.

Thank you, Mr. Deputy Speaker. I am always surprised at the lengths to which some people will go to stop Worcestershire getting a decent hearing in this place, but that takes the biscuit.

Travel time from Worcester city in the south of the county to Birmingham is about 40 minutes, which is not excessively long by London standards. However, from towns in the north of the county, such as Bromsgrove, it is a mere 20 minutes' commuting time to the heart of Birmingham. That explains why so many people choose to live in Worcestershire but enjoy the higher salaries earned in Birmingham. Places such as Worcestershire have to pay higher salaries to attract key staff because of the easy commute to the conurbation, where people's earnings can be so much higher. Ironically, on the grounds that the ODPM uses to justify its payment to Birmingham, Worcestershire should receive the area cost adjustment.

The area cost adjustment based on the new earnings survey is flawed, and it will get worse. Yesterday, I received a document from Advantage West Midlands, the local regional development agency, which contains some useful statistical information. For example, it gives average weekly wages for areas in the region, based on the labour force survey, not the new earnings survey. The difference between the two surveys is that the new earnings survey calculates wages where they are earned, but the labour force survey calculates wage levels for workers based on where they live. My argument is that the labour force survey fits best with the top-ups that I mentioned earlier, and it would be far more logical to use that.

The labour force survey tells us that average wages are higher in Worcestershire than in all districts of the west midlands conurbation. For the west midlands region as a whole the average wage is £319.03; for Birmingham it is £294.38; for Sandwell £265.47; for Dudley £324.08; for Walsall £283.81; for Wolverhampton £299.95; for Coventry £325.87, and for Worcestershire £341.96. If the labour force survey was used, the area cost adjustment would be paid to Worcestershire and not to the authorities that receive it under the current system.

What other evidence is there to back up that argument? Average house prices are far higher in Worcestershire than they are in the conurbation and only high earners can afford them.

I said that I would not intervene on the hon. Gentleman but I want to reinforce his point by referring to teachers' salaries. The average teacher's salary is £26,940 in Dudley and £26,710 in Gloucestershire, both areas that receive the area cost adjustment, but in Worcestershire it is £27,010. Teachers', salaries bear out what the hon. Gentleman said—that Worcestershire should receive the area cost adjustment.

I am most grateful for the hon. Gentleman's intervention. He and I do not always see eye to eye, but on this occasion we are united with other hon. Members in supporting Worcestershire's case. Although teachers' salaries on their own are not the silver bullet, they add to the weight of evidence for Worcestershire to receive the area cost adjustment.

More expensive house prices would be paid by higher earners. That makes sense. If we compare house prices in Worcestershire with those for the west midlands as a whole, we find that for the west midlands region the average price is £105,645, for Birmingham it is £98,070, for Dudley £89,901, for Sandwell £69,736, for Walsall £87,474, for Wolverhampton £75,691, for Coventry £85,297 and for Worcestershire £130,542. If we add to that the impact of the resource equalisation that took place this year, which reflects the council tax base, which in turn reflects house prices, we find that grant was allocated away from Worcestershire because it was deemed to be a wealthier area. The new earnings survey disadvantages Worcestershire, and the labour force survey better reflects the reality and experience of what is happening in the west midlands.

As a side issue, the Office of the Deputy Prime Minister views Hereford and Worcester as the basis of the new earnings survey, despite the recent divorce that split the two counties again. Worcestershire has a natural tendency to look north to the west midlands conurbation rather than west to Herefordshire; Herefordshire is a lower-wage economy than Worcestershire. Combining them merely lowers the average wage level, making it more difficult for Worcestershire to qualify for the area cost adjustment top-up. I ask the Minister to give me an assurance that in future Worcestershire will be treated separately from Herefordshire for the purposes of calculating area cost adjustment.

Apart from the flaws already highlighted in its calculation, area cost adjustment based on the new earnings survey is applied unfairly even in the west midlands conurbation. I accept that wage levels calculated by the new earnings survey are higher for workers in Birmingham, compared with those in Worcestershire; the same is true for Warwickshire and Gloucestershire. However, according to the new earnings survey, Dudley and Walsall have lower average wage levels than Worcestershire, yet they receive the same area cost adjustment top-up as Birmingham. They earn less, but they are treated as though they earn more. The wage levels in Sandwell are close to those in Worcestershire; yet Sandwell gets the area cost adjustment top-up and Worcestershire does not.

If the Minister were to take just two elements of the FSS formula for primary and secondary schools only, it would add up to some £7 million paid to local authorities, which, strictly speaking, do not earn it, even using the flawed logic of the ODPM's rules. In a former life I was employed to look at cost reduction programmes and I have a quick point for the Minister. He could stop paying £7 million to the authorities that do not strictly earn it: we will have £3.5 million in Worcestershire and his Department can keep the remainder to spend on other areas.

I know that many people view Worcestershire as a leafy and prosperous county, and the labour force survey suggests that it is, but the Minister may not be aware of some other disturbing facts. According to the index of deprivation produced by Oxford university and made available on the website of what was the Department of the Environment, Transport and the Regions, in Worcester city five of the 12 electoral wards are in the bottom 25 per cent. of educational achievers. Rather like a 20 per cent. cut in spending proposed by some politicians, being deprived of the area cost adjustment, in contrast to our neighbours, will not help.

I looked for evidence that Birmingham, Gloucestershire, Warwickshire and Dudley found it difficult to recruit teachers, compared with Worcestershire. If that were the case, it would be manifested in higher pupil-teacher ratios. I have obtained the latest figures from January 2003, supplied by the Department for Education and Skills. The average secondary school pupil-teacher ratio for England is 17:1. The average ratio in the west midlands is 17:1, but Worcestershire has the ninth highest ratio in England at 18.1:1 compared with Birmingham at 16:1, Dudley at 16.9:1, Warwickshire at 17.1:1 and Gloucestershire at 16.8:1. The evidence shows the opposite of what the ODPM believes is happening. If recruitment is difficult, the figures suggest that it is harder in Worcestershire than anywhere else in the west midlands. Can the Minister explain why those named authorities have been given 2 per cent. more funding?

Local head teachers have raised their concerns about a brain drain of teaching staff from Worcestershire to the west midlands conurbation, which was a finding of their recent survey. With that in mind, will the Minister ask his colleagues in the DES to undertake specific research into the movements of teaching staff between local council areas in the west midlands to see precisely how the area cost adjustment is impacting upon recruitment and retention?

Being surrounded on three sides by local authorities that receive area cost adjustment means that staff will be encouraged to migrate away from Worcestershire, attracted by the higher pay levels that can be afforded elsewhere because of the area cost adjustment. In turn, that will widen the average earnings gap measured by the new earnings survey, which measures where people work and not where they live. A vicious cycle will commence in which Worcestershire will lose out. Teachers will be recruited into neighbouring Birmingham, for example, which means that, all other things being equal, the average wage of people working in Birmingham will rise. The gap will widen and when the area cost adjustment is calculated average wage levels will have gone up in Birmingham, which will therefore get a greater area cost adjustment, and so on.

I cannot accept that that is what the ODPM has in mind and I urge the Minister to consider these three options: first, changing from using the new earnings survey to the labour force survey; secondly, some form of taper for those areas that border recipients of the area cost adjustment, which would give Worcestershire some relief—in principle, by acknowledging the existence of fringe and non-fringe parts of south-east England, the ODPM has already partially accepted the logic of that approach—thirdly, using the west midlands region as the basis for calculating area cost adjustment, which would better reflect the realities of travel-to-work patterns. In the short term, that would give the county much-needed respite ahead of what I hope will be a more fundamental review of how the area cost adjustment is calculated.

The area cost adjustment calculation is fundamentally flawed and should be reviewed urgently ahead of next year's settlement. As applied now, it produces perverse results and will in future years make the funding gap worse. Worcestershire is surrounded on three sides by areas receiving area cost adjustment and is therefore disadvantaged more than most. Despite welcome increases in resources, the system used by the ODPM has created a vicious cycle, which, if it is left unchecked, will act against my constituents. I know that the Department wants a period of stability, but it must surely be concerned about the adverse impacts that I have described today.

I do not expect the Minister to make a decision today, but I hope that he will go away and examine what can be done for Worcestershire in the light of one year's experience of the new funding system. I would then like to bring a delegation from the county to meet him, perhaps in September, to examine what progress has been made.

11.19 am

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister
(Phil Hope)

I congratulate my hon. Friend the Member for Worcester (Mr. Foster) on securing the debate, which has given us the opportunity to discuss the area cost adjustment. I also want him to know that I was not guilty of starting the fire alarm. I am grateful that my first Westminster Hall debate will be a detailed analysis of the complexities of local government finance.

The Government have high aspirations for local government. We continue to match those aspirations with proper investment, as demonstrated by the generous local government settlement that we announced in February. We have also introduced a new funding formula for local government following an extensive review that involved local and central Government.

However, as my hon. Friend illustrated powerfully, the area cost adjustment remains an issue that engenders debate. The area cost adjustment is the element of the local government funding formula that reflects the cost of recruiting and retaining staff in many areas of England and Wales. There has always been controversy about how it is calculated and the geography to which it is applied, and there have been numerous attempts to find a better solution.

I shall return to those difficult issues shortly. First, I shall put the debate in a wider context by referring to our decisions on the local government financial settlement. It is worth reminding hon. Members of the good increases in grant that we have been able to provide to local authorities generally. This year's settlement provides an overall increase in general grant of 5.9 per cent. and has allowed us, for the first time ever, to ensure that all local authorities receive a grant increase that is at least above the rate of inflation. The settlement has enabled us to continue the considerable investment that we have been making in local government since we took office. That investment has meant a real-terms increase in grant of 25 per cent. since 1997. That compares, as I think my hon. Friend acknowledged, with the 7 per cent. real-terms cut in grant that councils saw in the last four years of the previous Government.

None the less, some local authorities have expressed concern, as my hon. Friend has, about the pressures that they face this year. I understand those pressures and am aware that many councils still face difficulties. However, the increase in total Government grant, including special and specific grants, has been £3.8 billion—a cash increase of 8 per cent. this year.

Authorities in Worcestershire have benefited from those extra resources. Worcestershire county council received a grant increase of £15.5 million, or 6 per cent., which is above the average for county councils. Two district councils in the area received grant increases at the 12.5 per cent. ceiling that was set for that type of authority, and one benefited from our guarantee of a grant increase at least above the rate of inflation. I think that my hon. Friend would agree that that is not an ungenerous result for his area.

Since taking office in 1997, we have wanted to ensure that councils have the funds to deliver better services in line with their priorities. We were concerned that the former standard spending assessment system was overcomplicated and unintelligible to local government and the general public, particularly in the case of education, about which my hon. Friend spoke so eloquently. We concluded that that could not be good for central-local relations or local democracy and accountability, so we began the difficult process of formula review. That review dates from September 2000 and the Green Paper entitled "Modernising Local Government Finance", which asked for views on the basic form of the system. Following an extensive period of development and consultation, we have a new formula that is a significant improvement on the SSA system.

One consistent message, to which my hon. Friend alluded, was that local government wanted more stability and more predictability in funding levels so that it could concentrate on medium and long-term planning for improved service delivery.

Yes, but in case the hon. Lady's question is specifically on the area cost adjustment, let me say that I am about to discuss that.

I congratulate the Member for Worcester (Mr. Foster) on the excellent case that he put to the Minister. I am sure that the Minister will consider it in the fullness of time. He rightly points out that his Government were elected with a view to changing local government funding and making it fairer. However, the simple fact is that it is not fairer for children in Worcestershire, and the situation is getting worse. The area cost adjustment, which I am pleased to learn the Minister is about to deal with, could make all the difference to children in Worcestershire getting a fair crack of the whip.

I thank the hon. Lady for that comment. In a couple of years' time, it will be interesting to debate the fairness of increasing investment in local services as opposed to cutting them, as the Conservative party wants to, by 20 per cent.

Let me turn to the area cost adjustment. Over the years, numerous research projects have considered whether a solution can be found to the thorny question of compensating authorities in high-wage areas. We have conducted research openly, and local government has had every opportunity to scrutinise and debate those projects. The most recent example of that is the formula review subgroup, which was set up in spring 2001 to take forward work on reforming the local government grant distribution formulae. Its membership was drawn widely from central and local government. The aim was to allow all interested parties to contribute to the debate. The subgroup met on many occasions and 26 papers on the area cost adjustment alone were tabled by both central and local government. That is all available on the Local Government Association website. In the summer of 2002, we entered into a consultation on options for the new funding formula. In all, five area cost adjustment options were consulted on. Comments on those options were received from a wide range of stakeholders, including Worcestershire county council.

During the formula review, two main ideas for reforming the area cost adjustment were considered: the specific costs approach and the approach based on work by Professor Robert Elliott. The specific costs approach argues that the area cost adjustment should be based only on what authorities in high-wage areas already pay their staff over and above national pay scales. I know that is not what my hon. Friend the Member for Worcester has been talking about this morning. Under that system, payments that are easily measured, such as London weighting or the travel and housing supplements that some workers receive, do not reflect all the costs of being an employer in a high-cost area.

Grade drift or quality drift, by which I mean hard-pressed councils employing less experienced staff in order to fill a post, or moving people up pay scales by inflating their responsibilities, are difficult to put a cost to, as are the increased benefits offered to attract staff, such as more generous leave entitlements. In addition, councils in high-wage areas have higher non-pay costs as a result of their difficulty in recruiting and retaining staff. Rapid staff turnover and problems filling vacancies translate into increased agency fees, higher advertising costs and more staff training. Finally, if we based the area cost adjustment on what councils paid last year to recruit and retain staff, we would create an incentive to bump up the budget this year in order to obtain more grant next year. That would clearly be unacceptable.

For all those reasons, the specific costs approach was not taken forward. The second approach explored was the Elliott approach. Indeed that approach, researched by an independent review in 1997, forms the basis of the present area cost adjustment. Under that approach, detailed information from the whole labour market, together with information about employees, is used to establish local labour cost factors. Those reflect how much more, or less, people in one area are paid in comparison to another, purely as a result of local area characteristics.

We use new earnings survey data as the basis of that calculation for many reasons, including the fact that it is the largest source of information on wage levels across the United Kingdom, and the fact that it contains much detailed information on all workers who take part, such as their industry and occupation, their age, sex, and whether they are a full-time or part-time worker and in what area they work.

Although the labour force survey to which my hon. Friend referred contains much the same information, we do not use it in our area cost adjustment calculations. That is because the labour force survey is much smaller than the new earnings survey. We look at wages where people work because we want to gauge wage pressures in the labour market in which the local authority competes. We take account of wage pressures that councils face measured through local wages because councils are competing in that local labour market. Commuters' wage pressures are already accounted for in the local going rate. The Elliott approach is an enormous improvement on the old area cost adjustment, which, as my hon. Friend knows, used crude average wages calculated for a handful of occupations in crude concentric circles around London, to take account of increased wage costs.

One of the most frequently raised questions in the ACA debate concerns geography—by that I mean which authorities receive an adjustment and where the boundary lines are drawn. As my hon. Friend has said, some authorities, such as Worcestershire, have complained about being grouped into their pre-reorganisation counties for the calculation of the ACA. Worcestershire has also complained that it is just outside the boundary for the west midlands ACA area and faces the same wage pressures as its better-off neighbours, a point made by my hon. Friend this morning.

First, it is fair to say that the new geography for the area cost adjustment is a vast improvement on the old. Until this year, no council outside the south-east of England received an area cost adjustment, no matter how high its wage increases. Authorities within the south-east received an adjustment calculated using a very crude geographic approach using concentric rings radiating out of London, which did not reflect the geography of underlying wage pressures. When calculating the area cost adjustment now, we look at wage pressures throughout England and Wales. We have split the counties bordering London into fringe and non-fringe areas, reflecting the higher wage pressures that are associated with proximity to London. In that way, we have extended the coverage of the area cost adjustment beyond the artificial confines of the south-east to areas such as Cambridgeshire, the west midlands and Warwickshire, whose wage pressures previously went unrecognised.

I understand that, as my hon. Friend said, Worcestershire would like us to calculate an area cost adjustment value for it alone, instead of combining Worcestershire with Herefordshire. However, the difficulty is that in reforming area cost adjustments we have had to strike a balance between calculating the ACA on an ever-finer geography and producing factors for the formula that are reliable and stable over time.

The new earnings survey is the biggest wage survey in the country, but with a very fine geography its sample sizes can be quite low and the area cost adjustment factors in those areas can jump around unacceptably from year to year as a result of people moving into or out of the survey in that area. However, it is worth noting that if we had treated Worcestershire as an area cost adjustment area in its own right in the most recent 2003–04 local government finance settlement, it would not have received a higher area cost adjustment. Wages in Worcestershire are simply not high enough to lift it out of the lower limit floor mechanism within the ACA. It makes no difference whether Worcestershire is grouped with Herefordshire because its area cost adjustment remains unchanged. Competition from firms in higher-wage labour markets is already taken into account in the wage evidence that we use to calculate the area cost adjustment.

I understand my hon. Friend's concerns, particularly about funding education in Worcestershire. However, it is worth noting that Worcestershire received a 6 per cent. increase in its education formula spending. We have worked hard to improve the local government funding formula. I know that my hon. Friend would like to have a meeting with me and I am happy to respond positively to his request to discuss those matters further, but we are keen to maintain stability for local government funding for the next three years. I hope that he appreciates the importance of that for local government generally.

11.31 am

Sitting suspended until Two o'clock.

Regional Government (North-West)

2 pm

On a point of order, Mr. Deputy Speaker. I and a number of colleagues were almost late for this debate because we now have to take a tortuous route to this Chamber. There did not seem to be a lot of activity in Westminster Hall, so I wondered why the ordinary route for Members of Parliament should be closed. Could you clarify with the authorities what route we should take and could some clear signs be put up to show how we are supposed to go round the lift to get here?

I shall do my best to satisfy the hon. Gentleman's curiosity, having had a similar experience this morning. However, having had considerable experience on construction sites and being conscious of health and safety requirements, I know that it is important that potentially hazardous areas be rendered inaccessible to Members. The incident that caused attention to the roof of Westminster Hall happened some time ago and there has been activity for some time. The route is fairly well marked and I found it easy to follow. I am sure that other Members who were here before me this afternoon also found it easy.

I was able to find my way here, so the debate can begin.

I welcome this early parliamentary opportunity to discuss in greater detail the Government's proposed referendum on regional government in the north-west. Given that the Deputy Prime Minister told us all that there was a high level of interest in the north-west region in his proposals, I am sure that the Minister, who is new to his job, is brimming with confidence that our every word will be followed in the living rooms and workplaces of the north-west today. I wish that were so, but, sadly and as we all know, the truth is that there is no enthusiasm or excitement and precious little interest in the referendum in the north-west or anywhere else in England.

Many of us suspected that, but we now know for certain because the Government have helpfully provided us with the document, "Your Region, Your Say", which tells us just how uninterested people really are. Of the 7 million people in the north-west who were asked whether they wanted a referendum on regional government, just 3,947 responded, more than 43 per cent. of whom said no. In fact, just 0.03 of 1 per cent. said yes. That is three in every 10,000 and that is what the Deputy Prime Minister described last week as
"significant and widespread interest in holding a referendum".—[Official Report, 16 June 2003; Vol. 407, c. 22.]
His response reminds me of the East German Government who said after one bad election result that they needed to elect a new people.

The hon. Member for Knowsley, North and Sefton, East (Mr. Howarth)—he is not present today, but I spoke to him before this debate and have a high regard for him—spoke for many of us when he said of the statement last week that
"any close analysis of the consultation exercise would reveal that regional government is a preoccupation of the nomenklatura rather than the people—certainly the people in the north-west".—[Official Report, 16 June 2003; Vol. 407, c. 30.]

Is the hon. Gentleman aware that in Merseyside, more than 80 per cent. of those who replied were in favour of a referendum and that not a single local authority in the whole of Merseyside supports the views of my hon. Friend the Member for Knowsley, North and Sefton, East?

Perhaps the hon. Lady could help me by telling me how many people in the Merseyside area responded, and what proportion that was of the total number of people who were able to respond in the Merseyside region. I suspect that that number was extremely low.

MORI has conducted a significant poll. There are weaknesses in any sampling technique used in polling, but those represent only plus or minus a few per cent. What are the weaknesses in the MORI poll methodology that lead the hon. Gentleman to believe that it was wildly wrong in its assessment?

I made a previous career out of pointing out weaknesses in MORI polling, although as the general opinion polls change I have become less keen on that line. In Cheshire, the county in which the hon. Gentleman sits as a Member of Parliament, more than 80 per cent. of the people who responded said no to the proposal—in fact, the overwhelming number of replies were from Cheshire. One is therefore left wondering whether there was any point to that costly consultation charade, if the Government had no intention of paying attention to the result. However, that is now in the past, because the referendum will take place next year, whether we like it or not. It is therefore important to ask the Government some basic questions about that referendum and what is being offered to the people of the north-west.

The first thing that we need to establish is the ground rules for the referendum. Last week, the Deputy Prime Minister said that it would be held "next autumn." That could mean any time from September to December, if one were to stretch autumn a little. The boundary commission has already written to Members of Parliament in the north-west, saying that it plans to complete its work by 25 May 2004. Can the Minister give us a similarly precise view on when the referendum will be held? I assume that the civil service has already pencilled in a day in the Minister's diary, so why does he not tell us what that day is, either now or in his response at the end of the debate?

As part of establishing the ground rules, could the Minister also tell us something about the framework within which the "yes" and "no" campaigns in the referendum will operate? Does he know what the spending limits for the different campaigns will be? Moreover, since we now have a rough idea of when the referendum will take place, can the Minister tell us whether those spending limits are now in operation and, if not, when they come into force? Will they come into force when he tells us the date of the referendum? What will be the role of central and local government in the campaign? Will the Government be using taxpayers' money to promote the "yes" campaign and, if so, will local authorities be able to use such money to promote a "no" campaign? That last question will be of interest to many people.

There is also the question of turnout. The Regional Assemblies (Preparations) Act 2003 does not specify a minimum threshold for turnout, because the Government are not that stupid. However, the Minister for Local Government, Regional Governance and Fire said that if the turnout were "derisory", the Government would not proceed with an elected assembly even if the vote were "yes". Even the most ardent supporters of regional government are not expecting a high turnout in the referendum, so the question of what is "derisory" becomes very important. Would 10 per cent.—or 15 per cent.—be considered "derisory"? It is in the Government's own interests to set the hurdle now to avoid argument and controversy when the referendum takes place.

That brings me to the second point that I wish to raise today: the role of the existing north-west regional assembly. As the Minister may be aware, considerable concern has been expressed by all parties about the way in which that assembly has engaged in the debate so far. Last year, it conducted what it called
"a special … enquiry looking at the views of people in the North West about the future of our region."
It then published "Soundings", a series of glossy leaflets—I assure hon. Members that they were glossy, although I have only photocopies to hand—on the results of the inquiry.

Even the assembly's supporters would be hard pushed to call that "special enquiry" a model of balance. It was more like reading reports of tractor production in the Urals. I shall read some examples of its investigative journalism. For example, a splash headline screams, "Economic and Social Partners back directly Elected Assembly." However, when I investigated further, I found that the economic partners had said that regional assemblies were more of a distraction than a help. That, however, is not reported. Moreover, when the CBI in the north-west came out against regional government, the headline in the north-west regional assembly's supposedly impartial document was, "CBI's London Focus Just Won't Wash in the North West." The document continues:
"Parochial and provincial—that was the judgement of the North-West Regional Assembly—not on the regions, but on the London-centric views expressed by the CBI."
Then we have my favourite, "Accountants back assembly"—an exciting story until I discovered that it was based on a poll of 69 chartered accountants. The important thing to note is that all this propaganda has been paid for out of public funds. Labour-run Lancashire county council is so concerned that it has withdrawn funding from the north-west regional assembly on the grounds that it is illegally spending taxpayers' money. The council leader said:
"To continue our funding would leave us in a vulnerable position and the legal position is clear—it is an incorrect use of public money to run a campaign on what amounts to a political issue."

Could the hon. Gentleman tell us who funded Cheshire county council's anti campaign?

Local authorities of all political persuasions made their views clear. The point is that the north-west regional assembly is prohibited from engaging in this sort of activity.

I wrote to the Minister's predecessor, the former Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Shipley (Mr. Leslie), to express my concern. In his reply on 14 March, he confirmed what I just told the hon. Gentleman:
"The Government has spelled out to Regional Assemblies the distinction between assessing the regional appetite for a referendum and campaigning for an elected regional assembly … Following suggestions in the House that this distinction had not been observed, the Government wrote to the leader of the North West Regional Assembly asking for reassurance that this was not the case. That assurance has been forthcoming."
Where is that assurance? I should like to know why the Minister believes that he has been assured and why Lancashire county council believes that it has not.

If the Government are not to be the custodians of probity on this issue, we must turn to other organisations. I wrote to the Comptroller and Auditor General, and received a reply late last week that makes it clear that the National Audit Office will now investigate this. My hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) wrote to the Audit Commission, from which he received a similar assurance. We may receive answers, but it is a shame that we must turn to those organisations.

Is my hon. Friend aware of comments by David Jennings, the district auditor. In a telephone conversation in May 2003, he said:

"So far as I can see, some of the publicity issued by NEA could be seen to be contravening Part II of the Local Government Act 1986 and DoE Circular 20/88 Code of Recommended Practice on Local Authority Publicity".

I saw that comment, which confirms my concerns. I suspect that this is one of those things that will play out in the months and years ahead as steamroller organisations, such as the Audit Commission and the National Audit Office, do their job.

I ask the Minister to confirm today that the northwest regional assembly can have no role in promoting one side or the other in the forthcoming campaign. Furthermore, could he give us the commitment that if the people of the north-west vote no in the referendum, we can get rid of this unloved and unwanted north-west regional assembly once and for all?

The third area that I want to discuss is the cost and the powers of the proposed elected regional assembly. The Government say that they will publish a draft Bill that sets out the powers and functions of the assemblies before people are asked to vote for them. However, the preamble that could appear on the ballot paper has already been written into legislation. It states:
"You can help to decide whether there should be an elected assembly in the north-west region. An assembly would be responsible for a range of activities that are currently carried out mainly by central government bodies".
I emphasise the latter part of that sentence:
"carried out mainly by central government bodies".
We have seen precious little evidence that that is the case. Indeed, when the hon. Member for Jarrow (Mr. Hepburn) asked the Deputy Prime Minister last week to give an assurance that no powers would be transferred to regional assemblies from existing metropolitan authorities, he replied:
"My hon. Friend must be aware, if he considers the current housing strategy, that in some cases we are transferring powers—from counties, for example. We have to make a judgment and the Bill will contain exact provisions for what we will do".—[Official Report, 16 June 2003; Vol. 407, c. 39.]
That answer confirms what many of us, including the Local Government Association, have feared all along: when it comes to the crunch, Whitehall will not give up real powers to these assemblies, and such powers that they have will come from local government. In short, it will be an act of centralisation not devolution.

If the Bill's exact provisions make it clear that several functions that local authorities currently perform will be transferred to regional assemblies, will the Minister assure us that that will be spelt out to people, and that there will be no misleading statement on the ballot paper that says that
"the … assembly would be responsible for a range of activities that are currently carried out mainly by central government bodies"?

Turning from power to money, will the costs of elected regional government also be spelled out to people before they cast their vote? In a comprehensive and candid letter written to me last year, the Minister's predecessor, the hon. Member for Shipley, told me about the likely cost of establishing and running an elected regional assembly in the north-west. He estimated that it would cost up to £30 million to set up the assembly, which I understand central Government will pay, and about £25 million a year to run it. He says that £5 million of those running costs would be directly offset by staff transferring from other bodies such as the Government office for the north-west, but that the remaining £20 million would be new expenditure arising each year from
"the costs of staff to support assembly members, pay of the members, accommodation costs and provision for assembly elections".
In other words, £20 million of new money will have to be found to pay for the new politicians.

If we accept for one moment that the Government estimate is correct, where will that £20 million come from? The hon. Member for Shipley said in his letter to me:
"Most of these running costs will be met from the assembly's general government grant."
However, the Minister of State for Housing, Planning and Regeneration, said:
"There will be no new powers, no new money"
for regional assemblies. There will simply be
"a different way of scrutinising the vast amounts of government expenditure".—[Official Report, House of Lords, 28 April 2003; Vol. 647, c. 482.]
Let us get this straight, so that it is clear to everyone. The £20 million running costs of the assembly will mostly be met by general government grant, but there will be no new money in that grant to pay for it. In other words, it will come from existing money going to the north-west. That is not money currently being spent on administration: the Government have already subtracted £5 million to take account of that. It is £20 million that is currently being spent on other things such as public services, which will now be spent on politicians.

Not all the money will come from general government grant. The previous Minister also wrote to me saying:
"We believe that people in any region with an elected assembly should make some contribution towards its running costs. The contribution of council taxpayers to the running costs of an assembly would be equivalent to around 5 pence per week for a Band D council taxpayer".
That 5p precept on council tax bills is separate from the power being given to the regional assembly to raise its own money and increase its own taxes. Will that precept to pay for the administration be set by central Government, taking into account the grant that they give in any year? Will the assembly have any say in what the precept will be?

The previous Minister also mentioned in his letter to me accommodation costs, an innocuous phrase, but one that should set the alarm bells ringing for anyone who has followed events in Scotland and Wales since devolution. We all know that the new Scottish Parliament building will cost 10 times what the people of Scotland were told it would before their referendum. Have the Government made any provision for a new building for an elected north-west regional assembly? Will that be a decision for the assembly to take? Where will it sit to begin with, if it decides to have a new building?

The cost of all the new regional politicians—their staff, their accommodation, their pensions and their salaries—will be paid for by extra taxes and money being spent on other things in the north-west. Will that be spelled out to people before they are asked to vote for it? What will the cost be of the local government reorganisation that takes place? As my right hon. Friend the Member for Haltemprice and Howden (David Davis) continually points out to us, the one-off cost of abolishing Humberside county council was £53 million. What is the estimated cost of abolishing Cheshire, Lancashire and Cumbria? Cheshire county council reckons that its costs alone will be £60 million. Do the Government agree? What about the rest of the region? Will local taxpayers have to foot the bill? The Government must have done their sums, so perhaps the Minister can tell us today what they are today.

I wish finally to ask the Minister about the assembly's democratic accountability. The Government say that a north-west regional assembly will bring government closer to the people, but will the Minister confirm that the county of Cheshire may have just two representatives in the assembly, each representing about a third of a million people? No wonder an organisation such as the National Farmers Union has warned today:
"There is every reason for the farming and rural community to fear that its voice will be swamped".

I do not know whether the hon. Member for Manchester, Blackley (Mr. Stringer) will raise again a point that he raised earlier. Will the electoral system being considered almost guarantee, as he fears, the British National party representative a place on the regional assembly? It is something that I suspect no member of the Committee would want to see, and I urge the Minister to take a hard look at that problem.

When the people whom I represent are asked where they come from they say Knutsford or Wilmslow, or they may say Cheshire. If they are abroad, they may say England or Britain. However, none of them would ever say that they were from the north-west administrative region. I suspect that the same is true of the people represented by other hon. Members here today: they are Mancunians, Liverpudlians, Lancastrians or Cumbrians, not north-westerners.

Is the hon. Gentleman aware that a recent MORI poll showed that in fact there was over 90 per cent. identification of north-west people with their region?

Given that the people of Cumbria cannot even decide whether they are in the north-west or the north-east, I do not think that those polls are entirely reliable. In the next couple of years, we will be happy to consider opinion polls and issues such as trust and voting intention, but all the evidence that I have seen shows that people do not identify themselves as north-westerners. The north-west administrative region exists only on maps in Whitehall. It does not exist in the hearts and minds of the people who live in the north-west, and it is foolish, if not dangerous, to build political structures on the shifting sands of administrative convenience.

Government, local and national, should be rooted in the existing identities and loyalties of people, and those loyalties are clear. The loyalty of the people whom I represent is to the county of Cheshire—one of the oldest political identities in the western world. The loyalty of other people in the north-west is to cities such as Manchester or Liverpool. If we care about bringing government closer to people, we should be taking powers from Whitehall and giving them to county councils and city councils, not creating a costly, bureaucratic and undemocratic new tier of regional government.

The people in the north-west did not ask for a referendum on regional government, but they are going to get one. They deserve to know in advance how much that new talking shop for politicians will cost, who will pay for it, where it will get its powers from, how the referendum campaigns will be paid for, how we will prevent the BNP from getting a seat, whether the existing north-west regional assembly will survive a no vote, what counts as a derisory turnout and when the polling day is. We expect some answers from the Government today.

I shall end, a little unusually, with an appeal to my own party. I know how passionately opposed most Conservatives are to regional government in the north-west, and we could be tempted to fight that battle alone, but that would be a huge mistake. We must build as broad a coalition of support as possible. We have powerful allies in other political parties, especially in the north-west Labour party. We must draw together those people, who may oppose the Government's plans for their own perfectly legitimate reasons with which we do not agree. Some may feel that the plans do not go far enough. That is not important. We are being asked to vote on the Government's plans as put before the people.

We must bring trade unions, businesses, voluntary groups and local councils together in that referendum coalition. We must share platforms and make common cause, as I did the other day with a Liverpool Labour MP and a Liberal Democrat parliamentary candidate. We have the arguments on our side. Our opponents have to persuade people in the north-west to vote for more politicians, higher taxes, more bureaucracy, less accountability and the abolition of our counties. If we cannot win that campaign, I do not know what campaign we can win.

Order. The Chair already has six firm notifications of a desire to contribute to the debate, to which I see a further two have been added. I remind hon. Members that it is customary practice in a 90-minute debate to commence the first of the three winding-up speeches 30 minutes before termination of the debate. That means that we have 37 minutes left for open discussion. I appeal to all hon. Members seeking to participate actively to bear that time constraint in mind when they make their comments, which should be clear and pertinent. I hope that hon. Members will also consider that time constraint when making or accepting interventions.

2.23 pm

I congratulate the hon. Member for Tatton (Mr. Osborne) on securing time for this important debate about the referendum for a regional assembly in the north-west. I do not know whether he has done the arithmetic, but present at the debate are about a quarter of 1 per cent. of all hon. Members in the House of Commons, which is a considerably higher turnout than that for the response to the consultation in the north-west and anywhere that that took place.

I will try to curtail my remarks, Mr. Deputy Speaker, but I should like to refer back to the 2001 Labour party manifesto. I guess that most people do not read that very often, but I looked it up this morning and it was quite interesting. It states:
"In 1997 we said that provision should be made for directly elected regional Government to go ahead in regions where people decided in a referendum to support it and where predominantly unitary local Government is established. This remains our commitment."
It was that commitment in the 2001 election manifesto that led to the Regional Assemblies (Preparations) Act 2003. That is an imperfect translation of the manifesto commitment, which talked about regional government and did not talk about going out and testing the water. It referred to a commitment.

We have had a rather bizarre exercise in which people were asked whether they thought other people were interested in a regional assembly. It was truly pathetic to get about 4,000 responses—both for and against—in the north-west when we have had the regional assembly spending money in an ultra vires fashion. The Government have a responsibility to take more action than they have done, and I have written to Ministers about that. Money has clearly been spent unlawfully on campaigning. It should not be left to other hon. Members to bring in accounting officers to deal with that.

With all that activity and hon. Members from different parties campaigning in favour, all we got were 4,000 responses: 2,200 in favour and 1,700 against. That is not any basis on which to hold a referendum in the north-west. The referendum is taking place, as was said repeatedly in the Committee of the Bill that became the 2003 Act, because my right hon. Friend the Deputy Prime Minister believes he can win referendums in the north-west, the north-east and Yorkshire and Humberside. I think that he is wrong. When the 6 million people in the north-west of England understand what is being offered to them, they will reject it.

I think I have the answer to some of the questions asked by my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) about why opinion polls give the answers they do. People have a strong distrust and dislike of the south-east in the north-west. They believe that they do not get a fair deal from central Government in London. We should get a fair deal. I share that feeling with many of my constituents, but that is not reflected in what we are getting. First of all, what is wrong, Mr. Cook—

Order. I would be remiss in my duties were I not to remind the House that when it took the decision to hold sittings here it decided that the occupant of this Chair should be referred to as Deputy Speaker.

I do apologise, Mr. Cook. [Interruption.] I apologise, Mr. Deputy Speaker. You are labelled as such, as well.

I was explaining what was wrong with what is proposed. I return to my campaign against the abolition of the Greater Manchester county council between 1983 and 1985. In Greater Manchester we would have liked a referendum on that issue, and my guess is that people would have voted to keep the county council at that stage. We were not given that choice. None of us campaigning against that abolition asked for the people of Cheshire, Lancashire or anywhere else to have a say on it.

Although the Bill was improved so that there is now a choice on the ballot paper between two different forms of local government reorganisation where there are two tiers of local government, the effective decision on how 42 councils will be changed—whether they will be abolished or amalgamated—will he taken by the 60 per cent. of the people who live in unitary authorities. I should have thought that it was wrong in 1984 to give people outside the area a definitive say in whether local government was reorganised, and it is wrong in 2003. That is wrong in principle, but that point probably will not persuade a lot of people because it is principled, democratic argument.

If my hon. Friend is going to go back in history, will he go as far as to suggest that the parts of Cheshire that are now in Greater Manchester should be returned and decisions taken on that basis? Surely that is a ridiculous argument.

I do not think it is a ridiculous argument; it is about abolishing authorities. The major local government reorganisation in 1972 created a uniform system of two tiers throughout the country. Although some smaller authorities disappeared, there was a consensus between both parties that there should be changes. Most of us in the Labour party objected to the abolition of the GMC; we would not have wanted people outside the area to vote on a proposal that would have the potential, effectively, to abolish councils in Cumbria, Lancashire and Cheshire. That is wrong, and it is wrong for the other 60 per cent. of people—

I am mindful of your advice on the matter, Mr. Deputy Speaker, but I will give way one more time.

Does my hon. Friend agree that those of us in the Labour party who campaigned against the abolition of the GMC campaigned against how it was being abolished, not in favour of the structure of the GMC? In 1972–74, when the measure was being introduced, we argued for regional government and unitary authorities throughout the country.

I accept what my hon. Friend says, but my point was about who should have had a say in whether the county was abolished, not about the alternatives to abolition at the time.

The next issue, which will interest people, is whether the formation of an elected regional assembly will put right the wrongs caused by the country's huge and growing regional disparities. Will there be money in it? It is interesting to compare the White Paper that set up the Scottish Parliament with the present White Paper and Ministers' comments on it. The White Paper on the Scottish Parliament guaranteed that the Barnett formula, which puts lots of money into Scotland, would continue.

There is no such guarantee in this White Paper, which I shall quote again for the record. Ministers have stated that regional assemblies will not get preferential treatment, and that funding will be the same as for those without them; there will be no extra money. My constituents will not be happy about that; they believe we should get more money, and that 80 per cent. of the money in the transport budget should not be spent in London. There is no guarantee that there will be a redistribution of civil servants; there are more civil servants in the south-east now than there were in 1997, but fewer in every other region. That is wrong.

People in the north-west will not be happy when they realise that a proposal that is supposed to bring elected representatives closer to them will mean one or two elected representatives for the entire city of Manchester. That will not bring the representatives closer to the electorate; it will take them farther away. People with whom I have debated the matter in the Labour party and elsewhere are shocked that there will be so few representatives and that the elections will be by a system of proportional representation. That will almost certainly guarantee that several small minority and extremist parties will be represented on the regional assembly. It is possible that the BNP and other extreme bodies may hold the balance of power.

Does the drift of my hon. Friend's comments mean that if the assembly was much larger and the voting system was different he would support it?

No. If my hon. Friend had been listening she would know that my argument is not just about the election system, which is bad, but the fact that an elected regional assembly would give no added value. Even if it were 10 times as large, it would not bring extra resources to people in the north-west. The key issue is whether the new body would make us wealthier and improve the north-west. The simple answer is no.

We do not know precisely what functions the new elected regional assembly will have because we do not have details about its structure, which is a mistake in the run-up to what is likely to be a major campaign. Let us consider what the regional assembly is likely to deal with: transport, housing, economic development, and planning. Those functions have traditionally been part of local government and should stay part of it. The change would represent a centralisation and would not bring government closer to the people.

If an elected regional assembly were to go ahead—I hope that it will not and I will campaign to stop it—it would be likely to take government further away from people. It is—I suspect that this is why the Liberals are so keen on it—anti-Manchester and anti every single unitary authority. Most of the unitary authorities that get by carrying out the functions that they have at present do not have Liberal majorities. On a body that will never be controlled by one political party, the Liberals will be given an interest in all the different districts and cities and will interfere. The assembly will make governing Liverpool, Manchester, the Wirral and Salford that bit more difficult, because when it comes to really difficult decisions such as whether to bid for the Commonwealth games or whether to have a second runway at Manchester airport—the most important economic decision taken in the north-west—it will be difficult to achieve consensus across a body with so many political parties and so many different interests.

I will not take up much time because I was not present at the beginning—I had other pressing engagements elsewhere. Does my hon. Friend agree that the new entente cordiale between Manchester and many of us on Merseyside is based on the very principles that he has just been setting out? Does he also accept that people do not identify themselves as being from the north-west, which is just a point on the compass? People identify with towns, villages and cities.

I very much agree with that last point. If we had an elected regional assembly, we would get lowest common denominator politics that would not concentrate resources where they are most likely to be beneficial to the region. That is what happened when it came to the second runway at Manchester airport. The region split. That is most likely to happen in relation to big decisions in future. Those big decisions—whether they are about ports in Liverpool or something in Preston or Manchester—are better taken by local authorities and ratified or otherwise by central Government. A region would get in the way of that.

Is an elected regional assembly a step forward? Will it be helpful in putting right the regional disparities from which we all suffer? No, it will not. I have heard the argument that we must go for an elected regional assembly or there will be nothing else on offer that will help to change those regional disparities. That is not the case. This is a step backwards. It is likely to make the north-west less economically powerful and to move elected representatives further from the people. It is altogether a bad idea.

Order. There are only 22 minutes left. I appeal to right hon. and hon. Members to be considerate of their colleagues' need to participate.

2.38 pm

I do not disagree with the general thrust of either of the two speeches that we have heard so far. I congratulate my hon. Friend the Member for Tatton (Mr. Osborne) on the elegant way in which he summarised the key arguments. The results of the soundings exercise follow from a false premise. The false premise was that those who were invited to take part did not know all the things that are now emerging about—

2.39 pm

Sitting suspended for a Division in the House.

2.53 pm

On resuming

I was arguing that the vote on the soundings exercise was based on a false premise. I suspect that if people had been fully informed of all the facts, they would have been even less in favour and more against. The number is interesting and represents around 5 per cent. of the people who go to watch Manchester United at Old Trafford. That tiny tail has wagged the dog of the whole Office of the Deputy Prime Minister. I have received no letters in favour in my constituency postbag and there has been no campaign in favour. People have no desire for and I can find no organisations that want another unnecessary layer of regional government.

Mr. Cook—

Mr. Deputy Speaker, I apologise.

The proposition shows the Government's arrogance in thinking that this is the only show in town. I am aware that the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth) has ideas about some form of city representative government for Merseyside and other hon. Members may have their own models. In a longer debate, I would like to argue for a Select Committee of the House for the north-west to which we could summon witnesses and discuss matters. After all, we are accountable individuals.

There may even be a third way—something that was once popular. One could examine mechanisms to make the existing structures, such as the Northwest Development Agency, work more closely together. None of those ideas is available. The only show in town is an elected regional assembly. I believe in choice and diversity, and the Government were wrong in not allowing a debate about better ways of running the north-west of England before they settled on one model, which is beloved by nobody.

One of my worries is the effect that the proposals will have on local government. Examining the guidance issued with the boundary committee's work, I am confused about the precise objectives. I should be grateful if the Minister would try to enlighten us on the preferred alternative structure for local government, because it has not been thought through properly.

The document shows that the committee must take two models into account:
"existing district council functions being carried out by larger local government units including as appropriate a unit of a size comparable to the existing county council",
which would mean reconstituting county councils, or
"county functions being undertaken by smaller units but at least of a size that, on the basis of current experience of English local government, would have the capacity to deliver effectively the full range of county functions".
The options are vague and woolly. There is no sense that local government is being allowed to work out its own salvation. The presumption is that the replacement for what we have got must, by definition, be bigger units. The idea that, for example, authorities might co-operate in common purpose is not seemingly an option.

I asked our new council leader in Fylde what he had been told.

I do not want to give way because I shall finish in a few seconds to give others a chance to speak.

My local council leader was given the impression that the organisation in the Fylde area was almost a done deal. He thought that Fylde would be merged with either Blackpool or Wyre or that a Greater Lancashire authority would be formed. There were only two models. Is that "choice" and "diversity"? Is that listening to the people? Is that providing better local government? We have not had a debate in which all those issues, which are central to the effectiveness of a referendum, can be decided. It is fundamentally wrong that the solution before us, with which I disagree, is the only show in town.

Regional government is not required. At a recent meeting, the Central and West Lancashire Chamber of Commerce lobbied Members from my part of the world. It said:
"We are uneasy about the use of referenda and believe that the Government will not ask the question until it is sure it will get the answer that it wants —'manipulating the outcome'."
It has got that in one. The Government have manipulated the outcome by offering one choice. They are trying to fix how the boundary committee does its work, which is no choice, and they have a minority interest in the north-west. There are many other models, which we should debate. We should not regard the proposal as the only show in town.

2.58 pm

I do not understand why Conservative Members are so opposed to elected regional assemblies—I stress the word "elected". We currently have regional government in the form of the Government office for the north-west, which was set up by the Conservatives. That organisation of civil servants is not answerable to the north-west but they make decisions about the north-west for the north-west.

If there is any doubt about that, I shall recount a brief tale from when I was a member of the Public Administration Committee and went to the Government office for the north-west to see how it, the local authorities and the agencies organised themselves. I asked the head of the Government office for the northwest, "To whom are you responsible?" His answer was clear: he is responsible to his civil servant superiors in Whitehall. I think it is indicative that he is responsible not to Ministers or Westminster, but to unaccountable civil servants in Whitehall.

Can my hon. Friend confirm that ultimately all civil servants are accountable to Ministers?

Of course they are in principle, but that is not the case in practice. My hon. Friend knows that that is not the case; he has worked in Government. He knows that a lot of decisions were made in the Northern Ireland Office at a lower level, which came to him. He nodded them through, signed for them, but he did not get the kind of detail that he should have had. He could have had that detail if the Northern Ireland Assembly, which he helped to set up, had dealt with those decisions. My hon. Friend helped to set up a regional assembly in Northern Ireland, but he does not seem to want one for the north-west. I do not quite understand the logic behind that, but presumably he will be able to explain in due course.

I will be brief because others want to speak, but I want to return to the point about the principle of the matter. There seems to be some misunderstanding because people think that what we are being offered will be set in stone. I do not see that. The very fact that we are arguing about the constitution today shows that the constitution of this country is a live thing. It changes as society changes, and as people's needs and moods change. That is why we have a Scottish Parliament and Welsh Assembly. They were answers to the way in which the people of Wales and Scotland changed. We are already seeing that Scotland and Wales want more powers to be devolved from central Government. That will happen in the north-west. I am afraid that if we follow the line of my hon. Friend the Member for Manchester, Blackley (Mr. Stringer) we will end up in an Australian situation. The majority of people want regional government in the north-west, but because none of us can agree on the type of government that we want, or the powers that should be devolved, we shall end up as they did in Australia when the majority of people wanted a republic, but voted for a monarchy because they could not agree on the type of republic that they wanted.

Is it not a fact that when chambers of commerce and the public see exactly what powers are going to be given to the regions and their effect on strategic issues such as investment, jobs and employment, they will be convinced that this is the right way to progress?

I could not agree more with my hon. Friend. That is exactly the point. If we ever wanted an example of when the north-west regional assembly could have been influential in securing investment in the north-west, we simply need to look at the Daresbury situation. If we had had an assembly arguing for the north-west, able to counter the arguments put forward from Oxford, I do not think that the decision made over Daresbury would have been the one taken.

I know that the hon. Gentleman would not want to mislead the Chamber about Daresbury. The fact is that Oxfordshire did not want the synchrotron. The Government wanted to send it to Oxfordshire. That was nothing to do with competition from other regions, and a north-west assembly would have made no difference.

The hon. Gentleman may be right about the facts of the situation, but if we had had a regional assembly there would have been more focus, and we would have been able to put our arguments to the Government in a more focused way. The Government would have realised—as they did after their decision—the strength of feeling in the north-west. That situation would not have occurred.

On the British National party, if we tried to gerrymander a situation in which the BNP was excluded from electoral success, that would do democracy no good whatever. The way to beat the BNP is to point out the vileness of its policies and to argue a case, as we did with the Liberal Democrats in Burnley a week ago. We stopped the BNP in its tracks there. Unfortunately from my point of view, the Liberal Democrats got the benefit of that, but that happened because we argued the case against the BNP. That is the way to do it. If we try to gerrymander the situation, those people who already feel excluded and want to vote for the BNP will feel more excluded, and people will vote for the BNP in bigger numbers. The way to defeat it is by argument and political organisation.

3.4 pm

I respect the hon. Member for Wigan (Mr. Turner), but I think that he completely understates the vital role, importance and success of existing local government in the United Kingdom, whether it be the city of Manchester, the city of Liverpool, the county of Cheshire or the borough of Macclesfield. It works well, and it is close to the people.

I will not give way. I do not intend to give way during my speech because of the time constraint.

I am incensed by the Government's plans for an unwanted and unnecessary elected regional assembly in the north-west of England. The Government stated in the recent soundings exercise that
"it is intended by the Government that the primary factor in determining which region(s) will undergo a review will be the level of interest in holding a referendum in each region."
However, the Deputy Prime Minister revealed that the level of interest—those who responded to the consultation process on which the Government based their decisions to hold a referendum in the north-west, the north-east and Yorkshire and Humberside—was only 0.01 per cent. of the population of the English regions.

As we heard earlier, only 0.06 per cent. of the total population of the north-west responded to the Government's consultation. Only 0.03 per cent. of the population called for a referendum, and not all those people were in favour of an elected regional government. In other words, 9,997 people in 10,000 either did not want a referendum or were insufficiently interested to express an opinion. Only three people in 10,000 voted in favour of holding a referendum. In total, 2,202 people in the north-west want a referendum, out of a population of nearly 7 million.

In Cheshire, about 20 per cent. of respondents supported the idea of a referendum, and about 80 per cent. said that they did not want one. That contrasts with Cornwall, where 50,000 people signed individual declarations calling for a fully devolved Cornish regional assembly, but Cornwall is not having a referendum. Will the Minister tell me why that is so?

An ICM poll on 12 June on the new European Union constitution found that 88 per cent. of people polled wanted a referendum on that constitution, with only 12 per cent. against. However, as we are aware, there are no plans to hold a referendum on the EU constitution, which is vital to the future of the UK as a free and sovereign nation.

The hon. Member for Manchester, Blackley (Mr. Stringer) showed great experience and wisdom and spoke much sense about regional assemblies. He was right to say that regional assemblies will take power away from local people. In the north-west, I understand that there would be only 35 members representing a population of precisely 6.73 million. Where is the democracy in that situation? The people of the north-west will be asked to pay more in their council tax, but will receive less democracy. That is a fair deal for no one.

England already has enough politicians. Public services in my own borough of Macclesfield will not be improved by creating yet more politicians and fiddling with the tiers of local government. I totally support Cheshire county council's opposition to elected regional assemblies in England. The proposed parallel introduction of unitary authorities would bring about yet another unwanted and costly upheaval for local government. We have known for some time that the Government plan to scrap England's shires and to spend up to £2 billion on restructuring local government throughout the country. I am sure that that money, as the hon. Member for Manchester, Blackley said, would be better spent on public services.

There is no evidence that an elected regional assembly and a reorganised local government structure would improve the future delivery and quality of vital Government services such as education, health, social services, transport, and law and order. Taxpayers will have to pay for setting up an elected north-west regional assembly. My hon. Friend the Member for Tatton (Mr. Osborne), whom I congratulate on securing the debate, quoted the Government as saying that the assembly would cost about £25 million per annum, but we know that such estimates have proved unreliable, as with the Scottish Parliament building. I am utterly opposed to such wasteful, undemocratic proposals, which will do nothing for democracy or the delivery of public services.

3.9 pm

First, we must deal with what the public want, and the public want service.

The question is whether we can improve the delivery of services to the people whom we represent. As you know, Mr. Deputy Speaker, I lived for a long time in my adult life on the south coast. When living there, I was not convinced by any argument in favour of devolving power to the regions. I just thought that we had a nice cosy relationship with the City of London. I could pop up here, deal with major institutions and drop into the Palace of Westminster to lobby my MP and see Ministers. That is part of the normal relationship when someone lives on the doorstep, and it is because of the concentration of power in the City of London that the south-east has flourished so much during our lifetimes.

However, that was in stark contrast to my experience when I moved to the north-west in 1977. I suddenly realised just how different the relationships between the Government and the regions were. My previous perspective of that was completely false. I respect the view of my hon. Friend the Member for Manchester, Blackley (Mr. Stringer), but it is based on a narrow picture of the world, and that is why we must change. We must empower people in the regions so that they can influence the things that directly impact on their lives.

My hon. Friend the Member for Wigan (Mr. Turner) talked about the need to make the regional government in the north-west accountable. The north-west regional assembly must be accountable. What better vehicle is there for that than scrapping the county councils—anachronistic organisations that have no role in a modern democracy—and replacing them with all-purpose unitary authorities that directly service my constituents and, through the regional assembly, deal with the major strategic issues of inward investment, employment, jobs and so on? Those are the reasons why the House should support wholeheartedly a regional assembly in the north-west.

3.12 pm

The only speeches that I have made in the last two years have been very short. They usually follow the form, "I beg to move, That the Question be now put," and very popular they have been, too. I shall ask the Minister only a few quick questions on Cumbria, because there may be a chance for another colleague to speak.

If only 2,000 people in the north-west voted in favour of having a referendum, how many in Cumbria voted? Can the Minister give us the figures for those who participated in Cumbria—those who were for a referendum and those who were against?

There is no time. The hon. Gentleman spoke for slightly longer than I intend to, and I must be selfish on this occasion.

The north-west is an artificially created region, as are all our regions, but Cumbria sits ill in the north-west region. As my hon. Friends have pointed out, Cumbria often cannot decide whether it is in the north-east or the north-west. In truth, it is in neither. Cut off by the Pennines on one side and by the Lake District mountains to the south, Cumbria is a large county on its own. However, if the Government dragged us into a north-west regional assembly, there would be only two representatives for the whole of the county of Cumbria. The problem is not only that rural areas would not have a voice, but that Carlisle, Workington and other places would have very little voice. Indeed, with only two representatives from our gigantic county in such an assembly, everyone in Cumbria would have very little voice. We have an electorate of only 400,000 all told, but reducing those voices by having just two representatives in a north-west regional assembly would be inappropriate and disgraceful.

I have another question for the Minister. If the referendum goes ahead, may we have a count on a county basis, so that we know how many people from Cheshire, Lancashire and Cumbria—how many people in our counties—voted for a north-west assembly? If there is a clear majority in Cumbria for being dragged into a regional assembly, we will accept it. However, if there is no majority, I will say that the Minister has no right to drag the people of Cumbria into a region with which they have no particular affinity, an assembly that they do not want and an enormous cost structure for which they do not want to pay.

Will the Minister tell us how much reorganisation will cost Cumbria if we have a regional assembly, and have to discard our county councils, amalgamate our district councils or make some dog's breakfast out of the two?

Thank you, Mr. Deputy Speaker. I shall return to my usual pattern of not speaking again for another two years.

3.14 pm

I appreciate that other colleagues would have liked to participate in this extremely lively debate. Some strongly held views have been presented very articulately.

I commend the Deputy Prime Minister for his decision to go ahead with the referendum in the northwest. It will give all those who have spoken so eloquently against the referendum the opportunity to campaign and to vote against it, and it will encourage others to do the same. It will also give those like me who are in favour of it the opportunity to campaign for the referendum, and to encourage colleagues to vote for an assembly.

The somewhat belated decision to hold a double referendum in the two-tier areas was a good one. I hope that the Minister will confirm to the hon. Member for Manchester, Blackley (Mr. Stringer) that only the two-tier areas will take part in that referendum, so that it will not be imposed on them from the outside in any way. None the less, there are problems with the arrangement of that referendum, which I shall discuss briefly in a moment.

The north-west region should have the responsibility for taking decisions that affect it, and the powers to do so. The hon. Member for Wigan (Mr. Turner) spoke the truth when he said that we already have the people who are taking these decisions: it is just that they are not accountable to elected politicians from the north-west or to the community of the north-west. A north-west regional assembly is a way of getting better public service delivery in the north-west. It will be better for wealth generation in the north-west and for the environment in the north-west.

Plans for the referendum have focused minds on key issues, which the debate has starkly highlighted: the exact functions and powers that the regional assembly will have, and the need to underline strongly that the important thing for many of us is to take back decision making from Westminster and, more particularly, from Whitehall. The assembly is not about taking powers from existing local government and existing local government units.

The number of representatives to be appointed or elected is another key issue. If the number is to be the smaller one of the numbers discussed, it will not be easy, geographically or politically, to get proper representation throughout the north-west, which is diverse and has many different aspects that need proper representation. Linked to that is the system of election, which the hon. Members for Manchester, Blackley and for Wigan briefly mentioned. The problem is not whether one attracts extremist candidates for election. The reality is that extremists did not get elected in Scotland or in Wales, although that depends on one's view about the socialist party in Scotland. As the hon. Member for Wigan said so clearly, the way to defeat extremist parties is to contest their views with the electorate and to win the election where they stand.

The Government have made the task of those of us who want elected regional government much more difficult by linking it with local government reorganisation. As some hon. Members know, I served on Cheshire county council and on Chester district. Many of my former colleagues have views about the efficacy of local government in that area, and are very concerned that it might be lost in the process of reorganisation.

The pledge to publish the draft Bill is welcome. Will the Minister assure us that it will be published in short order? We need time to absorb those proposals and to base our campaign on them, not on some notional assumption about what is available. The same is true of the proposed alternative boundary options for those areas that will be reorganised. Depending on the form of the reorganisation, I suspect that the degree of support or opposition may vary quite widely in those areas of Cheshire, Lancashire and Cumbria. The Minister should do what he can to encourage the Electoral Commission to proceed briskly, and, more to the point, to ensure that his Department delivers a draft Bill in very short order.

When one considers what the referendum will test and what those who have to decide whether to vote yes or no have to take into account, one realises that the functions and powers of the new assembly will be of great importance. We want the Minister to reassure us that all the functions of the Government office for the northwest will be brought into the compass of the assembly and that the estimate of the budget that will be saved—the offsetting amounts of money that were mentioned by the right hon. Member for Fylde (Mr. Jack)—will be subject to some critique of its validity so that we can assess the net extra cost that might be in the Government's mind when making the proposals.

If there is improved accountability and better delivery, and we get more bangs for our buck in relation to public services such as health and, particularly at present, transport, and in relation to developing the economy of the north-west, it might well be £25 million well spent. It might not. We need those facts and figures before us as the debate unfolds.

Voters in the referendum will need to know what sort of representation they are likely to get. Is it the case that the borough of Stockport, which currently has three and a half constituencies in it, would be lucky to have one representative? That clearly raises questions about democratic legitimacy. That kind of Hobson's choice makes considerable demands on those of us who want to vote yes.

There are also issues about local government reorganisation, which is perhaps particularly a matter for Members from two-tier areas—my own area is unitary. However, I do not want the Minister to think, having listened to the debate, that all is doom and gloom. There is a real sense of north-west identity. I say that as the Member of Parliament for Hazel Grove, which has other regions on two of its boundaries. The so-called east midlands region is next door. The Yorkshire and Humberside region is only five or six miles up the road. I am jammed in the south-east corner of the north-west, yet the residents of Hazel Grove are quite clear that they live in the north-west. I have to say to the hon. Member for Manchester, Blackley that they are absolutely certain that they are not residents of Manchester.

We have a good start in terms of community identity and opportunities to deliver better public services. I hope that the Minister can give those of us present and the 6 million residents of the north-west the reassurance that we need to have a strong campaign for a yes vote.

3.22 pm

I am pleased to be contributing to what has been a good debate and delighted that my hon. Friend the Member for Tatton (Mr. Osborne) managed to secure it. I was even more delighted to be present when my right hon. Friend the Member for Penrith and The Border (David Maclean) broke his two-year vow of silence. May I urge him to break it a little more often? He spoke in an impassioned way and with a great deal of common sense. My right hon. Friend the Member for Fylde (Mr. Jack) and my hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) made excellent contributions. It seemed that, on the Labour Benches, there was a majority against an unknown and unwanted region.

Page 73 from the White Paper, "Your Region, Your Choice" shows that the vast, unknown region extends from Cumbria in the north—no one is quite sure whether Cumbria wants to be in the north-west or the north-east, as my right hon. Friend the Member for Penrith and The Border has made clear—to the south of Cheshire in the south. I am told reliably by my hon. Friend the Member for Tatton that if one gets in a car and drives from the Scottish borders to London, more than half the time is taken up driving through the region of the north-west. It is a vast region with no real community of interest stretching from the people at the top to the people at the bottom. It has a population of 6,880,500. As has been said, the soundings exercise showed that there was little interest in having a regional assembly. I will not read out the figures again.

What we want from the debate is answers to the six questions asked by my hon. Friend the Member for Tatton. First, what are the ground rules for the referendum? Secondly, will the boundary commission report next May? Thirdly, what will be the date of the referendum; will it be next autumn? Fourthly, what framework will there be and what will be the spending limits for the campaign? Fifthly, will central and local government be able to contribute to it? Sixthly, what would be considered a derisory turnout? If we can get the Minister to answer those questions today we will have achieved a great deal.

There is much divided opinion on the issue. Many Labour Members in the north-west are against the proposal; for example, the hon. Member for Tyne Bridge (Mr. Clelland) said, "My argument, as someone representing a Merseyside constituency, is that Merseyside does not fit neatly into the fictional north-west." [Laughter.]

No. I know that the hon. Gentleman is going to cause mischief. I must have inadvertently said north-east when I meant north-west. The hon. Member for Knowsley, North and Sefton, East (Mr. Howarth) said, "I will be pressing for the map to be redrawn so we are included in the north-west." Not only do Labour Members oppose the region per se, they oppose the boundaries too.

In pressing the questions posed by my hon. Friend the Member for Tatton, I ask the Minister to turn to page 66 of the White Paper and tell us what criteria the local government boundary committee take into account. As the White Paper says, a third of all the people in the north-west region will be "re-boundaried" in the local government boundary reorganisation. The White Paper states that the local government boundary committee will have to take into account what
"appeared to it to be desirable, having regard to the need 'to reflect the identities and the interests of local communities to secure effective and convenient local government"'.
What on earth does that mean? Will the Government publish guidelines to the local government boundary committee in good time, so that we know exactly what they say?

I cannot, because I do not have much time.

I want to turn to the matter of expenditure. Much has been made of expenditure and, again, the White Paper has something to say about it. Page 44 states that
"an assembly in the North West would have a say on around £1.3 billion"
of expenditure plus the block grant of £2.1 billion. That seems to be sophistry, as the next page continues:
"In future, where a region has an elected assembly, its level of funding will continue to be determined in the same way";
in other words, it will not get extra funding. Indeed, Lord Rooker said:
"It is true that, compared with regions without elected assemblies, assemblies will not receive any additional money other than what we have outlined".—[Official Report, House of Lords, 7 April 2003; Vol. 123, c. 101.]
The question for the Minister is, will any other money be available?

May we have some more information about the referendum? Will all three referendums for the regions be on the same day? Will there be a preamble to the referendum, and if so, what will govern the wording? Can the Minister give us an idea what the question will be? Will there be more than one question? Will there be restrictions on the promotional material that central and local government can issue in the 28-day campaign?

There are many differing opinions on the matter and there is no less doubt about the expenditure involved and the cost of setting up the regional assembly, which many of my hon. Friends have mentioned. I have an additional question for the Minister: what does he think will be the cost of setting up the regional assembly? The original estimate of the cost of setting up the Scottish Executive was £152 million, but this year the cost is estimated to be £208 million. Those are not my figures; they come from a CBI press release. The situation is even worse in Wales; the original cost of setting up the Welsh Assembly was estimated to be £72 million, but it is now estimated to have cost £148 million, which is considerably more.

We estimate that it would cost £2 billion to set up all the regional assemblies and £3 million to run them. That is equivalent to 30 new hospitals, 400 extra schools, 6,000 new policeman and 12,000 new teachers. Yet the proposals will not improve public services one iota; they will not result in one extra teacher, nurse or policeman, at a time when the Liverpool women's hospital has seen the number of patients waiting for admission rise by over 40 per cent. It is yet another example of a Labour Government wasting precious resources.

In case anyone is in any doubt that the north-west regional assembly is not wanted, I shall close by quoting my right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith). Writing in the "Municipal Journal", he said:
"Putting the power of the centre before the needs of communities is nowhere more evident than in the Government's plans to abolish counties in favour of a regional tier of government. Counties are a tangible part of British identity and history. People who live outside the Metropolitan areas come from counties; only statistics come from regions. Counties exist in our hearts and minds; regions exist only in bureaucratic categorisation. Counties are part of our nation; regions are part of the state."
How can we have a referendum on this unwanted region and yet not have a referendum on perhaps the most important issue facing us today—an EU constitution?

3.30 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister
(Phil Hope)

I thought that we were going to get through the whole debate without a mention of Europe, but unfortunately the hon. Member for Cotswold (Mr. Clifton-Brown) spoilt his track record.

I congratulate the hon. Member for Tatton (Mr. Osborne) on securing the debate. He finished his eloquent speech with the interesting hostage to fortune that if the Conservatives cannot win this campaign, they cannot win any campaign. I have a suspicion that another campaign will come up in a couple of years' time that they may also look forward to losing.

The debate has been marked by the exceptional contribution from the right hon. Member for Penrith and The Border (David Maclean). After two years of silence, we heard him again today. He now goes back into the box of the Opposition Whips Office. I shall try to answer later some of the points that he raised, given the short time available to me.

The Government are rightly committed to a far-reaching and radical programme of constitutional change and devolution, transforming this country from what it was in 1997—one of the most centralised in the western world. We have devolved power to Scotland and Wales, we have restored citywide government to London and now we are offering the chance of devolved power to the English regions. On each occasion, the Opposition have initially opposed the proposals on the table and on each occasion they have backtracked and now accept our achievements.

I welcome my hon. Friend to his new responsibilities. Does he agree that if citywide government is good enough for London, it should be good enough also for Merseyside and Manchester?

I thank my hon. Friend for his kind remarks. I shall address the concerns raised by my hon. Friend the Member for Manchester, Blackley (Mr. Stringer) later, when I discuss the importance of regions as distinct from other forms of local government, particularly in relation to economic regeneration across the UK and achieving fairness of economic regeneration between the north and south.

Once again the Opposition are opposed to allowing people to choose how they are governed at the regional level. The only question is: when will they do a U-turn on this proposal?

As my hon. Friend the Member for Manchester, Blackley pointed out, we are meeting our manifesto commitment to allow referendums on establishing elected regional assemblies in the regions that want them. My hon. Friend the Member for Wigan (Mr. Turner) explained clearly why we want elected assemblies. The main functions to be transferred to them are those currently carried out by central Government and their agencies in the region or by unelected public bodies. Those powers will make a huge difference in vital areas, such as job creation, employment and skills, regional spatial strategies, housing strategies, transport funding, transport strategies, the cultural strategy and the regional tourist boards. The directly elected assemblies would be responsible for a long list of important functions; they would be elected by people in the regions and be accountable to them. They will thus democratise that existing layer of regional government, bringing decision making closer to the people in the region and making strategic regional decisions more accountable.

I, too, congratulate my hon. Friend on his new post, although I regret losing a tennis partner. I hope that his office can sort that out.

Does my hon. Friend agree that the long list that he has read out is the reason why there is now a strengthening of opinion in favour of the Welsh Assembly, for example?

Well, indeed. When we give democracy to people, they grab it and use it as a power base for their area. We have seen that in local government and the devolved assemblies in Scotland and Wales, and we shall see it in the English regions when they have democratically elected assemblies.

The hon. Gentleman is talking nonsense. The responsibilities that he is talking about, and which are held by the Government office for the north-west, will be looked after by some 35 people in a regional assembly. Will he tell the House how many Members of Parliament there are for the north-west? All those responsibilities are looked after by the Members of Parliament for the north-west area who sit in this House.

I am grateful to the hon. Gentleman for making that point, but in the existing regional assemblies around 250 Conservative councillors take an active part in those regional chambers. They recognise the importance of taking part in democratically elected structures and the importance of a regional driver for economic regeneration, and when the referendums are held they will recognise the importance of creating newly elected regional assemblies that will take forward the interests of those regions, not just in the north-west but in the north-east, including Yorkshire and Humberside.

I add my congratulations to the Minister on the vigorous way in which he is addressing this important brief.

Does the Minister think that the Opposition's suggestion that they should, as MPs, run the regional quangos would take power and decision making far away from people on the ground and that the answer is to have a directly elected regional assembly so that people who are responsible for the north-west arts, tourism, economic development, heritage, further education funding and many other issues will be accountable to the people on the ground, not to MPs?

Yes, Mr. Deputy Speaker. I congratulate my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) on her campaigning zeal on such issues. She is a well known advocate of a regional assembly in the north-west and I am delighted to see her in the Chamber. It is a pity that the shortness of the debate does not allow everyone to contribute. I want to put on record our gratitude for her work in championing the interests of the north-west.

I will, but time is short and I shall be unable to cover all the questions that hon. Members are asking, rightly, and to which I want to respond.

I am grateful to the Minister for giving way and welcome him to his new job. Does he disagree with the then Minister for Local Government and the Regions, his right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford), when he cited a range of responsibilities that the regional assembly would have—I chose the example of road transport schemes because he raised it—and said:

"Financial responsibility will remain with central Government"—[Official Report, Standing Committee A, 17 December 2002; c. 298.]
and, therefore, the House? Yet the Minister said today that transport will be with the regional assemblies. Which is right?

I regret that the hon. Gentleman has obviously not read the Government's White Paper, which spells out the proposals as to which powers will lie at a regional level and clearly describes in detail which transport matters will be regional and which will be local. I suggest to him that without a regional elected assembly there will not be the sort of democratic involvement that so many hon. Members for the north-west are keen to see when making such important regional decisions.

This debate is about a referendum and about riot imposing our views, but allowing people in the English regions to have a choice and to decide. Through the soundings exercise, we have determined in which three of the eight regions there is support for a referendum, where we shall proceed, and the five where there is less support.

Opposition Members seem to think that the soundings exercise is the same as a referendum. When they quote their statistics about turnout for a soundings exercise it is as though we should have a referendum to have a referendum. That is nonsense. The purpose of the soundings exercise was to identify in which regions we should go forward to a referendum. That is when we can start to argue about turnout; I shall come to that in due course. My point is that the statistics being thrown about in this Chamber by Opposition Members show that they fail to understand that a soundings exercise is not a referendum. We shall engage in that referendum wholeheartedly.

In the north-west, the soundings exercise showed that 56 per cent. of respondents want a referendum. Although the county councils expressed opposition, perhaps for obvious reasons, 22 of 31 local authorities that responded are in favour, including more than three quarters of district councils and unitary authorities. Some 55 per cent. of respondents in the north-west think that the overall level of interest is strong or very strong. The region had the largest number of responses and six opinion polls in the north-west all showed a clear majority in favour.

I congratulate my hon. Friend on his new ministerial responsibilities. Does he recognise that many district and borough councils made representations supporting regional assemblies because they believed that the Banham reforms under the Conservative Government were a half-baked exercise that did not solve the problems facing local government?

My hon. Friend is right to point out some of the mistakes of the past. I shall not dwell on those, but we want to get it right in future. We have made it clear from the outset that we believe that three tiers of government below the national level would be one too many. That reflects one of the points made by the right hon. Member for Fylde (Mr. Jack). Last week the Secretary of State directed the independent boundary committee for England to carry out a local government review in each of the three northern regions. I point out that it is the boundary committee that is doing that, not the boundary commission.

While I am on that point, I was helpfully passed the policy and procedure guidance to the boundary committee for England, the publication of which the hon. Member for Cotswold (Mr. Clifton-Brown) asked about. It was published on 16 June. I am sure that he will enjoy reading it. He also asked what would be in the referendum as if it was some great mystery, or as if there was some skulduggery lurking behind the bushes. I am glad to say that we have already decided that matter in the House. In the Regional Assemblies (Preparations) Act 2003, the question is
"Should there be an elected assembly for the (insert name of region) region?"
That is the question that will be put to the electorate, so I hope that I have put that point to bed.

It is important that we give voters a choice and a say in the structure of their local government. The boundary committee for England is already asking people in the north-west about their views on restructuring the county areas of Cheshire, Cumbria and Lancashire. That point was raised by other Opposition Members. The committee will make recommendations, including at least two options for the restructuring of each county area to the Deputy Prime Minister by 25 May. It will be people living in those county areas who will have an opportunity to vote on whether they want an elected assembly and on which option for local government they would prefer. That confirms the point made by the hon. Member for Hazel Grove (Mr. Stunell).

Given that I have practically no time left, I shall try to deal with the specific questions of the hon. Member for Tatton on the date, cost and so on. I have to tell hon. Members that neither we—including myself as the newly appointed Minister—nor the civil service have pencilled in a date for the referendums. We have said that they might take place in autumn 2004. The boundary committee for England will make its recommendations by 25 May. The Deputy Prime Minister cannot lay an order for referendums until six weeks after that date. The referendum can then not be held until 10 weeks after both Houses approve the order, and hon. Members know what a busy time July is in both Houses. It would not be sensible to set a date until nearer the time when we know that we can deliver it.

I might add that under the terms of the framework, the referendums will take place under the provisions of the Political Parties (Elections and Referendums) Act 2000, with interested organisations applying to the Electoral Commission to be the designated "Yes" or "No" campaign. The commission has to designate the body for each side, or none at all; it may make a grant of up to £600,000 to each, but it has not yet decided how much that grant will be. Financial limits under the PPER will apply to permitted participants in the campaigns, who must register with the Electoral Commission. I hope that that deals with some of the points about the cost of running the campaign.

Setting-up costs for the new elected assemblies will vary, but the hon. Member for Tatton is right: we expect it to be about £30 million in each region, which includes the assembly accommodation. It is impossible to give an accurate estimate of local government reorganisation costs, but we expect to see recommendations and savings from different regions in different ways. He was right to say that each assembly would cost about £25 million a year to run, but about £5 million of that cost will be offset because staff will transfer from existing bodies.

I shall move on rapidly, Mr. Deputy Speaker. On the question of thresholds, it is fair to say that the fairest and simplest approach is to decide solely on the basis of votes cast. That is a fairly old-fashioned view, I guess. It would be undemocratic if people who did not vote could in effect veto a decision by those who did. If we announced a precise figure on the question of a threshold, we would create a perverse incentive to wreck the referendum by not voting rather than simply opposing the proposal. That answers that particular point.

The debate is coming to a close, but I could make many other points.

Air Quality (London)

3.45 pm

After all that excitement, I am delighted to have the opportunity to raise the issue of air quality in London, which should be—I think that it is—a matter of great concern to each and every one of the millions of people who live or work within our capital city. The implications of not sorting out this major challenge are obvious in respect of the health of Londoners, but they also concern London's economic position.

Air pollution in London is, of course, nothing new and I am just old enough to remember my father wearing a face-mask on his way to work to try to combat the lethal smogs of the fifties. Happily, the Clean Air Act 1956 solved that problem, but today we are once again faced by a huge challenge. Poor air quality caused by pollution in the air impacts on human health, most typically by irritating the lungs and airways or by passing into the blood via our lungs. Children, older people and those who have pre-existing lung or heart conditions are most at risk. It has been estimated that the capital's air pollution causes around 1,600 premature deaths and a further 1,500 hospital admissions annually. The strain that that puts on London's health services is self-evidently tremendous.

The incidence of asthma has become increasingly prevalent in recent years. In the UK as a whole, there was a 50 per cent. increase in childhood asthma between 1975 and 1995 and, although I am told that air pollution itself is not thought to be a direct cause, it is recognised that it triggers attacks. There are, however, other significant causes.

Anecdotally, in the six years in which I have been coming to Westminster to work on behalf of my constituents, I have noticed that I suffer increasingly from congestion problems of the nasal variety, although I must say that it took me three hours to come the 18 miles from Uxbridge this morning. It is therefore wise to acknowledge that traffic congestion is a major cause of problems with air quality.

There are two concentrations of pollution on any map of air pollution in London. One is here in the centre of London; the other, on which I would like to concentrate, is in the Heathrow region. It is frightening to see exactly how poor the air is that many of us in the vicinity of the airport have to breathe.

The main pollutants that concern us in London are nitrogen dioxide and particulate matter. I am no scientist and must rely heavily on the advice and expertise of others. Like many other people, however, I am convinced by the evidence that I come across on a daily basis that poor air quality is now a major problem for many Londoners. I would like to take the opportunity at this stage to acknowledge the help that the air quality officer at the London borough of Hillingdon, Val Beale, has given to me.

My main concern is the area around Heathrow airport, where it is acknowledged that the air in many households is already above the EU limit values for nitrogen dioxide. I am not convinced that the impact of the building of terminal 5 has been properly taken into account. Indeed, the inspector at the planning inquiry accepted that Heathrow has become a national air pollution hot spot. He stated that
"terminal 5 is likely to cause harm and to have an adverse impact on health as a result of Nitrogen Dioxide and Particulate Materials."
The concept of building a third runway at Heathrow would seem contrary to health considerations for local people.

Professor Duncan Laxen, in his report in October 2002 to the London borough of Hillingdon, stated that
"even with an aggressive set of assumptions about reductions in emissions from aircraft, there would still be thousands of people exposed above the EU limit value around Heathrow in 2015 and 2030."
He continued:
"The study carried out for the new runway identified more than a doubling of the number of people exposed to elevated pollutant concentrations."
Returning briefly to the question of terminal 5, it is interesting to note that the Secretary of State, in paragraph 77 of his decision letter, stated that
"he considers that the Inspector placed too little weight on the European Community law aspects of the air quality issues and he recognises the obligations that Community law imposes on the Government."
The Minister here today is not from the Department for Transport, so I will not repeat the many arguments about further expansion at Heathrow. However, I will pose some questions related to health and the environment.

I was not sure whether the Minister present would be from the Department of Health or from the Department for Environment, Food and Rural Affairs. I am delighted to see the Minister for Rural Affairs and Local Environmental Quality here, but I do not know whether he will be able to respond to my questions. If not, I shall have to take the route of parliamentary questions.

First, I should like to know whether the Department of Health has made any assessment of the health implications of terminal 5 for the Heathrow area and of the implications for the local health economy. I would also like to know whether it has done any work on what would be likely to happen if a third runway were to be built? The same questions apply, although in a slightly different way, to the Minister's Department.

When does the Minister expect air quality to fall within the limits set by the European Union and what would he recommended for people who live in areas where the nitrogen dioxide levels are higher than will be legal—under EU law—in a few years' time? Would the logical position be for the Department to expect people to leave their homes, or for the airport to close down, neither of which would be a satisfactory solution? Does the Department accept that the health of people in those areas has already been adversely affected by poor air quality and, if so, what have the two Departments done to alleviate that situation? Has any consideration been given to the financial implications for local primary care trusts as a result of the increased problems that they face?

I am concerned that those involved in the decisions that will be made shortly on increasing air traffic capacity in south-east England, and particularly on the possible provision of a third runway at Heathrow, have put the question of air quality to one side. I believe that they have taken the rather glib attitude that they will sort out the problem when they come to it. However, I was pleased to note that the Department for Transport said that it did not accept the recently revised figures put forward by BAA plc, which substantially reduced the projected amounts. One might say that BAA plc "would say that, wouldn't they?" I am delighted that the Department for Transport is taking a view on that.

I would also like to know whether the Minister's Department, and Ministers or officials in the Department of Health, have spoken to their colleagues in the Department for Transport and whether they have made any formal representations to that Department, such as a formal response to the consultation that will finish at the end of this week.

There are already severe health consequences in the vicinity of Heathrow in relation to air quality. Those problems, of course, exist in the rest of London, but hon. Members will understand that I am speaking from a constituency point of view, and therefore concentrating on the Heathrow area. I would like to think that the Departments that cover all aspects of the problem take the issue seriously, and that we really live in an era of joined-up government, so that the Departments involved talk to each other about it. Does the Minister agree with me, many other hon. Members on both sides of the House, many people who live in the poisoned shadow of Heathrow, and those eminent academics when we say that, for air quality reasons alone, there should be no third runway at Heathrow?

3.55 pm

I am grateful to the hon. Member for Uxbridge (Mr. Randall) for raising this important issue and for the manner in which he covered it. First, let me reassure him on joined-up government. As he acknowledged, I would not want to respond on matters that fall within the brief of other Departments, but we have regular meetings at which Ministers engage with colleagues. A few weeks ago, my noble Friend Lord Whitty and I had meetings with Transport Ministers about some of the matters that concern us. In view of the opportunity to redefine portfolios a week ago, we decided to incorporate DEFRA's transport interests and air quality interests into one portfolio for which Lord Whitty is now responsible. Air quality issues were part of my portfolio until last week, but I am sure that that focus, on which both of us were keen, will benefit joined-up government.

I am happy to draw the attention of colleagues at the Department of Health to relevant queries that the hon. Gentleman raised. He started with the improvement in air quality since the killer smogs of the 1950s and referred to his father's experience of wearing a face mask. Having visited London in the 1950s, I know how dramatically different the air quality is now compared with that in those days.

That long-term trend has continued over the last decade. The latest results from the air quality headline indicator show that in 2002 there were on average just 24 days when air pollution levels in London were recorded as moderate or higher, compared with 43 days in 1996. Those improvements have been achieved through progressively tighter vehicle emission and fuel standards and the introduction of comprehensive controls over pollution from industrial and domestic sources.

The problem has not gone away, however. In certain areas of the country, including parts of London, pollution levels are unacceptably high. We must address that, not least because of the health impacts of exposure to air pollution, to which the hon. Gentleman referred. Examples are the links to asthma and reduced life expectancy.

The hon. Gentleman focused on airports and the impact of Heathrow, so it is only fair to respond to those points. Aviation, too, has a role to play, and we will take air quality fully into account in the air transport White Paper, which is due to be published by the end of the year. Air quality was a key consideration in the terminal 5 decision. We made it clear that another runway at Heathrow could not be considered unless the Government could be confident that levels of all relevant pollutants could be consistently maintained within EU limits. We also said that in our consultation paper on the future development of air transport in the UK, I can therefore assure the hon. Gentleman that air quality issues have not simply been brushed to one side.

BAA plc is required to produce and keep under review an action plan showing how it intends to minimise emissions from, and attributable to, Heathrow. We have issued a clear challenge to the aviation industry: it must dramatically reduce the emissions of nitrogen dioxide from aircraft using Heathrow if there is to be any question of considering a third runway.

Most London boroughs have found some areas where the strategy's air quality targets for nitrogen dioxide and particles are unlikely to be met without further measures. In most cases, that is primarily because of road traffic emissions. However, the hon. Gentleman is right to say that in Hillingdon and Hounslow emissions from Heathrow airport were identified as another source. The two local authorities concerned are now drawing up action plans to tackle the problems identified. Where action is outside their remit—for example, with regard to Heathrow airport, motorways or trunk roads—they will work with the airport authorities and the Highways Agency.

The UK aviation industry has recently committed itself to tough targets for emissions improvements. The Department of Trade and Industry aerospace innovation and growth team report that was launched on 11 June is based on European targets of a further 50 per cent. reduction in CO2 per passenger kilometre by 2020. It also contains an ambitious target to reduce NOx emissions by 80 per cent.

It is worth pointing out that new cars are much cleaner than they used to be 10 years ago. A new car bought in a showroom today will emit about one tenth of the pollution of one bought a decade or so ago, and additional improvements continue to contribute to long-term air quality.

On the general air quality issue, action is under way locally and nationally, and internationally, because air pollution does not respect national boundaries. Emissions of pollutants arising in mainland Europe can contribute significantly to concentrations in the UK, particularly in London and the south-east. We are working closely with our partners in Europe to tackle trans-boundary pollution. Reductions agreed under the national emissions ceiling directive in the UK and in other member states will play an important part in helping to cut emissions at source.

The Government's air quality strategy, to which I referred a few moments ago, sets out our policies for tackling air pollution. It includes health-based standards for the main pollutants of concern and objective dates for their achievement across the UK. The fact that those objectives are, in some cases, tighter than the corresponding legally binding European air quality directive limit values—the limit on nitrogen dioxide has been introduced five years early—demonstrates our commitment to delivering cleaner air as soon as possible.

I am grateful to the Minister for giving way and I have been listening with great interest. Will he acknowledge that there are households in areas where air pollution is above that level?

Some areas have specific problems, which is one of the reasons for putting together the areas where specific action is required. Hillingdon carried out a review and assessment of air quality within its boundaries, which is why an air quality management area covering approximately two thirds of the borough has been declared from the A40 corridor to the southern borough boundary. Hillingdon must now develop an air quality action plan in order to reduce emissions and to improve air quality. That is one way to focus on areas where there are particular problems. I accept the hon. Gentleman's point that there are some places where air quality is unsatisfactory. In order to tackle that, action must be taken at the international, national and local levels, which is allowed for in the legislation and in the practical arrangements. I hope that my reply has fully acknowledged his point.

Measures have been implemented or are being introduced to meet the objectives in the strategy. Those include further vehicle emission and fuel standards, fuel duty differentials and our power shift and clean-up grant schemes to promote the wider use of greener fuels and vehicles. Our 10-year transport plan sets out an investment programme of £180 billion to improve public transport, to cut congestion and to reduce air pollution. We have introduced the system of local air quality management, to which I have just referred, that allows local authorities to identify pollution hot spots and to implement local measures to deal with them.

We also have a system of local transport plans under which local authorities can bid for new capital funding for local transport measures. We have given local authorities new powers and new funding to carry out roadside emission testing where levels of pollution are high, and some 26 London boroughs have been designated so far.

We are on course to meet, or have already met, the objectives for most of the pollutants, but indications are that additional measures are likely to be needed if we are fully to meet the nitrogen dioxide and particles objectives in certain parts of England, including parts of London. Targets are being challenged, as the hon. Gentleman said.

Under the Greater London Authority Act 1999, the Mayor of London has devolved responsibility for air pollution in London. His air quality strategy, which was published last year, sets out how he intends to implement the air quality objectives in the Government's air quality strategy. The measures include implementing the cleanest bus fleet in the United Kingdom, the first emission standards for taxis and the possible introduction of low emission zones to ban high-polluting vehicles.

I understand that the Mayor will publish a feasibility study on low emission zones shortly, and is also assessing the impact of his congestion charging scheme, including the impact on air quality. The Mayor's air quality and transport strategies will have a key role to play, as will the air quality action plans that individual boroughs are working on under their local air quality management duties. All that is crucial if we are to meet our objectives and the corresponding European limit values.

We are considering what additional measures might be needed as part of our review of the air quality strategy, the review of the 10-year plan for transport and the delivery of the Department's joint public service agreement with the Department for Transport to meet air quality targets. It is worth saying that all these measures sound rather formal, but they are intended to drive up the quality of air that our citizens breathe and to drive down the levels of pollution in a way that improves the general quality of life.

I do not doubt the sincerity of the Minister or the Government in trying to reduce the level of pollution, but will the Minister, with his vast experience, tell me what will happen if the level of pollution in these areas is still above European levels by 2010? Those levels will be a legal requirement by then, so what will happen if they are not met? Will it be a slap on the wrist, and which Department will be in trouble? Will the Government be in trouble, or the Mayor? I want to know what the consequences might be.

We are all in trouble if we do not meet the objectives, not only because they are requirements, but because we are dealing with the health of our citizens. That returns me directly to the point made by the hon. Gentleman right at the beginning. The Mayor of London has the power of direction over the boroughs, and the Government have the power of direction over the Mayor. If necessary, there are powers to require actions to be taken to ensure that the measures are having the desired effect on the levels of pollution, which are regularly and carefully monitored. However, I am optimistic that everyone, including the local authority officers, about whom the hon. Gentleman was talking, the Mayor of London and Departments, recognises the importance of achieving the objectives and will work co-operatively at all levels of government. That is the answer to the hon. Gentleman's question "What if?" There are powers of direction, should it be necessary to use them. I sincerely hope that we all agree that the achievement of local, national and international objectives, and careful monitoring to ensure that progress is being made and at the required speed, is the right way to approach the issue.

I assure the hon. Gentleman that we take air quality very seriously. We recognise that London and other parts of the UK will have the real challenge of meeting air quality targets, and the transport sector will have an important part to play in that. As the hon. Gentleman suggested, that includes airport operators and aviation. Local measures will have a key role to play in addressing the problems, especially at the sort of level that he highlighted. The Government will continue to work towards meeting their targets to provide cleaner air for everyone and to meet the UK's obligations under the European air quality legislation to which he referred.

4.9 pm

Sitting suspended.

Patient Packs/Dispensing Costs

4.10 pm

This may seem a rather mechanistic and narrow subject for an Adjournment debate, but it is an opportunity to reflect on a subject that is of great concern to a number of key constituents of most Members of Parliament. It is also a matter with a great deal of history behind it.

I want to cite a presentation made to the British Pharmaceutical Conference in Llandudno in September 1958 by Mr. Chamings, a former head of the Leicester school of pharmacy, setting out the basis for original pack dispensing of pharmaceutical products. An article from The Pharmaceutical Journal describing his contribution states:
"In his talk, Mr Chamings said that the use of proprietary medicines in manufacturers' original packs had reached the level of 80 or 90 per cent. in continental Europe and North America. This, he said, 'points to the inevitable in British medicine' although, at that time, the average in Britain was around 50 per cent. Famously, he pulled a continental pack of medicine from his pocket and asked: 'Why can't we do it like this?'"
But to take a little bit of more recent history, the same article, quoting The Pharmaceutical Journal of 18 June 1983, said:
"The breaking of bulk"—
bulk in this sense means bulk packages of pills or other prescription products—

"to meet prescriptions has resulted in an anachronistic cottage industry within pharmacy."
We have clear evidence that for many years it has been recognised that the practice of taking a large number of pills in bulk and then putting them into a separate pot or package for passing on to a patient is inefficient, anachronistic and carries certain other risks. During this short debate, I shall develop the argument that we should at last bring that process to a conclusion in this country.

For those of us who obtain prescriptions from a pharmacist, blister packs are the commonest way in which we see a product. They are safer and have a quality control placed on them that is far greater than the bundling of pills, however carefully done, by a pharmacist in a back room. The integrity of the pack is retained. The expiry date is clear. There is a batch number that allows the product to be traced back to the manufacturer. There is a clear description of the contents and the quantity, which is displayed clearly on the pack.

There is a small pharmaceutical manufacturer in my constituency, and I am pretty sure that my hon. Friend the Minister has a much larger one in her constituency. When visiting the site, I am always amazed by the absolutely understandable and obsessive concern with quality control that ensures that what we get in the pack passed to us by a pharmacist is exactly what we need. The quality control involved in the preparation of the individual pill and packaging it into whatever receptacle is used by the manufacturer is critical to that process, and to the manufacturer's achieving a licence to do that task at all.

Let us compare that with what happens in a pharmacy, in which people take the product in bulk and handle it however best they can into the receptacle that they are going to give to the patient. Imagine the process continuing in the home of the patient. The patient could have a bottle of pills, which is pretty rare nowadays, or a split pack, which is quite common and which involves someone being given one pack of a product plus a cutoff piece of foil from another pack to make up the correct quantity. That method of quality control is far inferior to that of dispensing a complete pack as produced by the manufacturer. No one would argue that using the original pack from the manufacturer is not the safest and the highest quality way for a pharmacist to meet a prescription requirement.

Using the original pack also improves compliance in relation to the product. One of the critical issues, which we are increasingly coming to recognise, is that health is a contract between various parties. Critically, one of them is the patient. Patients have to be persuaded that they need to complete the course that they have been given by a pharmacist. They expect accurate information and easy to remember ways in which to check whether they have taken the product that they are supposed to on a certain day. Those things are innate when using the original manufacturer's packs. It is far harder to be confident about compliance when there are split packs or products that are sourced direct from the pharmacist from bulk products supplied to him or her.

The process is also immensely wasteful and time-consuming. The classic example is when a pack is available in 28-day units, but the doctor has prescribed a course of 30 days. Someone takes the 28-day pack and snips two days off another pack, leaving a 26-day pack. Unless another patient comes in and another two days are snipped off, those items are unlikely to be used, and the risk of damaging the product in the process of snipping it up is quite significant. Why can we not have either 28 or 30 days—we need to define what we mean by a month of treatment—and pack in a uniform, standardised form?

As the answer to my parliamentary question of a few weeks ago revealed, at the moment, the national health service pays between £5 million and £6 million a year to pharmacists to compensate for packs that are broken into and thrown away. That is a waste of public resources. We should be addressing the matter anyway and hoping to improve our performance.

Dispensing in broken packs also takes more time. If someone is fiddling around trying to cut the correct number of items up to put in an envelope to go with the complete pack, that will take longer. Worse still, that person has to comply with European Union law and provide a leaflet to go with the small number of additional pills. If there are no spares in the pharmacy, the Department of Health kindly provides xerox machines to allow people to copy the leaflets and hand them out to those who receive a prescription, but there are doubts about the legality of that process. Surely, it is an obtuse response to a matter that should be addressed by examining the most sensible process to address a need, rather than trying to find bodge-it and fix-it methods of dealing with inadequacies.

The process of monitoring the dispensing of products is immensely costly. Again, a question to the Department of Health about a month ago elicited the fact that between 1990–91 and 2002–03 the cost of the Prescription Pricing Authority—the people who process the scripts that go through a pharmacy—has increased in real terms by £18 million. That is ignoring inflation and I was careful to ask the question in that way. That is largely a reflection of the increased number of prescriptions that are being given out to people—something that we all must accept.

Nevertheless, it is fair to say that, when pharmacists examined the remuneration paid to them during the same period for each prescription dispensed, they established that in 1990–91 the figure was £1.39 for each prescription, and that in 2000–01 the figure had dropped to £1.05. Therefore, it is one-way traffic. We expect greater and greater efficiency from pharmacists, and, as I have said, we can improve their efficiency, but the cost of the bureaucracy and processing regime that the Government maintain to support the paperwork has continued to escalate and, indeed, has not demonstrably improved its performance in unit costs over that period, as the answer to my question showed.

Having chosen the subject of this Adjournment debate, I received some comments from interested parties on the matter, and I want to quote from one of them. I refer to the organisation that produces drugs that have gone beyond the point at which the major manufacturers continue to protect their rights. Such drugs can then be bulk produced by anyone with the appropriate licence. The British Generic Manufacturers Association said that it would be very happy for me to confirm in my speech that it
"fully supports the introduction of patient packs as the normal presentation for prescription medicines."
It also said that it is happy to discuss the way in which it could standardise the numbers in the packs. Obviously, it could be 28 or 30; there are arguments either way. There could even be some differences between products. However, the sensible approach would be to make sure that we understood what unit we were using.

I also read some of the comments made by the patients. The pharmaceutical press has been running a campaign on the issue recently, and among the contributors was Epilepsy Action, which referred to examples of products that it had been shown that had been dispensed to people to meet their needs. One bundle came from a woman who had been given four different packs from different countries and by different manufacturers supposedly containing identical medicines. Epilepsy Action even received reports of people being given mixed bubble packs in the same box. Any steps that can prevent such things from happening will be welcome.

There is a consensus that we are adopting a low-quality approach, which also has significant inefficiencies within it. What can we do about it? It is not a new subject. Indeed, Governments—I use the term generically—have already accepted the need for progress towards the provision of patient packs. Until November 1997, various parts of the industry were co-operating with the Government towards an agreed plan that would make all products available only in patient packs by 1999. However, minor difficulties with modest cost implications emerged—I have referred to the fact that we spend about £5 million to £6 million a year on broken packs, and additional photocopiers were provided to all pharmacists at a cost of about £500,000. 'The relatively small-scale costs of progressing through to the conclusion of the patient pack programme are between £5 million and £10 million a year. Those cost implications put off the Department of Health, which aborted the project.

We are therefore left with a continuing legacy of packs of various sizes, and with some products not in patient packs at all. That results in confusion for GPs, who have to remember exactly what quantities they are supposed to prescribe; pharmacists, who have to fumble around and try to remember the correct quantities; and patients, who are left with an unsatisfactory bundle, sometimes of pills in different shapes and sizes.

The approach of giving greater freedoms to the different nations of our country has resulted in some useful initiatives. In Scotland, an experiment is under way that allows pharmacists to dispense to the nearest quantity of an available patient pack. Therefore, when a doctor prescribes for 30 days, but the pack is for 28-day, the patient will get a 28-day pack. That seems a modest and intelligent approach that we should adopt in the UK as a whole.

There are some small exceptions. There are some items that we would not wish to see in 28 or 30-day packs. Those have been identified in the exercise that I have referred to, and consensual ways forward have been agreed. Some say that the flaw is that one cannot apply the scheme to antibiotics or antihistamines. I agree with that, but we can address that matter intelligently while maintaining the integrity of the patient pack initiative.

The scheme is an idea whose time probably came about 45 or 50 years ago. Our time-warp approach leaves us offering a less efficient and less safe service than would be experienced by patients in other countries. The negotiation of the new contract for pharmacists should finally start to prod us into the modern age. I emphasise that we are prodding at an open door. I had a meeting with local pharmacists in my local area, and they are keen to make progress. One very active local pharmacist in my area, Michael Everitt, runs a pharmacy in Castle Gresley and regularly calls me on pharmacy matters. They are keen to see us make progress. They recognise that it is a legitimate part of the negotiation of pharmacists' contracts. Therefore, I very much hope that the Minister will be able to give some indication of the Government's commitment to bring this long-awaited project to its conclusion.

4.29 pm

I congratulate my hon. Friend the Member for South Derbyshire (Mr. Todd) on his success in securing a debate on this important issue. We greatly value his interest in health and health care issues and, in particular, his contribution to the all-party parliamentary group on pharmacy. He is a staunch and knowledgeable proponent of the role that pharmacists can play in the health, and indeed the life, of the nation. He has proved that by his words this afternoon.

This country has the benefit of a highly educated and trained pharmacy work force. I share with my hon. Friend a conviction that we must use those skills and knowledge to best effect. The Government have made clear their commitment to sustaining and further developing the important contribution made by pharmacists in modernising NHS services for patients. The debate about patient packs is about the safe, accurate and efficient handling of more than 600 million prescription items a year.

However, there is sometimes a misunderstanding of the Government's position on patient packs. We are fully supportive of the use of patient packs, and we have never in any way opposed their manufacture or use. We accept that there are advantages to the use of patient packs. Our reservations are about the appropriateness, practicality and cost of moving to a situation under which complete patient packs are the only form in which medicines are prescribed by doctors or dispensed in community pharmacies. We are yet to be convinced, as some are, that the exclusive use of patient packs represents the only way of complying with the European directive on labelling of medicines and patient information leaflets. Nor have we been convinced that there is a simple, cost-effective or even desirable way of mandating that patients receive their medicines only in complete patient packs.

Switching to patient packs sounds a simple idea, but in fact it raises complex and difficult issues. Hon. Members might think that doctors should be strongly encouraged to prescribe in standard pack quantities, but standard packs do not necessarily contain the quantities that doctors prescribe, or that they believe they need to prescribe.

I am listening with care to what the Minister says. I quoted the experience of my constituent who told me that he would regularly ring up a doctor to say, "You said 28, but in fact they come in packs of 30"—or vice versa—"and do you mind?" He said that he had never heard of a doctor saying, "No. I want precisely that quantity, not what you've just said." The difficulty is not that doctors want to prescribe a different quantity, but that there is a lack of knowledge of the precise pack quantities with which they are dealing—understandably so, as doctors have many other things to think of.

I appreciate my hon. Friend's point, but he is talking about a small variation. There might be much wider variations in the numbers that doctors want of something. The pack size might be for 14, 28 or 30 days, although somebody should be given a particular drug for just a couple of days. There are situations other than that which he is envisaging that might pose more problems for the argument that he advances.

We could insist that pharmacists dispense complete patient packs, even if they contain more or less than that which has been prescribed. The question then is, what if the quantities in those packs are inappropriate for the patients who receive them? It might not be a question of two days, but of a considerable variation. On the argument about cost and paying for the medicines, discarding the excess part of the packs before dispensing could mean the NHS paying for medicines that will inevitably be wasted. 1 appreciate that my hon. Friend and I share the same interest in the efficiency of the system, getting the best value for money and minimising waste. We must consider the best way of taking that forward.

It is true that pharmacies can claim so-called "broken bulk" payments for the remainder of packs that they cannot use, but that applies only to residues that cannot be used up within six months. It does not routinely apply to all packs that are split. Even if we could agree that prescribers should prescribe, or pharmacists dispense, standard pack sizes, we would have to decide what is a standard pack. Different suppliers supply different size packs for the same product; clearly, different GPs have different ideas too. We could impose standard pack sizes, but we do not see it as the Government's job to tell the pharmaceutical industry what pack sizes to make. In any event, and as my hon. Friend said, there is trade in medicines across the European Union, and any attempt to impose special UK pack sizes would be likely to breach EU rules on the free movement of goods.

It was largely because those various issues had not been addressed properly that we decided against continuing the previous Administration's patient pack initiative. The proposed arrangements were highly complex, and important details had not been agreed. Contingency arrangements were missing, and we calculated that the initiative would have diverted up to £60 million from direct patient care during the first three years and £15 million each year thereafter. That calculation was based on earlier figures, so it is not a current costing.

Our decision on the patient pack initiative indicated no lack of commitment to ensuring that patients receive medicines in a safe, appropriate and convenient way, accompanied by the correct information leaflets. We have explored several ways in which pharmacists and others can be helped to comply with the requirements of the European directive and it was in that spirit that we put forward a package of measures last August.

First, we issued guidance reminding pharmacists of their obligation to provide patient information leaflets. The guidance acknowledged that there would be circumstances in which pharmacists would have to dispense either from bulk supplies or from split patient packs. The guidance made it clear that the best approach by far in such cases would be for the company marketing the medicine to supply sufficient copies of the original leaflet. Failing that, pharmacists might photocopy leaflets or download them from a reputable electronic source.

Secondly, while acknowledging concerns about copyright, we opened consultation on a proposal to provide a statutory defence for pharmacists who copy leaflets for the sole purpose of complying with the law. We also offered to make a one-off payment, of £500, to community pharmacies to help to meet the costs of gearing up to comply with the law.

Thirdly, we said that we would consider with interested parties the possibility of allowing a certain amount of rounding of prescriptions, so that, in the case in which my hon. Friend was interested, for example, prescriptions calling for 28 tablets to be dispensed might he met by packs of 30 and vice versa. We also said that we would explore with the National Prescribing Centre and primary care trust prescribing advisers what actions might be appropriate to promote prescribing practices that would facilitate the provision of patient information leaflets.

The consultation on the proposal to provide a statutory defence to permit pharmacists to copy leaflets provoked considerable interest. The Medicines Control Agency, as it then was, received some 130 responses. There was, of course, significant support for the principle of written information with medicines, but it is fair to say that many respondents expressed disquiet about the particular mechanisms discussed in the document. In relation to the statutory defence itself, some respondents were in favour and some were against. Inevitably, responses addressed wider issues about patient packs and the provision of leaflets. In particular, pharmacy and pharmaceutical industry bodies expressed considerable reservations about the appropriateness and practicality of photocopying leaflets and argued forcefully that the only feasible way forward is patient pack dispensing.

We are, of course, giving those views and all the other responses that we received careful consideration, but two important points remain. First, the notion of patient pack dispensing is not, in our view, as simple as it is claimed to be. As I have explained, we do not believe that there is a ready-made, cost-effective solution simply waiting to be taken down from the shelf. Secondly, even if such a solution existed, the present reality is that medicines in this country are frequently dispensed in part-packs, whether from bulk supplies or from patient packs. It is clearly preferable for companies marketing medicines to provide sufficient copies of original leaflets for pharmacies to use, but if they do not, surely it is better that pharmacists photocopy or download leaflets than that patients receive no leaflets at all.

No-one would deny that there is a case for looking at how we can avoid the unnecessary splitting of patient packs. As I have said, we have already signalled our willingness to talk about ways of facilitating the greater use of complete packs by permitting rounding between 28 and 30 packs. That will be done in the context of our overall desire to simplify the rules governing the reimbursement of medicines dispensed on the NHS.

I referred to the increasing efficiency of pharmacists. A parliamentary answer showed that over the past 10 years pharmacists have been asked to dispense more products for the same mount of money or thereabouts. Does the Minister accept that the present round of negotiations with pharmacists, particularly in the context of the OFT report, is an opportunity to tie up some of the issues and provide a real gain in terms of patient quality outcomes rather than just addressing it in terms of whether we shall photocopy some leaflets?

I agree with my hon. Friend that it provides an opportunity for such matters to be discussed further. I undertake to investigate whether the matter is being included in the discussions in any way, shape or form. However, I am sure that my hon. Friend will accept that it is not just a matter of community pharmacists negotiating with the Government. The views of GPs, hospital and pharmacy services, those writing prescriptions in a hospital setting, the pharmaceutical industry and the patients must also be involved.

It being twenty minutes to Five o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.