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Commons Chamber

Volume 408: debated on Tuesday 1 July 2003

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House Of Commons

Tuesday 1 July 2003

The House met at half-past Eleven o'clock


[MR. SPEAKER in the Chair]

Private Business

Mersey Tunnels Bill (By Order)

Order for further consideration, as amended, read.

To be further considered on Tuesday 8 July.

Oral Answers To Questions


The Secretary of State was asked

Kidderminster Hospital


If he will make a visit to inspect the new diagnostic and treatment centre at Kidderminster hospital when it is completed next year.␣[122416]

Phase 1 of the Kidderminster diagnostic and treatment centre will open in December 2003 and it is scheduled to be fully operational by April 2004. I can certainly promise to visit the centre, because I want to thank the delivery team for the excellent work that it is doing on this important project.

May I thank the Minister for his reply and welcome him to his seat, as well as the whole team for their first session of Health questions?

Given the threat to hospitals throughout the country from the European working time directive and the struggle that hospital staff now have to maintain continuity of care, will the Minister ensure that the diagnostic and treatment centre at Kidderminster, which, like others, is distant from the acute general hospital that serves it, can provide medical cover through a reasonable selection of intermediate elective surgery to meet the needs of the local community and tackle waiting list problems in the wider area?

I am grateful to the hon. Gentleman for welcoming me to the Dispatch Box.

Yes, I can assure the hon. Gentleman that we shall take a keen interest in the way in which that particular diagnostic centre works. We shall take on board the issues that he raises about the challenges posed by the working time directive. I think that he can be reasonably confident that the centre will be very popular locally. Past experience suggests a 98 per cent. rate of satisfaction with such centres, and I have no reason to believe that his centre will be any less successful.

I welcome the Minister to his duties.

Will the diagnostic and treatment centre at Kidderminster have a system for ensuring that the profits of the operator are returned to the NHS and shared with it, and that there will be a cap on the number of private patients that it takes? Will that be the practice generally for all other diagnostic and treatment centres?

I am grateful to my hon. Friend for his welcome.

The Kidderminster diagnostic centre is an NHS centre, so the issues that my hon. Friend raised will not be of concern there. On the general issue that he raised, I shall certainly reflect on his comments. If he wishes to talk to me about his concerns, I shall be happy to discuss them with him.

May I, too, welcome the Minister to the Dispatch Box?

Will the Minister reflect carefully on the wise words of the hon. Member for Wyre Forest (Dr. Taylor)? The previous Secretary of State for Health told me that there was a capacity problem in the Worcestershire health economy. That is certainly the case, and it means long waiting lists and lots of problems for patients. The centre at Kidderminster is a very important part of the solution to that problem and I hope that he will reflect carefully on what the hon. Gentleman said.

The hon. Gentleman is right; the diagnostic centre will be a very important part of building that capacity and getting waiting lists down. I welcome the interest that he has taken in this matter and in the general issues of the local health economy. However, if we are to tackle the issues that he raises, we must do so by getting investment into the national health service, and not cutting it.

May I add my congratulations to the Minister?

Will the Government use a standard tariff for treatments carried out at centres such as Kidderminster and other centres around the country, or will privately run centres be able to charge the NHS more for the same procedures?

I am grateful to the hon. Gentleman for his welcome.

I am afraid that I have to admit that I have no idea about that matter, but I shall look at it very carefully in the coming days, and I shall certainly respond to the hon. Gentleman. What I can tell him is that the Kidderminster centre is being set up with the full cooperation of the local primary care trust and strategic health authority. We expect it to have a strong impact on local waiting times and we have no reason to believe that in the fullness of time it will not prove to be an extremely successful operation.

Primary Care Trusts (Funding)


What assessment he has undertaken of the funding of different primary care trusts in relation to funding targets. [122417]

We consider our allocations policy for each round of allocations in the light of all the circumstances at the time. Allocations for the period 2003–06 were announced last December and took account of the position of all primary care trusts in relation to their target share. The allocations made were the biggest three-year increases to go into the national health service in its history.

Why do the Government persistently fund some PCTs at way below their own national formula for determining the health needs of an area, while funding others consistently above it? In my area, the Bedfordshire PCTs are £22 million below the Government's formula target, yet two PCTs in the same health authority are funded at £25 million above that target. When will the Government bring about a fair allocation of health resources?

First, I welcome any support from Conservative MPs for the idea of targets, as they are not always so supportive of them. Secondly, the hon. Gentleman will remember that we have to strike a balance between the amounts that we spread across all the PCTs, given the infinite demand for them and the limited resources. Thirdly, those resources are vastly increased over anything that the Conservative party, or anyone else, ever put in.

I am going to answer the question specifically in relation to Bedfordshire. [Interruption.] I am glad that Conservative Members are so keen to get the answer, because it is as follows: Bedford PCT's allocation will increase by no less than 32 per cent.; Bedfordshire Heartlands PCT's allocation will increase by 31.7 per cent.; and Luton PCT's allocation will increase by 32.74 per cent. Those are staggering increases. The truth of the matter is that by comparison with the 30 per cent. increases under this Government, Conservative Members would take 20 per cent. away.

Is my right hon. Friend aware that my local PCT, Barnsley, which is one of the biggest in the country, is moving further away from its target funding because of the deficit that exists and is about £6 million behind its budget position? Given that Barnsley is one of the areas of greatest need, yet one of those with the lowest funding, will he look again at that situation?

I am always prepared to look particularly at areas of need, because that is one of the elements that form the criteria by which we allocate money, so I shall do so. However, I think that my hon. Friend would be the first to admit that, both historically and in terms of what any of our international competitors are doing, the amount of investment that is going into the national health service is unprecedented—£45 billion for 2003–04, £49.3 billion for 2004–05 and £53.9 billion for 2005–06. Those are staggering amounts of money. Even in my first couple of weeks in the job, I have been absolutely staggered by the amount of investment. I can tell my hon. Friend that the three-year announcements on 11 December represented the biggest ever investment handout by the state in this country since the dissolution of the monasteries.

The dissolution of the monasteries was an early version of invest and reform. The investment is staggering in its historical context.

I am delighted to hear the Secretary of State say that he is prepared to look at specific areas of need. While he is considering the funding requirements of different primary care trusts, will he look specifically at the retinal laser treatment known as photodynamic therapy? Two of my constituents, a Mrs. Scott and a Mrs. Brooks, are expected by the brand new flagship Norfolk and Norwich University hospital to travel to Liverpool for that treatment, though they are elderly and find it difficult to see, because the local PCTs have not yet given their approval to have the treatment locally. Does he agree that it is unfair to expect elderly people to fund the costs of travelling so far, from Norwich to Liverpool, and will he look into it?

Obviously, I am not aware of the specific case that the hon. Gentleman raises, but yes, I will look into it.

On distance from targets, my right hon. Friend knows that I was part of a delegation of all Bedfordshire and Luton Members of Parliament who recently met his predecessor. While we acknowledge the considerable increase, year on year, in resources for the national health service throughout the country, including Bedfordshire, we highlighted three issues at the meeting. First, Bedfordshire health services have been below target for 25 years or so—indeed, they are near the bottom of the national league table. Secondly, that has contributed to weakness over the years in building decent primary and community care services. Thirdly, although the Government acknowledge that there is a gap and that it needs to be closed, on current figures, the pace of change means that it will take almost 20 years. Does my right hon. Friend accept that the needs of my constituents and residents in Bedfordshire and Luton, and the challenge of the NHS plan to modernise and improve require the gap to be closed much more quickly?

I know that my hon. Friend is a stalwart fighter for his constituents. I would expect nothing other than that. Of course, we pay great attention to need, which exists not only in Bedfordshire but throughout the country, especially after two decades of starvation of investment in the NHS. However, the allocation policy must take account of several factors, including the overall resources available and the priorities for their use. Although my hon. Friend finds Bedford's allocation unsatisfactory, it will increase by £34.7 million, or 32.1 per cent., in the next three years. As I said earlier, Bedfordshire Heartlands' allocation will be increased by 31.7 per cent., which is £52.1 million, over three years. Although my hon. Friend, like many others, does not find his allocation satisfactory, I believe that he would be the first to agree that, by historical and international standards, the increases are staggering in proportion and amount.

I welcome the Secretary of State to his latest challenge. He has held down the post for two weeks, which is good going, and he has clearly already discovered his predecessor's collection of scratched old records at the bottom of his desk.

My hon. Friend the Member for South-West Bedfordshire (Andrew Selous) asked how the relative funding problems in Bedfordshire have been affected by the Department's age-sex standardisation technique. Does the right hon. Gentleman have any plans to revise that formula?

I thank the hon. Gentleman for his overgenerous welcome. I have been here only two weeks—

As I look at the standard of the Opposition, I believe that I shall be here for much longer.

Of course, I shall continually review the criteria for allocating resources. Allocation is based on several criteria, including need, population and the start level of resources. I shall bear the hon. Gentleman's comments in mind.

Cancer Fund Distribution


What plans he has to continue the exceptional tracking exercise carried out recently for cancer fund distribution. [122418]

This was an exceptional tracking exercise. The NHS is receiving £12.7 billion extra from 2003–04 to 2005–06. It is for primary care trusts in partnership with strategic health authorities and other local stakeholders to determine how best to use their funds to meet national priorities, including cancer targets.

I thank the Under-Secretary for her reply. I welcome the openness and transparency represented by that exercise to find where the cancer money went. Will we ensure in future that all the money—not only 60 per cent., which some authorities spend—will be spent on cancer, as should happen?

I know that my hon. Friend is aware that, apart from some central funding, the money is principally routed through the primary care trusts. The research and the report that the national cancer director published on 22 May show that, after some initial problems, there has been additional major spending on new cancer drugs and significant investment in other important aspects, such as expanding the cancer work force and extending services such as radiotherapy and screening. There is clear evidence that the money is getting through and making a difference, but it is up to local decision making.

Is it not a fact that many cancer patients need nutritional supplements? Given that the Lords rejected the food supplements regulations last night and that 300 nutrients are about to be taken off the shelves, does that not mean that the Government have failed to bat for Britain in Europe? The Minister claims that in the light of the so-called dossier, those nutrients can go back on the market, but is it not true that only 15 supplements have been put forward for that dossier, and that 280 odd will therefore not be put forward? What does the Minister have to say about that?

I am not entirely clear as to the direct relevance of those questions, but as you are allowing them, Mr. Speaker, I shall do my best to respond. The point is that we have negotiated the best possible deal with other European member states, and we have a long lead-in for some of the changes. Many issues have yet to be decided, and I think that we all agree that the only reason to ban any supplements is, effectively, that they are unsafe—[HON. MEMBERS: "No."] Well, that is the Government's ground for taking action, and on the basis of evidence. I trust that we can work with the industry to secure the best possible outcome for UK consumers. That is our main objective, and I believe that our best interests are served by working together.

My hon. Friend is right to say that the tracking exercise has been incredibly useful. I have seen its effect on my network, allowing those concerned and me, as a Member of Parliament, to understand where the money is going. Visiting the United States also made clear just how well we are doing in terms of cancer treatment. Does she agree that this exercise is one way in which central Government can keep an eye on the money spent and ensure that local teams are spending it where they should? It also allows Members of Parliament to have confidence in the process.

I agree with my hon. Friend that it has been a useful exercise. Some differences in experience have clearly been encountered throughout the country, in terms of the money going to where we hoped it would go. But I hope that she and other Members will understand that it is quite difficult permanently to track in detail the money going into cancer services. Much of the money may go to specialisms, in which case only some of the money relates to cancer treatment. Given the ongoing bureaucracy, form filling and returns required to get a detailed picture, such a process is not sensible. However, we have overall targets and we are doing well on all of them, which is evidence that the money is getting to where it needs to be. I trust that Members will continue to take a lively interest in this issue.

Does the Minister accept that, ultimately, all cancer services in the community and in hospital outstations are underpinned by the regional cancer centres? When will the Government publish the independent review panel report on the future of acute health services in east Kent and, in particular, of the joint cancer centre at the Kent and Canterbury hospital? In practice, will we see a vital and excellent cancer centre eroded and ultimately closed by stealth?

We are looking at all of these issues carefully in the light of the panel's recommendations, but I can assure the hon. Gentleman that the report will be published shortly. He will have to wait to see what is in it, but the Government are of course totally committed to having a very high standard of care in excellent centres throughout the country. I am sure that he will join me in working towards that objective.

Nhs Patients (Wales)


What the Government's policy is towards the treatment of NHS patients from Wales in England. [122420]

It is the responsibility of local commissioning bodies to ensure proper access to NHS services for their local populations. NHS trusts in England will continue to provide a range of services to patients from Wales in accordance with these arrangements.

I am grateful to my right hon. Friend for that reply. Is he aware that many of my constituents and others in north-east Wales currently receive much of their medical treatment from hospitals in England, such as those in Chester, Gobowen, Liverpool and Manchester? My concern is that the Health and Social Care (Community Health and Standards) Bill does not place an obligation on foundation hospitals to continue to treat patients from Wales. Will my right hon. Friend therefore consider an amendment to ensure that hospitals in England continue to have an obligation to treat patients from Wales?

I do not think that we will be considering an amendment to do what my hon. Friend suggests. However, there was some argument in the Standing Committee about the Bill's provision in connection with the treatment of patients from Wales by NHS foundation trusts in England. It was always argued that NHS foundation trusts in England were fully able, and legally empowered, to treat patients from Wales. We have tabled some further amendments in Committee to make that perfectly clear. To put the matter beyond doubt for my hon. Friend, I assure him that there is nothing in the Bill, if it is approved by this House, to prevent NHS foundation trusts, once they are established, to treat patients from his constituency. I think that that is the right way to deal with this matter.

Will the Minister confirm that the Bill means that English hospitals that treat Welsh patients will be subject to two separate inspection regimes by two sets of inspectors in the same year?

We have made it clear that we want the new audit and inspection arrangements to be as minimally invasive and bureaucratic as possible. It is perfectly possible for the National Assembly for Wales and the commission for health care audit and inspection to co-ordinate and co-operate to determine how the investigations and monitoring arrangements work in practice. That is the sensible way to proceed, but the fundamental problem for Opposition Members is that they do not accept the devolution settlement. They do not accept that it is perfectly possible for the National Assembly for Wales to exercise those functions in a devolved way. Yes, there will be two inspection bodies, but that is no reason to argue that there cannot be proper co-ordination between them. That is the right way to proceed. It reflects the constitutional settlement agreed by this House, which is working well in the interests of the people of Wales and England.

My hon. Friend the Minister uncharacteristically misunderstands the question asked by my hon. Friend the Member for Wrexham (Ian Lucas). The point is not that English foundation hospitals will not have the ability to treat Welsh patients but that, although the Bill as constructed gives them a legal responsibility to treat English patients, it does not give them a similar responsibility to treat Welsh patients. Will the Minister carefully consider whether the Bill could be amended so that patients in Wales and in England enjoy equal rights?

With the very greatest respect to my hon. Friend, I must tell him that he is wrong on that point. The Bill makes it evident beyond any reasonable doubt that NHS foundation trusts in England will be perfectly able, legally, to treat NHS patients from Wales. The point that my hon. Friend has not understood is that whether an English hospital treats patients from Wales is a matter for the commissioning bodies and the trust to negotiate. Once the agreements are in place, there is nothing in the Bill to make it impossible for an NHS foundation trust—or any other NHS acute service provider in England—to provide services to patients from Wales.

Water Fluoridation


What recent representations he has received regarding the extension of fluoridation in the public water supply. [122421]


We have received representations from the water industry requesting that the legislation on fluoridation be amended to make strategic health authorities solely responsible for deciding, where their populations are in favour, that a new fluoridation scheme should be introduced. We will table a relevant amendment to the Water Bill tomorrow, for debate on 9 July before Third Reading of the Bill in another place.

I am grateful to the Minister for that reply. I welcome the new team in the Department of Health to their remaining duties in Wales and Scotland.

Fluoridation is one such matter. In my constituency, 69 per cent. of people do not have access to an NHS dentist. The incidence of lip and mouth cancer is among the highest in western Europe, and we have an above-average incidence of decay in children's teeth. My constituents tell me that they do not want fluoride in the water as a matter of compulsion; they want to be able to opt to take fluoride as a supplement. Will the Minister give them the guarantee that the NHS will deal with the dentistry that needs to be performed, but that fluoridation will be a matter of personal choice for the consumer?

We are enabling local communities to decide what they want to do on this matter. I appreciate the hon. Gentleman's points about dental services, but those are a matter for the National Assembly for Wales and I cannot comment on them. I hope that hon. Members accept that we are looking to give local communities the decision-making power. I am sure that the hon. Gentleman, who believes strongly in devolution, accepts that that is the right way to go on these matters.

Has not Parliament spoken in favour of water fluoridation but mistakenly left the final decision in the hands of plcs, not the people? I thank my hon. Friend—and her predecessor, my hon. Friend the Member for Salford (Ms Blears)—for ignoring the bluster of the flat earth society and agreeing to table an amendment that will help us to improve children's health. Will she give a firm assurance that, regardless of what happens down the Corridor, this House will get a chance to vote on the issue and clear it up once and for all?

I am grateful for my hon. Friend's support for the proposal. I emphasise that no fluoridation scheme will take place unless there has been wide-ranging consultation in which both the proponents and opponents of fluoridation have been encouraged to participate and in which the majority of the population have indicated that they are in favour. Ultimately, this matter should be decided locally, but we recognise the difficulties that water companies have faced and are proposing to table the amendment in accordance with suggestions put to us on many fronts over recent months.

Countries as diverse as Finland, Cuba, Canada and Germany are now abandoning water fluoridation, but are not finding that tooth decay has increased or decreased. Why should we consider bucking that trend in this country by introducing this illiberal measure?

I have said that the amendment is enabling and will not necessarily lead to any more fluoridation schemes, which will depend on what people decide locally. There is a strong correlation between fluoridation and reducing tooth decay; that is an important fact. Large chunks of England down the east side—roughly from Hartlepool to Essex—have fluoridation occurring naturally at the sort of levels that might be put into matter, and 5 million other consumers already receive fluoridated water in Birmingham and other areas.

A very long time ago, the people of Bolton voted in a referendum against fluoridation, but it was a very long time ago. Bolton metropolitan council also voted against fluoridation, but that was some time ago as well. Will my hon. Friend give consistent guidance to all councils and people across the country so that everyone can have a say in this emotive matter, the guidance is upheld and up-to-date consultations are carried out if and when Parliament decides on the issue?

The detailed guidance will be a matter for regulations. At the moment, we are only at the stage of tabling an amendment to the Bill in another place. Local people will decide how they engage with the options covered by the regulations, which will be a matter for them.

Does the Under-Secretary understand the concern of many that there is already too much interference in what we eat and drink? Fluoridation is one concern, but there is concern also about far too many colourings and additives and the effect that they have on children's behaviour, about the reduction of basic vitamins and minerals in food, and about GM food. I accept that there is a positive dental benefit from fluoridation, but should not the Government concentrate on the real cause of the problems: the amount of sugar consumed by children?

We are doing things to improve diet and decrease the intake of sugar and salt. I reiterate to the hon. Member for Wealden (Mr. Hendry) that 5 million people already receive fluoridated water at one part per million, the proposed level of any scheme, and large chunks of the population receive it naturally through the water supply. The idea that it is purely an artificial additive is clearly wrong.

Digital Hearing Aids


What the take-up of NHS digital hearing aids is. [122422]

By the end of May 2003, 98,540 digital hearing aids had been fitted to 62,865 people as part of the modernising hearing aid services project. We have recently announced that an additional £94 million will be made available over this and the next financial year to support national roll-out of a modernised hearing aid service providing digital hearing aids.

I welcome my hon. Friend to her new post and wish her well in it. I also welcome what the Government are doing on digital hearing aids, but I must tell her that it is not happening quickly enough in North Staffordshire. Does she agree that there is an unsung hero in North Staffordshire—my constituent, Mr. Longstaff—who will not be satisfied until everyone who needs a digital hearing aid can get one? He does not want people to have to wait until 2005. Could the Minister contact the Treasury and ask whether it could free up the £10 million or so in balances that existed under the old health authority? If we could free up that money and get it moving over to the new primary care trusts more quickly, we could roll out the digital hearing aid programme that much more quickly for constituents in North Staffordshire.

I thank my hon. Friend for her kind comments and welcome, and I understand the point that her constituent makes. The programme that we have set in train on digital hearing aids has been widely welcomed. I understand that the North Stoke primary care trust is commissioning this work on behalf of the other four PCTs in the area, working with the local service provider—the University hospital of North Staffordshire—and the project team. Funding is being examined and they are trying to establish how best to provide those services as quickly as possible. In fact, we look to PCTs to provide only about 25 per cent. of the funding; in a typical area, that will amount to about £6,000 per PCT. In view of the increase in PCT funding, we believe that they should try to match the 75 per cent. provided centrally to help introduce the service.

I too congratulate the hon. Lady on her appointment and I am sure that she will add sparkle to the Front-Bench team and do very well. She will be aware that digital hearing aids can help people to stay in work and revolutionise people's lives. Is she aware of the disappointment in west Norfolk that the Queen Elizabeth hospital was not part of either the first or the second pilot scheme? Can she give us any idea of when my constituents will be able to get these worthwhile and important aids?

I thank the hon. Gentleman for his kind comments. Digital hearing aids will be in place by March 2005. It has been done in waves, with different trusts signing up to the programme at different times, but it obviously takes time because various things have to take place. The proper equipment must be installed and audiologists must be trained. We need to ensure that, once the service goes out, it is able to deal with people's individual needs. I hope that the hon. Gentleman's constituents will accept that we are moving as quickly as we can. No one would be happier than we if it could be done more quickly, but real practical problems must be addressed. Nevertheless, the service should be rolled out nationally by April 2005.

I welcome my hon. Friend to her new position and I also welcome the fact that, as a result of the Government's investment in the health service on an unprecedented scale, this technology has been made available. However, is she aware of age-based discrimination in certain areas where older people who have old-style analogue hearing aids are not receiving the new digital aids? Will she make it clear that the Government will not tolerate that sort of discrimination in any NHS trust, and that the service should be freely available at the point of use so that older people can have access to digital aids?

I thank my hon. Friend for his comments. I completely agree that there should be no discrimination. The approach taken has been that people who require new hearing aids or are obtaining them for the first time have been prioritised for digital hearing aids. Provision is then worked through so that people who have had hearing aids longest get the new ones, and that may be people who have had them four years, then three years, then two. We are renewing the oldest analogue hearing aids by replacing them with digital hearing aids. That may be why my hon. Friend's constituent believes there is discrimination, but that is not the case. We are simply working through the system to deal first with those who have had hearing aids longest before we move on to others.

I add my welcome to the Minister, but while she has a fresh pair of eyes, will she look again at the facts behind her brief? Her words will sound hollow to people like my constituent Tony Warner, who is 83 and who had to wait 23 months to have a digital hearing aid fitted because of the lack of audiological technicians in the area. Does she realise that it is no good making digital hearing aids available if there is no one available to fit them? The hearing aids must be fitted by technically qualified people, but the number of audiological technicians qualifying last year was half the number in the previous year. The gap between supply and demand is widening, and the waiting lists will lengthen, not shorten.

I thank the hon. Gentleman for his welcome. I understand his constituent's frustration at any delay. As I have said, we are moving as quickly as we can to institute proper training and to put equipment in different areas. The hon. Gentleman has certainly drawn attention to a real problem in the training of audiologists. We have instituted new training programmes in recognition of the fact that there is a difficulty, and we are working with other sectors to see whether more can be done to train people. There is a difficulty, but we are working hard to redress it. I hope that that will give some comfort to the hon. Gentleman's constituent.

Does my hon. Friend accept that many people who are partially deaf, as I am, have stopped using the analogue hearing aids issued by the national health service because they pick up too much noise that we do not want to hear, meaning that we cannot hear what we do want to hear? We want the new generation of digital hearing aids to be introduced as soon as possible because they make a great difference to what people hear.

Yes, I am well aware of the differences between analogue and digital, although it might be quite handy in this place to hear some things and not others. My hon. Friend has hit the nail on the head. It is absolutely true that the new digital hearing aids allow much greater personalised tuning to serve the problem of the person concerned. Through computerisation, people are better able to adjust the hearing aids to deal with particular problems. My hon. Friend is right to say that we need to have systems in place as soon as possible, and I assure him that that is what we are working to do.

I too welcome the Minister to her post. She has had a remarkable first outing. By the way, the jacket that I am wearing is not a hospital jacket, so she need not worry too much about that.

May I press the Minister on the timing of the roll-out programme? Will Queen Mary's hospital in Sidcup, which has its service provided by Lewisham, be dealt with at an early stage of that programme? The hospital feels that it is getting postcode treatment and facilities at the moment, and I hope that it will be dealt with early rather than at the tail end in 2005.

I thank the hon. Gentleman for his kind comments; I assure him that he has no need to apologise for his white coat.

I understand that there will be concerns about the roll-out in different areas, but as I said, we have worked closely with primary care trusts in different areas to ensure that the programme can be properly met by 2005. We are encouraging other areas to come forward; we shall then work closely with them to ensure that they have the proper training and equipment so that, once the service is up and running, they can deal with people quickly and ensure that they have the benefits of digital hearing aids.

Foundation Hospitals


If he will make a statement on the accountability of foundation hospitals. [122425]

NHS foundation trusts will be fully part of the national health service and run locally, not nationally. The Health and Social Care (Community Health and Standards) Bill sets out various strands of accountability for NHS foundation trusts.

As currently drafted, the Bill provides for foundation hospitals to appoint their own auditor, with no public auditor—neither the Audit Commission nor the National Audit Office—and no public scrutiny of the annual audit reports. Given that foundation hospitals will be spending billions of pounds of public money, voted by the House, should not they be ultimately accountable to Parliament rather than to an amorphous group of local worthies? Does not the Secretary of State share my concern that, when things go wrong, as they always do from time to time, no one will be to blame and no one will be held accountable to Parliament for the billions of pounds of taxpayers' money that is being spent?

I am surprised, because the whole tenor of what has been said from the Opposition Benches is that foundation hospitals do not have sufficient freedoms and are over-burdened. I believe that is wrong, but it is interesting that some Conservative MPs are saying that the hospitals should have extra burdens and that there should be more intervention. The truth is that we have a fair balance; NHS foundation trusts will have more freedom to take their own decisions locally, while nevertheless being fully part of the national health service and accountable not only to those who commission health provision—mainly the local primary care trusts—but also to their members, to those in the area who use them, to the NHS foundation trust through the board of governors and, of course, to the new independent regulator. In addition, they will be accountable to the new Commission for Healthcare Audit and Inspection. That is a balance between the desire to have a diverse form of supply inside the NHS and maximising freedom. There is plenty of surveillance, oversight and transparency and we should not go further by interfering and inflicting more obligations on the freedoms of the NHS foundation trusts.

If Christie hospital in my constituency becomes a foundation trust, what will be the electorate for its governance?

I do not know specific details about my right hon. Friend's local hospital, but I can tell him that the electorate will include not only the locality but the patients who use the hospital.

Should not foundation hospitals be accountable to the rest of the NHS for their borrowing powers? In the Standing Committee, the hon. Member for Birmingham, Hall Green (Mr. McCabe) put that point well. He said that we needed to know

"whether the extra that the trusts can borrow comes off the NHS total. If it does, it suggests that there could be a preference for those trusts at the expense of other parts of the NHS. That is a pretty central anxiety for a great many of us".—[Official Report, Standing Committee E, 22 May 2003; c. 367–68.]
Even those of us on the Liberal Democrat Benches who support the principle of alternative providers for hospital services do not think that that should be at the expense of existing providers. Is not it unfair and unjustifiable for there—

Setting priorities is not a new phenomenon inside the national health service, or any other expenditure portfolio, and when priority is given to one subject, one area, one person or one operation, it can be argued that it has therefore been taken from another area or person. There is nothing new in that, but we have tried to ensure—I think, successfully—that foundation trusts will represent a new form of publicly accountable health service. They will be truly part of the NHS, but, alternatively, they will have freedoms that have not previously existed to meet the different needs, ambitions and expectations of today's working people.

We will have centrally provided resources and standards. We will have local decision making and, as far as we can, we will give patient power and choice to individuals, so that they can exercise it among the plethora of diverse suppliers of services. We have done so to get national standards, more capacity than has been provided in the NHS ever before and a range of diversity and choice for individuals because, at the end of the day, while every hon. Member so far has concentrated on the suppliers of health care, the benchmark for all our decisions should be the receivers of health care—the patients—and they should come first.

I warmly welcome my right hon. Friend to his new post, but may I ask him to cast a new pair of eyes on the views of the Public Audit Forum, which is made up of the Comptroller and Auditor General and the Auditors General for Wales, Scotland and Northern Ireland, who say that the proposed arrangements for auditors in foundation hospitals are, in fact, inconsistent with Lord Sharman's guidelines for public accountability and that the appointment of auditors should be independent of the foundation trusts, so that auditing is consistent and comparable across the NHS? As a minimum, will my right hon. Friend allow foundation hospitals to consider bids from public sector auditors, not just private firms, so that there is transparency and accountability for the taxpayer and no danger that the focus will be on presenting the accounts in the best light?

I will certainly look again at my hon. Friend's request, but as of today, I am satisfied that there is in place sufficient oversight, which balances the need for transparency and accountability to the public sector. For example, the foundation trusts will be overseen, among other bodies, by the Commission for Healthcare Audit and Inspection. Given the 14 days that I have been in my new job, I am not truly versed in the minutiae and every detail of Lord Sharman's advice. Why not? Perhaps it has been laggardly of me not to put that at the top of the pile, but I have been trying to deal with a number of other issues, such as people who are sick. They come at the top of our priorities, but I will certainly look at the issues raised by my hon. Friend.

How much will it cost to elect foundation hospital boards and to maintain foundation hospital membership? Will that money be top sliced or come from individual trust budgets?

It will be a lot less costly than either reducing the NHS budgets by 20 per cent. or adopting a policy of providing health care in this country largely through the private sector. We will not go down either of those roads, and we will make sufficient financial provision to ensure that the NHS foundation trusts' freedoms are balanced by accountability, locally and nationally.

The new Secretary of State will have to do an awful lot better. When the previous Secretary of State did not know the answer, it was a lot less obvious. No doubt he will pick up that skill in time, but since he does not know how much his proposals will cost, let me help him. It is estimated that the cost of advertising for membership will be about £60,000, that the cost of running an initial ballot will be about £17,000, and that the cost of servicing the membership thereafter will be between £145,000 and £250,000 per trust. Those figures are based on the current estimates, by the foundation trust candidates, that it will cost between £4 and £5 a year to service each member of the trust. How does diverting £250,000 per trust square with the Government's pledge to put money into front-line care, not the bureaucracy?

Since the hon. Gentleman thinks that I am not sufficiently well versed in deception, I promise him that I will study those on the Opposition Front Bench in an attempt to improve myself; but if I have a degree of honesty about my presentation at the Dispatch Box, I do not regard that as a disadvantage. We in the Labour party do not think that a disadvantage, but perhaps those in other quarters do.

If the hon. Gentleman would stop intervening, I will try to answer his question.

The expenditure laid out in the estimates that the hon. Gentleman gives is as nothing. Some £250,000 is as nothing compared with the thousands of millions of pounds that would be taken from the NHS if Conservative Members had their way. I have to say—

Order. We cannot go into what Opposition Members would do if they were in government; they are in opposition.

Thirty-five thousand people voted in the ballot that I called on proposals to downgrade the accident and emergency department at Bassetlaw hospital. If all those 35,000 people choose to join the proposed foundation hospital as members, will they have the power to vote out the chief executive and the board if they ever come back with such ill-advised proposals in future?

Those powers will reside with the governors, who will be elected. I hope that my hon. Friend would, like me, welcome the introduction of further decentralised accountability and democracy inside the national health service. I also hope that he would support me in saying that patients are ultimately the arbiters of whether the health service works as well as we want, which is why we are committed to both decentralisation and a patient-centred health service.

Would not the most effective way to raise the quality of care in our hospitals be to make them directly accountable to patients by giving them the right to choose any NHS hospital in this country and ensuring that taxpayers' money follows patient choice by giving them a patients passport equal to the cost of the operation that they need? Therefore, why have the Government removed, for the first time in the history of the NHS, the right of patients to choose any hospital other than the one to which their local primary care trust has contracted to send them? When will the Secretary of State repeal circular—

I was almost on my way to agreeing with the right hon. Gentleman when he said that we should extend real choice to people, but he reverted to talking about the theoretical choice that is always espoused by Conservative Members: people may have the right to choose to buy a Rolls-Royce, but it is a pity if they do not have enough money to exercise that right. Labour Members want to give patients real choice by putting the necessary financial resources into the health service so that—in London, for example—if people do not have an operation of a specified type in six months, they will be able to choose to go to another national health service, or private, hospital. Indeed, if the operation is not provided in this country, people could go abroad to have it done because the patient is the centre of all our considerations. I want to roll that out. Mrs. Thatcher said several years ago that she wanted the choice to have the treatment for her family that she wanted, at the place and time that she wanted. I half agree with her, but the difference is that I want that for every family in this country.



What assessment he has made of the implications for health care of the proposals from the Office of Fair Trading on the regulation of pharmacies. [122426]

Pharmacy is an integral part of the NHS. We are carefully considering the OFT report in the wider context of the important part that pharmacy plays in our plans to modernise NHS services, to reduce health inequality and to improve access and choice for patients.

These principles, together with the 2,500 letters we have received on the OFT proposals, will frame our response, which my right hon. Friend the Secretary of State for Trade and Industry is co-ordinating.

I thank the Minister for what appeared to be a positive response. When the Government respond to the OFT, I hope that they will take account of the views of pharmacists and doctors, especially those in my constituency who work in small villages such as Bishopsteignton and Shaldon and fear that the pharmacy will close if the OFT proposals go ahead. Will she tell the OFT that pharmacists and doctors throughout the country are not happy with the proposals as they are at the moment?

The hon. Gentleman makes an important point about access to pharmacies, especially those in rural areas. I assure him that we take those concerns seriously. The role of pharmacists should be expanded so that they become more of a part of the primary care team. When we respond to the OFT report, we shall consider publishing a new draft framework for the national pharmacy contract. We are considering sitting down with pharmacists to decide what other services may be provided and how we may draw up a contract that takes account of their views and the need to expand their vital service as a greater part of the primary care team.

The thousands of people in my constituency who have contacted me on the issue very much welcome the fact that the Government have not just fully accepted the OFT proposals. They look forward to discovering what the Government think is the best way to recognise the importance of pharmacies in local communities. However, there is, of course, a period of uncertainty. Will my hon. Friend, whom I welcome to the Dispatch Box, ensure that we receive the Government's idea of the way forward as soon as possible?

I thank my hon. Friend for his welcome. He makes an important point. We need to respond to the report in the near future. In making that response, we also wish to take account of the Health Committee report, which was extremely helpful in explaining both the important part that pharmacists play in the wider primary health care team and the need to improve the current system, perhaps by introducing wider choice in some of the areas that pharmacists cover.

Speaker's Statement

12.31 pm

I have a short statement to make about today's Order Paper.

There is an error in the rubric printed in italics on item 5, set out on page 2480. The Order Paper should state that item 5, the Hunting Bill (Programme) (No. 4) motion, is debatable. Debate may continue for up to 45 minutes.

A corrected version is being placed in the Vote Office.

Points Of Order

12.32 pm

On a point of order, Mr. Speaker. May I draw your attention to the astonishing reports that are emerging that the Scottish Executive were not consulted on plans for a new UK supreme court prior to their announcement by the Prime Minister in his statement on the reshuffle last month? Given that the proposals will have a direct and significant bearing on the administration of justice in Scotland, which is, of course, devolved, does that not reflect a breathtaking contempt on the part of the Prime Minister towards the Scottish Parliament and democracy in Scotland? Does it not also amount to a breach of the UK Government's internal guidelines, including the devolution guidance notes issued by the Office of the Deputy Prime Minister in 2002? They state inter alia that

"The Memorandum of Understanding and Concordats are intended to promote exchanges of information and prior notification, so as to minimise the scope for surprises both north and south of the border."
In view of the gravity of the situation, would it not be in order for a Minister at the new Department for Constitutional Affairs to come before the House to make an urgent statement?

That has nothing to do with the Chair. The hon. Lady is discussing devolved matters. There is nothing to prevent her from asking a Minister to come to the Dispatch Box or from tabling questions, but it has nothing to do with me.

On a point of order, Mr. Speaker. I gave you notice that I wished to raise a point of order on the legislative mess in which the Government have left the House following last night's proceedings on the Hunting Bill. I ask for your guidance on two items in particular. The first is on the proceedings concerning the recommittal of the Bill to a Standing Committee. As the House will have noted from the terms of the programme motion on the Order Paper, the Government intend to ram through those further Standing Committee proceedings by the close of business next Monday 7 July.

In that context, are you, Mr. Speaker, able to respond to the question raised yesterday at column 42 by my hon. Friend the Member for Mid-Worcestershire (Mr. Luff)? He asked Mr. Deputy Speaker whether the former Standing Committee would simply be reformed to consider the amendments agreed yesterday and their implications, or whether the Committee of Selection would have to meet later this week to appoint a new Standing Committee, perhaps with—or perhaps without—the same membership. Your response to this point, Mr. Speaker, clearly has implications for the Government's planned rapid timetable for consideration on recommittal.

Secondly, Mr. Speaker, I ask for your guidance on whether the Committee will be able to consider issues arising out of new clause 14, which the House also agreed last night. It states:
"Registration under Part 2 shall not be effected in respect of the hunting of mink."
It is identical, other than giving the name of a different species, to new clause 11, which dealt with foxes. I would have assumed that it had the same consequence as new clause 11 in requiring that the matter be referred back to a Standing Committee for further consideration, yet the recommittal motion agreed last night would appear to exclude the Committee from considering any matters arising from new clause 14 because it refers only to new clause 11.

Will you advise us, Mr. Speaker, whether the Committee will be able, within the bounds of order, to consider issues arising out of new clause 14, or do the Government have to introduce a further recommittal motion to put right another bit of a mess that they have made for themselves?

Further to that point of order, Mr. Speaker.

Order. The point of order of the hon. Member for Aylesbury (Mr. Lidington) was so long that it would help me if I could be allowed to respond to it.

I thank the hon. Gentleman for giving me notice of his point of order. Last night, the House agreed that the Hunting Bill be recommitted to the Standing Committee to which it previously stood committed. I think that that answers his first point

On the hon. Gentleman's second point, the recommittal motion authorises the Standing Committee only to make such amendments as it considers necessary in consequence of the addition of new clause 11. There is no reference to new clause 14 relating to mink.

With great respect, Mr. Speaker, the Bill is now significantly different from the Bill that was considered by the Standing Committee at some length, and which came before the House yesterday. As you know, we were given no notice of the Government's volte face on their own amendment, new clause 13. Is it not unprecedented and a discourtesy to the House and to you, Mr. Speaker, for the Government to railroad the Bill through so quickly? Would it not be more sensible for the Government to give one other week for this process?

This is now a matter for the Standing Committee. It is not a matter for me.

Further to the point of order of my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack), Mr. Speaker. Given that the Bill is so different now—it is almost an entirely new Bill, proposing a total ban rather than regulated hunting—and given that it is to be discussed in less than a week by the Standing Committee and for only two hours, as I understand the programme motion, on the Floor of the House, one hour of which will be presumably Third Reading, can you give us any guidance on the exercise of the Parliament Act in circumstances in which the Bill will have been so little discussed in the House?

The programme motion is to be debated later today. The hon. Gentleman may wish to raise these matters then. I would not wish to comment on the Parliament Act today.

On a point of order, Mr. Speaker. Yesterday, the Department of Trade and Industry made an announcement via a written statement on civil partnerships. Given its nature, it should have been made first to the House. Indeed, you reiterated that point to the Department on 9 December. However, the announcement was extensively trailed in The Observer, including quotations from the Minister for Industry and the Regions, who then appeared on the "Today" programme before the written statement was available. The hon. Lady talked extensively about the content of the consultation document. Even then, copies of an 88-page document were not available throughout yesterday from any of the Vote Offices. When I entered the Chamber today, it was still not available, despite multiple requests by many hon. Members through the Vote Office to the responsible Department. Can you do anything to reiterate your urging on behalf of Back Benchers and Front Benchers who wish to know the content of these announcements in good time, and, indeed, to stress to Departments that such documents must be available to hon. Members through the Vote Office in the normal way, instead of being kept back, apparently for the purposes of media management?

The House knows that I deprecate statements being made to the media about new policy announcements before they have been made to the House. In the case of the document to which the hon. Gentleman referred, I understand that what was published yesterday was a consultation paper, and that its publication was made known to the House in a written statement yesterday by the Deputy Minister for Women.

On a point of order, Mr. Speaker. As you will know, the Government were defeated last night when the House of Lords voted overwhelmingly to call on them to revoke the Food Supplements (England) Regulations 2003 and renegotiate with the European Commission. Have you had an indication from Ministers, Mr. Speaker, about whether they want to clarify the Government's position? The need for such a statement is given greater urgency by the astonishing claim by the Under-Secretary of State for Health, the hon. Member for Welwyn Hatfield (Miss Johnson), during health questions today that supplements are being removed because they are unsafe, and it would give Ministers a chance to explain that supplements will remain on sale until they are banned by Europe.

As the hon. Gentleman said, that was raised in Question Time today, and there is nothing to stop any hon. Member putting questions to the Minister concerned.

On a point of order, Mr. Speaker. I have given you prior notice of my point of order, and have advised the Members concerned. I wish to draw your attention to remarks by the hon. Member for Harrogate and Knaresborough (Mr. Willis) in last Monday's debate on student fees. At column 730, he said

"when we asked the House of Commons Library to comment on the Conservative proposals, it said:
`We couldn't understand the logic'."—[Official Report, 23 June 2003; Vol. 407, c. 730.]
That point was reiterated in a debate last Wednesday by the hon. Member for Newbury (Mr. Rendel) at column 1081 and outside the House in the pages of the Romsey Advertiser by the hon. Member for Romsey (Sandra Gidley).

I was concerned that the Library, which has a hard-won and universal reputation for scrupulousness and accuracy, should have been quoted in such a way. I today received a response from the Librarian, who rightly preserved the confidentiality of exchanges between herself and the hon. Member in question. However, she concluded that
"the response as a whole was balanced and gave a fair assessment of an admittedly complex policy area."
She also commented that she was
"satisfied that Mr Willis misquoted somewhat selectively and out of context from the information we gave."
The hon. Member for Harrogate and Knaresborough, who is not here at the moment, may wish in due course to set matters straight, but I hope that you, Mr. Speaker, can remind all hon. Members that the absolute integrity and independence of Library briefings should not be compromised in any way.

I should like to consider this matter. I will look into it and reply to the hon. Gentleman.

Finance Bill Ways And Means

Intangible Fixed Assets


That provision be made in the Finance Bill amending Schedule 29 to the Finance Act 2002.— [Dawn Primarolo.]

Inheritance Tax: Gifts With Reservations


That provision be made in the Finance Bill amending section 102 of the Finance Act 1986.— [Dawn Primarolo]

Finance Bill (Programme) (No 5)

Motion made, and Question proposed.

That in accordance with the resolution of the Programming Committee of 30th June 2003 and pursuant to the Programme Order of 6th May 2003 relating to the Finance Bill:

(1) Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion 8 hours after the commencement of proceedings on the first of the Ways and Means motions relating to the Bill set down this day.
(2) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion 9½ hours after the commencement of the proceedings on that motion.
(3) Paragraph (2) of this Order has effect notwithstanding the practice of the House as to the intervals between stages of Bills brought in upon Ways and Means Resolutions.
(4) The proceedings on consideration shall be taken in the order shown in the following Table, and each part of the proceedings shall (so far as not previously concluded) be brought to a conclusion at the time specified in the second column.



Time for conclusion of

New Clauses and new Schedules,
except those relating to stamp
duty land tax or stamp duty.
3½ hours after the
commencement of the
proceedings on the motion
referred to in paragraph (1)
Amendments relating to Clauses
1 to 41 and Schedules 1 and 2;
amendments relating to Clauses
130 to 211 and Schedules 21 to
5½ hours after the
commencement of those
New Clauses and new Schedules
relating to stamp duty land tax
or stamp duty; amendments
relating to Clauses 42 to 129 and
Schedules 3 to 20; remaining
8 hours after the commencement
of those proceedings.

[Dawn Primarolo.]

12.44 pm

I do not understand why the Minister does not see fit to explain to us why on earth so little time is being allocated to such important material. The Government seem at least to be acting consistently in their wish to deny the House proper opportunity to debate the matters before it.

I suspect that were the Minister to seek to catch Mr. Speaker's eye, she would make some spurious claim about the programme motion being agreed in the Programming Committee. That, from my information, may be technically true, but the Minister knows that, in effect, the Opposition had no choice. We were offered inadequate time or potentially no time at all. Faced with such an option, my hon. Friends on the Programming Committee were probably right to accept, reluctantly and under the Government's pressure, inadequate time, because we would otherwise get even less time. I hope the Minister will not say that the Opposition signed up to the programme motion and were content with it. We are not.

The reason we are not content is straightforward. The Finance Bill is always a special Bill, not only because of its content and the effect it has on everybody's daily lives, both individual and corporate, but because there exists no safety net in the House of Lords, as exists for other Bills. That puts the Finance Bill in a special category. I have never accepted an excuse that may be offered from time to time by the Government and others that if, by some mismanagement, we do not have adequate time in this House to scrutinise a Bill and hold the Government to account, there is always the safety net of the House of Lords.

As we know, their lordships do a wonderful job of scrutinising legislation. They sit for more hours and more days than we do, and they do the job that we should be doing. The reason we cannot do it is that the Government do not let us do it. Systematically, and this is another case in point, the Government take an arbitrary view of how much time the House requires to scrutinise the Government, and then feign surprise when we fail adequately to do so, in spite of the sterling efforts of my right hon. and hon. Friends. The Finance Bill is therefore in a special category. We have no safety net and no alternative to the scrutiny that the House can bring to bear. That is the general point.

What are the Government seriously suggesting in the programme motion? Not only are they arbitrarily imposing an overall time limit on our proceedings, but they compound that error by claiming to know how long the House will require for each grouping within, as we call it in this place, the knives. In the first grouping there are, by my calculation, nine distinct and separate issues to be considered in a mere three and a half hours. Those include items such as ISAs and PEPs, children's tax credit for persons subject to immigration control, capital allowances for small and medium-sized enterprises, and a very controversial issue that affects many people—vehicle excise duty on historic vehicles.

One could argue that each of those issues would merit three and a half hours. I am sure that hon. Members could take up that time subjecting those matters to proper scrutiny, but the Government tell us that all those issues together will be allowed only three and a half hours. There is the potential for several hundred Members of Parliament to want to contribute to a debate on behalf of their constituents on issues that may affect them individually, whether through their investments in ISAs and PEPs or their much loved historic vehicle, but they will be allowed only that limited amount of time.

In the next group there are seven major issues and 30 Government amendments. The Government are at this stage introducing substantial amendments to their own Finance Bill, yet they have the gall and the impertinence to tell us that only two hours will be allowed to consider those seven separate issues covered by 30 Government amendments. That is an insult to the House.

Finally, and perhaps worst of all, the Government are allowing us only two and a half hours to consider, of all things, stamp duty and stamp duty land tax—a major and extremely important issue covered, by my reckoning, by about 90 separate amendments. I hope that the point has by now become clear: whereas historically we have always been allowed two days for this stage of proceedings on the Finance Bill to consider such matters, the Government have taken it upon themselves to say, as they did originally, that one day should suffice, and they have only grudgingly given us a little extra time so that we now have eight hours in total to deal with all the matters that I have just adumbrated.

Why do the Government take the view that we have to finish our work and deliberations here in the House of Commons at 10 or 11 o'clock tonight? What is so magical about that hour? Does the Paymaster General turn into a pumpkin? Are we no longer able properly to consider the Finance Bill at later hours, as many of us who have been around for a while used to do routinely? Are the Government now telling us that so delicate are Labour Members, so lacking in stamina, so lacking in commitment to the parliamentary process, that they insist on bunking off at 10 or 11 o'clock at night regardless of whether the measure before the House has been given proper scrutiny? That is the only conclusion that we can draw—it really is. Instead of saying, "Let us examine the size, scope and nature of the issues and then attempt to agree on what constitutes a reasonable amount of time", the Government march along in hobnailed boots—I am sure the Paymaster General rarely wears such footwear, but I suspect that on this occasion she did so—and tell us that this arbitrary amount of time is the time that we will take: three and a half hours for nine major issues, two hours for seven further issues, and two and a half hours for a group encompassing 90 separate amendments. The figures speak for themselves.

I endorse the right hon. Gentleman's observations. I hope that he agrees with me that, given the shortage of time in Committee and in view of the matters being drawn to our attention by business people throughout the country, surely now is an opportunity to have at least two or three days for Report and Third Reading.

The hon. Gentleman is right. I suspect that even Committee stage did not take as much time as has often and traditionally been allotted in the past. He makes a wholly valid point, and I admit to him and to my colleagues that I might have been rather selfish in concentrating on the parliamentary aspects of the programme. Outside interests legitimately take as much interest in and have as much to say about the Finance Bill as about any other measure, and perhaps more than most. At this stage, given the new material being introduced by the Government, such outside interests should be able to expect Members of Parliament to have ample time in which to reflect their legitimate views.

I suspect that people outside this place looking in on the parliamentary process can only draw the same conclusion as I have drawn. The Government do not really care what they have to say and do not see any need for anyone outside this place or, indeed, Members of Parliament to show a proper interest in the contents of the Finance Bill. Instead, we have the usual Government assumption that because they will it, it must be so, and there is no need for proper scrutiny. This is yet another sad episode in what I can only perceive to be the decline of opportunities for the House of Commons properly to scrutinise the Government's business.

I hope on this occasion, as I always do, that the House will resist the programme motion—or even that the Paymaster General will have a last-minute change of heart. I am always optimistic about such things and the compliant look on her face makes me even more optimistic. I hope that she is about to tell us that, having heard my argument, she is prepared to give us more time. That is my earnest wish. If that is not the case, those outside the House can draw only one conclusion.

12.54 pm

I am not quite as optimistic as the shadow Leader of the House, but I rise to pick up some of his comments without wanting to eat further into the precious time available to us today.

It is fair to say that this year's Finance Bill has not been politically high profile. Perhaps that tempted the Government to think that they could accelerate the progress of the Bill through Parliament, including the proceedings to be dealt with today. However, the Bill's lack of a high political profile does not mean that it does not contain a tremendous amount of very important detail that is important to individuals, businesses and those who have to use the tax system. This is the fourth longest Finance Bill on record, and those who have examined the Committee proceedings will know that although we were able to cover a substantial proportion of the Bill, parts that arose during the earlier sittings in particular were not touched upon. Given that those parts deal with some of the issues that are most important to us, and which might create problems for the tax system in future, we must be concerned.

Also of concern is the fact that we are faced with an accelerated timetable in circumstances in which we cannot rely on the other place to mop up some of the aspects that we are unable to cover. We have to be able to cover all of the issues contained in the Finance Bill in adequate time during proceedings in this place. Given the length of this year's Finance Bill, it is not obvious why we are to have only nine and a half hours today to debate the range of issues encompassed by the amendments, compared with approximately 13 and a quarter hours of debate last year. Even if I do not share the optimism expressed by the shadow Leader of the House that the Paymaster General will suddenly announce that the House will sit into the early hours of the morning, I ask her at least to put on the record the fact that this year's curtailment to one day of the final stages of the Finance Bill does not set a precedent for future years.

12.56 pm

I will be brief. I always find debates on programme motions intriguing in that they eat into the time that hon. Members say they desperately require.

I take issue with the shadow Leader of the House who, when listing the important amendments before the House, failed to mention the oil and gas industry-related amendments tabled by Scottish National party Members. That was uncharacteristic of him: as a Scot, he knows that the industry supports approximately 250,000 people and has brought £160 billion to the Treasury over the past 25 years.

My point is direct and straightforward. In Committee, SNP Members tabled two amendments: one on the whisky industry and the other relating to our concerns about the changes to the fiscal regime covering the North sea oil and gas industry. The amendments were submitted in good faith and we were given a reasonable assurance through the usual channels that we would get our usual time during Committee stage to debate those issues. However, our amendments were put way down the list and our time was squeezed by a developing row between the Opposition and Government Front Benches that resulted in a series of inconsequential amendments being tabled and debated at length. Although we had time to debate our whisky amendment, our amendment on oil and gas fell without debate.

We believed that we would therefore have the opportunity to debate that subject on Report, so we tabled a similar amendment. However, such are the rigours of the programme motion that it seems likely that we will be disappointed once again. It is no great secret that the programme motion will pass, so let me make an appeal—a plea—to Front Benchers and others who seek to catch your eye during the debate, Mr. Speaker: give us this opportunity to debate oil and gas, even though it is way down at the bottom of the list of matters for debate.

I want to put on the record something that the hon. Gentleman, who was not a member of the Programming Committee, may not know. A strong submission and argument was made by Her Majesty's official Opposition, supported by the Liberal Democrats, that there should be no knife after new clause 9 and that we should have a package of time running from the beginning of our consideration of amendments to the start of consideration of the amendments relating to stamp duty. Had that been allowed, the hon. Gentleman would not have to suffer the concerns that he has expressed. As he knows, the order in which new clauses are considered depends to some extent on the time of their tabling, so it behoves him to try to get his new clauses tabled rather more quickly. None the less, it is important that he recognise that the Opposition did all we could to assist him. It was entirely the Government's edict that demanded that a knife fall at the point that gives rise to his complaint.

I am grateful to the hon. Gentleman, and I appreciate his assistance in the Programming Committee. I go further and thank him for the assistance that Conservative Front Benchers gave us in the Standing Committee: they rushed through business so that we had an opportunity at least to discuss our concerns about the whisky industry. I hope that similar consideration is given today.

I am sure that you, Mr. Speaker, agree that debates on the Finance Bill should be open and accessible to hon. Members of all parties, regardless of size. The oil and gas industry is a massive industry of substantial significance to Scotland. I hope that we will secure assistance and that we will reach our amendments, which are of fundamental importance to Scotland.

12.59 pm

To give the hon. Member for North Tayside (Pete Wishart) the assistance that he seeks, I shall be brief.

The record shows that the motion was agreed to without a Division. If the shadow Leader of the House checks the draft programme motion that was circulated to his representatives last Thursday, he will see that the Government, in discussions with the Opposition, ensured that the nine and a half hours allocated for debate, including of the ways and means and programme motions, were protected. The motion provides the equivalent of one and a half days and sets out three groupings for debate—the new clauses, the amendments and a very substantial section 3 on stamp duty.

I should like to finish my comments. The hon. Gentleman was present in the Committee, where there was discussion about the division of time, but no dispute about how much time would be taken in respect of the first group, which consists of new clauses, and the second group, which consists of amendments. There was a question about the inclusion of the programme and the way in which we proceeded. If less time is taken on the new clauses, more time will roll forward into the amendments—

I am explaining the position. If 45 minutes are not taken in debating the programme motion, the time will roll forward and there will be more time for the new clauses.

I say to the hon. Gentlemen that every effort was made in seeking from the Opposition indications that they wished the business to follow a particular pattern.

No. Opposition Members asked for two days. It is not always possible to have two days' debate on the Finance Bill, which, like all Government business, is dealt with on the basis of the availability of time and the business of the House in looking at the due process of consideration.

I will not do so, because I am explaining that, as has been discussed, as the record demonstrates, and as those who were present in the Committee can testify, after considerable informal discussion we finally reached agreement without a Division on today's business. That is why I moved the motion formally.

On a point of order, Mr. Speaker. Is it in order for a Member of this House to present a picture of what took place at a meeting elsewhere that is not in accordance with what actually occurred?

That is a point for debate. Hon. Members have an opportunity to rebut any case that is made.

I am grateful to the Paymaster General for at last giving way; I had not realised that she was doing so, as it appeared that she had concluded her speech.

The Paymaster General will recall that, in the Programming Committee yesterday, after extensive formal and informal discussions, and in the absence of the Government being prepared even to consider allowing the usual two days for Report and Third Reading of the Finance Bill, Her Majesty's official Opposition, under protest and recording their displeasure at the arrogant approach taken by the Government in confining today's business to one parliamentary day, albeit with a few extended hours, and with some dispute on where the knives fell, decided that it was better when faced with that situation that we should pragmatically and responsibly seek to ensure that there was some form of workable programme for today. We did so under protest at not being able to secure two days. Furthermore, as she knows, it would therefore have been wholly inappropriate for us merely to play gesture politics by voting "no" after we had come through informal discussions on our secondary line of argument about getting the programme that we wanted for today.

Finally, as the Paymaster General well knows, the important concession extracted from the Government was to get at least some time by way of protected business. That formed a central part of the negotiations. I hope that the record will show that the primary argument is about having two days—[Interruption.] This may be an intervention, but I am making sure that the record is set straight about the fact that two days are required and that it is under protest that we agreed to the proposals, pragmatically and responsibly, to ensure that today's programme can at least work, despite the falling of the first knife, which we do not regard as necessary.

There we have it. The Opposition agreed to the programme motion as a workable programme for today. They said that they wanted two days and the Government have met their concerns and given them more time. That is what is being proposed and the hon. Gentleman confirms that.


The hon. Member for Eddisbury (Mr. O'Brien) was present in the Programming Committee, which is why I gave way to him, and he has confirmed—I quote him—that the Opposition agreed in a pragmatic way that the programme was workable for the business today. I commend the motion to the House.

1.6 pm

I shall be as brief as I possibly can. We have heard some inaccuracies from the Government Front Bench. I was present in the Programming Committee yesterday afternoon. The version of events that we have heard from the Paymaster General does not represent what genuinely took place. The meeting started with a discussion of whether there should be two days of debate. That is all that the debate was about. I personally made the point that we believe that two days are necessary. We discussed that point and continued to do so until she said, in words of one syllable, "There will not be another day"—[Interruption.] I do not want to give way to the Paymaster General; she would not give way to Opposition Members, so I shall return the compliment. I have learned my lessons from her.

The first part of the discussion was about the need for two days. We got an emphatic no and were told that there would not be two days. Such an approach leaves an Opposition with two options—to be responsible or to take a wrecking approach. Faced with an intransigent and arrogant Government who were not prepared to respect democracy, we had no choice but to make the best of a bad job. That was explained at the meeting, and it is to my regret, and I hope that of the House, that the Paymaster General did not do the decent thing and say exactly what happened rather than give her own version, saying "Ah well, they agreed with it." We did not do so; we objected to what went on and I object to what is going on now. The real version should be the version that is in the record, and not her contrived version.

1.7 pm

I have declared my interests in the register.

I am amazed by the Government's attitude and conduct in this matter, and I am very disappointed, as I had thought that the Paymaster General was one of those rarer Ministers in this Administration who understood the feelings of the House and tried from time to time to adjust the script accordingly. Today, she is failing us badly, but I should like to have one quick go at persuading her to adopt a new way of handling this business in view of the great unease among Opposition Members about the shortage of time and the truncated programme that we are being asked to approve.

I see on the Order Paper that, towards the end of our proceedings today, there will be a relatively short debate on what amounts not merely to a completely new tax, but to a completely new way of handling that new tax and running our economy. We are invited to approve within two and a half hours a complete rejigging of stamp duty and stamp duty land tax and, I assume, its use—at a much higher level than we have been accustomed to in this country regarding property taxes—as a regulator of the economy, instead of the normal monetary and interest rate methods, in preparation for joining the euro.

I think that that is worth a day's debate on its own, and separate legislation. It is a massive change in the conduct of economy policy that will have a huge impact on homeowners and house values throughout the country if the Government are planning, on the back of that legislative change, to impose much higher rates of stamp duty to bring us into line with our European partners and to try to take the heat out of the housing market, of which euroland does not seem to approve.

I would therefore suggest to the Paymaster General, at this late stage, that she allow us sufficient time today to do all the business, up to and including that on insurance companies, which must be completed in five and a half hours but could probably be done within the eight hours that we have overall. The stamp duty provisions should be brought back at a later stage as separate legislation to allow us to have a proper debate on a new and very dangerous method of running our economy.

Question put:

The House divided: Ayes 273, Noes 155.

Division No. 262]

[1:10 pm


Ainger, NickClark, Paul (Gillingham)
Ainsworth, Bob (Cov'try NE)Clarke, rh Tom (Coatbridge &
Allen, Graham


Anderson, rh Donald (Swansea E)Clarke, Tony (Northampton S)
Atherton, Ms CandyClelland, David
Atkins, CharlotteClwyd, Ann (Cynon V)
Austin, JohnCoffey, Ms Ann
Bailey, AdrianCohen, Harry
Baird, VeraCook, Frank (Stockton N)
Barnes, HarryCook, rh Robin (Livingston)
Battle, JohnCorbyn, Jeremy
Bayley, HughCousins, Jim
Begg, Miss AnneCox, Tom (Tooting)
Bell, StuartCranston, Ross
Benn, HilaryCruddas, Jon
Bennett, AndrewCryer, Ann (Keighley)
Benton, Joe (Bootle)Cryer, John (Hornchurch)
Berry, RogerCummings, John
Best, HaroldCunningham, rh Dr. Jack
Betts, Clive


Blackman, LizCunningham, Jim (Coventry S)
Blears, Ms HazelCunningham, Tony (Workington)
Blizzard, BobDalyell, Tam
Borrow, DavidDarling, rh Alistair
Bradley, rh Keith (Withington)Davey, Valerie (Bristol W)
Bradley, Peter (The Wrekin)David, Wayne
Brennan, KevinDavidson, Ian
Brown, Russell (Dumfries)Davies, rh Denzil (Llanelli)
Burden, RichardDavies, Geraint (Croydon C)
Burgon, ColinDavis, rh Terry (B'ham Hodge H)
Byers, rh StephenDawson, Hilton
Campbell, Alan (Tynemouth)Denham, rh John
Campbell, Mrs Anne (C'bridge)Dhanda, Parmjit
Campbell, Ronnie (Blyth V)Dismore, Andrew
Caplin, IvorDobbin, Jim (Heywood)
Casale, RogerDobson, rh Frank
Cawsey, Ian (Brigg)Donohoe, Brian H.
Challen, ColinDoran, Frank
Chapman, Ben (Wirral S)Drew, David (Stroud)
Clapham, MichaelEagle, Angela (Wallasey)
Clark, Mrs Helen (Peterborough)Efford, Clive
Clark, Dr. Lynda (EdinburghEllman, Mrs Louise


Etherington, Bill

Farrelly, PaulLepper, David
Field, rh Frank (Birkenhead)Leslie, Christopher
Fitzpatrick, JimLevitt, Tom (High Peak)
Fitzsimons, Mrs LornaLewis, Ivan (Bury S)
Follett, BarbaraLewis, Terry (Worsley)
Foster, rh DerekLinton, Martin
Foster, Michael Jabez (HastingsLloyd, Tony (Manchester C)

& Rye)

Love, Andrew
Foulkes, rh GeorgeLucas, Ian (Wrexham)
Gerrard, NeilLuke, Iain (Dundee E)
Gilroy, LindaLyons, John (Strathkelvin)
Godsiff, RogerMcAvoy, Thomas
Goggins, PaulMcCabe, Stephen
Griffiths, Jane (Reading E)McDonagh, Siobhain
Griffiths, Nigel (Edinburgh S)McDonnell, John
Griffiths, Win (Bridgend)McFall, John
Grogan, JohnMcIsaac, Shona
Hain, rh PeterMcKechin, Ann
Hall, Mike (Weaver Vale)Mackinlay, Andrew
Hall, Patrick (Bedford)Mactaggart, Fiona
Hamilton, David (Midlothian)McWalter, Tony
Hamilton, Fabian (Leeds NE)Mahmood, Khalid
Hanson, DavidMahon, Mrs Alice
Harris, Tom (Glasgow Cathcart)Mallaber, Judy
Havard, Dai (Merthyr Tydfil &Mandelson, rh Peter


Mann, John (Bassetlaw)
Healey, JohnMarris, Rob (Wolverh'ton SW)
Henderson, Ivan (Harwich)Marsden, Gordon (Blackpool S)
Hendrick, MarkMarshall, David (Glasgow
Hepburn, Stephen


Hesford, StephenMartlew, Eric
Hewitt, rh Ms PatriciaMeale, Alan (Mansfield)
Heyes, DavidMerron, Gillian
Hinchliffe, DavidMichael, rh Alun
Hodge, MargaretMiliband, David
Hoey, Kate (Vauxhall)Miller, Andrew
Hood, Jimmy (Clydesdale)Moffatt, Laura
Hoon, rh GeoffreyMole, Chris
Hopkins, KelvinMoran, Margaret
Howarth, George (Knowsley N &Morgan, Julie

Sefton E)

Mountford, Kali
Howells, Dr. KimMudie, George
Hughes, Beverley (Stretford &Murphy, Denis (Wansbeck)


Murphy, Jim (Eastwood)
Hughes, Kevin (Doncaster N)Naysmith, Dr. Doug
Humble, Mrs JoanNorris, Dan (Wansdyke)
Hurst, Alan (Braintree)O'Brien, Bill (Normanton)
Hutton, rh JohnO'Brien, Mike (N Warks)
Iddon, Dr. BrianO'Hara, Edward
Illsley, EricOlner, Bill
Irranca-Davies, HuwO'Neill, Martin
Jackson, Glenda (Hampstead &Osborne, Sandra (Ayr)


Pickthall, Colin
Jackson, Helen (Hillsborough)Pike, Peter (Burnley)
Jenkins, BrianPope, Greg (Hyndburn)
Johnson, Miss Melanie (WelwynPrentice, Ms Bridget (Lewisham



Jones, Helen (Warrington N)Prentice, Gordon (Pendle)
Jones, Jon Owen (Cardiff C)Primarolo, rh Dawn
Jones, Lynne (Selly Oak)Purchase, Ken
Kaufman, rh GeraldQuinn, Lawrie
Keeble, Ms SallyRammell, Bill
Keen, Alan (Feltham)Reid, rh Dr. John (Hamilton N &
Kemp, Fraser


Khabra, Piara S.Robertson, John (Glasgow
Kidney, David


Kilfoyle, PeterRoche, Mrs Barbara
King, Andy (Rugby)Rooney, Terry
King, Ms Oona (Bethnal Green &Ross, Ernie (Dundee W)


Roy, Frank (Motherwell)
Knight, Jim (S Dorset)Ruane, Chris
Kumar, Dr. AshokRussell, Ms Christine (City of
Ladyman, Dr. Stephen


Lammy, DavidRyan, Joan (Enfield N)
Lawrence, Mrs JackieSalter, Martin
Laxton, Bob (Derby N)Sarwar, Mohammad
Savidge, MalcolmTurner, Dennis (Wolverh'ton SE)
Sawford, PhilTurner, Dr. Desmond (Brighton
Sedgemore, Brian


Shaw, JonathanTurner, Neil (Wigan)
Sheridan, JimTwigg, Derek (Halton)
Skinner, DennisVis, Dr. Rudi
Smith, rh Andrew (Oxford E)Walley, Ms Joan
Smith, rh Chris (Islington S &Wareing, Robert N.


Watson, Tom (W Bromwich E)
Smith, Geraldine (Morecambe &Watts, David


White, Brian
Smith, Jacqui (Redditch)Whitehead, Dr. Alan
Smith, John (Glamorgan)Williams, rh Alan (Swansea W)
Southworth, HelenWilliams, Betty (Conwy)
Starkey, Dr. PhyllisWinterton, Ms Rosie (Doncaster
Steinberg, Gerry


Stevenson, GeorgeWoodward, Shaun
Stewart, Ian (Eccles)Woolas, Phil
Stinchcombe, PaulWorthington, Tony
Stoate, Dr. HowardWray, James (Glasgow
Stuart, Ms Gisela


Sutcliffe, GerryWright, Anthony D. (Gt
Tami, Mark (Alyn)


Taylor, Dari (Stockton S)Wright, David (Telford)
Thomas, Gareth (Clwyd W)Wright, Tony (Cannock)
Thomas, Gareth (Harrow W)Wyatt, Derek
Tipping, Paddy
Touhig, Don (Islwyn)

Tellers for the Ayes:

Trickett, Jon

Mr. John Heppell and

Truswell, Paul

Vernon Coaker


Ainsworth, Peter (E Surrey)Evans, Nigel
Allan, RichardEwing, Annabelle
Amess, DavidFabricant, Michael
Atkinson, David (Bour'mth E)Field, Mark (Cities of London &
Atkinson, Peter (Hexham)


Bacon, RichardFlight, Howard
Baldry, TonyFlook, Adrian
Barker, GregoryForth, rh Eric
Baron, John (Billericay)Foster, Don (Bath)
Barrett, JohnFox, Dr. Liam
Bellingham, HenryFrancois, Mark
Bercow, JohnGarnier, Edward
Beresford, Sir PaulGeorge, Andrew (St. Ives)
Blunt, CrispinGibb, Nick (Bognor Regis)
Boswell, TimGillan, Mrs Cheryl
Bottomley, Peter (Worthing W)Goodman, Paul
Brake, Tom (Carshalton)Grayling, Chris
Brazier, JulianGreen, Damian (Ashford)
Breed, ColinGreenway, John
Brooke, Mrs Annette L.Grieve, Dominic
Browning, Mrs AngelaGummer, rh John
Bruce, MalcolmHague, rh William
Burnett, JohnHammond, Philip
Burns, SimonHancock, Mike
Burt, AlistairHarris, Dr. Evan (Oxford W &
Butterfill, John


Cable, Dr. VincentHarvey, Nick
Calton, Mrs PatsyHawkins, Nick
Cameron, DavidHeath, David
Campbell, rh Menzies (NE Fife)Hendry, Charles
Carmichael, AlistairHermon, Lady
Chapman, Sir Sydney (ChippingHoram, John (Orpington)


Howarth, Gerald (Aldershot)
Chidgey, DavidJack, rh Michael
Clarke, rh Kenneth (Rushcliffe)Jenkin, Bernard
Clifton-Brown, GeoffreyKeetch, Paul
Collins, TimKey, Robert (Salisbury)
Conway, DerekKirkbride, Miss Julie
Cormack, Sir PatrickKirkwood, Sir Archy
Curry, rh DavidKnight, rh Greg (E Yorkshire)
Davey, Edward (Kingston)Laing, Mrs Eleanor
Djanogly, JonathanLamb, Norman
Doughty, SueLansley, Andrew
Duncan, Peter (Galloway)Letwin, rh Oliver

Liddell-Grainger, IanShepherd, Richard
Lidington, DavidSimmonds, Mark
Lilley, rh PeterSimpson, Keith (M-Norfolk)
Loughton, TimSmith, Sir Robert (W Ab'd'ns &
McIntosh, Miss Anne


Mackay, rh AndrewSoames, Nicholas
Maclean, rh DavidSpink, Bob (Castle Point)
McLoughlin, PatrickStanley, rh Sir John
Malins, HumfreyStreeter, Gary
Maples, JohnStunell, Andrew
Marsden, Paul (Shrewsbury &Swire, Hugo (E Devon)


Syms, Robert
Mawhinney, rh Sir BrianTaylor, John (Solihull)
May, Mrs TheresaTaylor, Dr. Richard (Wyre F)
Murrison, Dr. AndrewTaylor, Sir Teddy
Norman, ArchieThomas, Simon (Ceredigion)
O'Brien, Stephen (Eddisbury)Thurso, John
Ottaway, RichardTonge, Dr. Jenny
Page, RichardTredinnick, David
Paice, JamesTrimble, rh David
Price, Adam (E Carmarthen &Turner, Andrew (Isle of Wight)


Tyrie, Andrew
Prisk, Mark (Hertford)Viggers, Peter
Pugh, Dr. JohnWalter, Robert
Randall JohnWaterson, Nigel
Redwood rh JohnWatkinson, Angela
Robathan, AndrewWeir, Michael
Robertson, Angus (Moray)Widdecombe, rh Miss Ann
Robertson, Hugh (Faversham &Wiggin, Bill


Williams, Hywel (Caernarfon)
Willis, Phil
Robertson, Laurence (Tewk'b'ry)Winterton, Ann (Congleton)
Robinson, Peter (Belfast E)Winterton, Sir Nicholas
Roe, Mrs Marion


Rosindell, AndrewWishart, Pete
Ruffley, DavidYoung, rh Sir George
Russell, Bob (Colchester)
Sanders, Adrian

Tellers for the Noes:

Sayeed, Jonathan

Mr. Mark Hoban and

Selous, Andrew

Mr. David Wilshire

Question accordingly agreed to.

Orders Of The Day

Finance Bill

As amended in the Committee and the Standing Committee, considered.

New Clause 6

Intangible Fixed Assets: Tax Avoidance Arrangements And Related Parties

(1) Schedule 29 to the Finance Act 2002 (c. 23) (gains and losses of a company from intangible fixed assets) is amended as follows.

(2) In paragraph 111 (tax avoidance arrangements to be disregarded)—

  • (a) in subparagraph (1) for the words following "in determining" substitute "whether a debit or credit is to be brought into account under this Schedule or the amount of any such debit or credit", and
  • (b) in subparagraph (2)—
  • (i) for "under paragraph 9" in paragraph (a), and
  • (ii) for "under Part 4" in paragraph (b),
    substitute "under this Schedule".
  • (3) In paragraph 95(1) (cases in which persons are "related parties") at the end add—

    • "Case Four
    • P is a company and C is another company in the same group."

    (4) The amendments in this section—

  • (a) have effect in relation to the debits or credits to be brought into account for accounting periods beginning on or after 20th June 2003, and
  • (b) in relation to the debits or credits to be brought into account for any such period shall be deemed always to have had effect.
  • (5) For this purpose an accounting period beginning before, and ending on or after, that date is treated as if so much of that period as falls before that date, and so much of that period as falls on or after that date, were separate accounting periods.'.— [Dawn Primarolo.]

    Brought up, and read the First time.

    1.24 pm

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

    Last year, after extensive consultation, the Government introduced new tax rules for companies' good will and intangible assets, such as patents, brand names and copyrights, which are vital for a modern, knowledge-based economy. The new rules, which are in schedule 29 of the Finance Act 2002, broadly allow companies to claim tax relief for those assets as they write them down in their accounts. Companies may alternatively elect to treat them as though they were written down at 4 per cent. per annum. The rules are meant to apply only to assets created by or acquired from an unrelated party after 31 March 2002.

    There is clear evidence of marketing tax avoidance schemes that are intended to bring assets that already existed on 31 March 2002 into the new regime to claim relief under the alternative 4 per cent. option. We estimate that there are approximately £400 billion to £600 billion of potentially eligible assets. If only a small fraction were brought into the new tax regime, the cost would be enormous, apart from the fact that that was not the intention. The cost would continue for the next 25 years.

    The avoidance schemes rely first on the fact that the anti-avoidance rule does not currently apply to the 4 per cent. relief. They then try to exploit a mismatch in the definitions of "related persons" in the intangibles rules and of a group for capital gains purposes. To put it simply, they try to transfer assets in a group for capital gains purposes so that no capital gains tax arises, while arranging matters so that the transfer is between unrelated persons for intangible assets purposes. Thus, the asset is treated as acquired from an unrelated person and can be brought within the new regime.

    The new clause would block such schemes by widening the scope of the anti-avoidance rules in schedule 29 of the 2002 Act and by tightening the definition of "related persons". It is a modest and proportionate response to an attempt to exploit a new relief. I underline our determination to act against tax avoidance speedily and firmly.

    I commend the new clause to hon. Members and I am happy to respond to any questions.

    The Paymaster General told us in a written statement on 20 June after the Committee had concluded its proceedings on 17 June that such a new clause would be tabled. It prompts us to ask why the Treasury and the Inland Revenue were unable to formulate it before the Finance Bill was considered or during the Committee's proceedings. That would have been more appropriate than taking up time now.

    It is clear that the changes will have an immediate effect and the new clause therefore smacks of panic by the Treasury and the Government. It is part of a transparent and notable theme that will become apparent in our proceedings today, in that it reflects a panic in the Treasury, which has splurged and wasted so much money that it now has to gather much, make every part of the tax system sweat and, above all, change the balance between the rights of the citizen taxpayer and those of the Government. I do not wish to explore that more general theme now because there will opportunities to do that later.

    The background note to the new clause is useful and I daresay that it would not have attracted controversy if it had been tabled when we considered the Bill in Committee. Paragraph 22 of the background notes states:
    "There is now clear evidence",
    to which the Paymaster General referred,
    "that companies are seeking to overcome the restrictions in Schedule 29, by exploiting a perceived mismatch between the definition of related persons in the intangibles rules and the definition of a group for capital gains purposes as well as the fact that the anti-avoidance rules in paragraph 111 of Schedule 29 do not extend to cover the optional 4 per cent. scheme."
    The new clause therefore tries to remove the mismatch. It has been decided that the provision will not be retrospective—a major issue with which we had frequently to contend in Committee. We may dispute the Government's ability to deploy money or doubt whether they deserve to receive so much taxpayers' money, given the way in which it is deployed—let alone wasted—on behalf of taxpayers.

    None the less, because the proposal is not retrospective and because the changes seem to be in line with the consultation—had it been considered in a timely manner in Committee, it might have attracted our broad non-objection—we may on this occasion have to accept that the Government are entitled to introduce it, notwithstanding those reservations.

    1.30 pm

    I have declared my interest in the register. I am rather perplexed by this proposal. I can quite understand why the Government need more and more money—as my hon. Friend the Member for Eddisbury (Mr. O'Brien) rightly said, they are wasting so much of it—but I am not sure that this is the final answer. The Government are legislating at the last minute in a panic, and my hon. Friend is right to ask why a whole year has elapsed since the previous legislation, why nothing was forthcoming if the matter was this urgent, and why nothing was forthcoming when the original Bill was considered in Committee. Why is this proposal being introduced from 20 June, as if huge gaps appeared in the revenue from that date onwards but no such problem had existed previously?

    If the Paymaster General is right in saying that she is going to lose revenue unless she makes this particular change, is she not running the risk—if the change is adopted—of losing revenue in other ways following the bolting of this particular stable door? For example, might not many more exchanges of brand assets and other intangibles take place between groups of companies? I believe that it is becoming quite fashionable for certain large companies owning lots of brands to concentrate on their top six or 12 and to sell their other brands. Those other brands may be very advantageous or interesting to competitors or other companies in related fields, which, by dint of acquisition from an external group, could then trigger the advantages of the Finance Act 2002.

    Is the Paymaster General worried that this change might simply shift the method of making sensible tax-planning arrangements from transfers of brands and intangibles between companies in the same group, to transactions between different groups of companies? Has she considered that if the closure of this loophole leads to the tax-planning advantages becoming much greater for one system than for the other, the legislation itself might trigger changes in corporate structure? Might it not be better for shareholder value for the boards of companies owning a substantial number of brands to de-merge different companies within the group, and then to transfer brands and assets of an intangible nature afterwards, so that they can get round this particular closing of the loophole?

    I fear that the Paymaster General has not come up with the final answer, and that what she is really seeking to do is to repeal schedule 29, but has yet to realise that the insatiable demand for revenue requires that the Government take such action. As a result, she has brought a half-baked half-measure to the House today, and I doubt whether it will be found sufficient. I ask her to address my worry that closing one door simply opens up others that industry and commerce will take advantage of, because of the obvious tax-planning advantages in so doing.

    I should point out to the right hon. Member for Wokingham (Mr. Redwood) that this regime was introduced last year with the support of his party, following extensive consultation with business. The facility that it provides within the tax system—a facility that did not exist under his Government or in the first years of this Government—has been widely welcomed.

    The right hon. Gentleman asked me the $64,000 question: will tax planners continue to try to tax plan? Well, I expect that they will. As a Minister, the issue for me is this. I have seen marketed specific suggestions and arrangements that would lead to a loss of revenue to the taxpayer, collected on the Government's behalf, in respect of what was introduced last year as essentially a relieving measure. I should point out to the right hon. Gentleman that the proposals are specific and targeted and will deal with those avoidance measures.

    I realise that the regime was introduced last year with our agreement; indeed, I welcomed it at the time and thought it an excellent idea. My understanding was that the whole idea was to charge less tax on companies and therefore, from the Treasury's point of view, to lose revenue. My worry this afternoon is that the Government seem to be trying to reverse that. They appear to regret the fact that they lost revenue through a measure that I thought was introduced as a tax relief. My suspicion is that what they are really seeking to do in due course is to scrap the whole thing, which I would regret deeply.

    I can assure the right hon. Gentleman that that is not the case. If he looks at the legislation he will discover the specific intended use of the 4 per cent. annual deduction, which, as I explained in my opening remarks, is being abused. We are therefore seeking to prevent that by introducing anti-avoidance measures.

    If I may, I shall first answer the questions from the hon. Member for Eddisbury (Mr. O'Brien). Perhaps I did not hear him correctly, but my understanding from what he said is that the Opposition will not be dividing the House on this issue.

    I thank the hon. Gentleman. His first question was why the proposal has been introduced now and not in the original Bill. Regrettably, I was not able to table the new clause in time: the Revenue has only recently received the relevant information, which requires us to act immediately. As he knows—we have discussed this issue before—it was the practice of the previous Government and of other Governments that anti-avoidance legislation becomes effective from the date of its announcement, and that is the practice of this Government.

    I know that the hon. Gentleman shares my view about the importance of the issue of retrospection. Whatever the view of schemes introduced before 20 June, there is no retrospection in this proposal. It deals immediately with what we understand to be the perceived problem with the arrangements, in terms of exploiting an aspect of this legislation. This House never intended that the arrangements be used in this way, and I am grateful to him for his support on this issue.

    I am very grateful to the Paymaster General for giving way. She is bringing a certain world-weary cynicism to today's exchanges, and I can tell that she is very taxed by, and disappointed by, the incidents of abuse that she believes she has identified. However, for the edification of the House and in order to satisfy the legitimate curiosity of my constituents in Market Hill, Buckingham, this weekend, would she care to identify three examples of especially grave abuse that the new clause is designed to tackle?

    Order. I should point out to the hon. Gentleman that there was probably a shorter way of putting that point.

    I can do better than that—I can explain to the hon. Gentleman, so that he can explain to his constituents, why the new provisions are needed and the otherwise potential loss to the Treasury, to which I referred in my opening remarks. He will surely agree with me that it is better to prevent loss of revenue through speedy action than to sustain such loss in the first place. The provisions are needed because of the way in which the aims of two parts of the legislation seek to be achieved. The provision on the related party is clear and effective where it applies. It gives certainty to the meaning of the law—a meaning that all of us understood, and therefore agreed with, in passing this legislation last year.

    However, there are a variety of possible schemes, as I said. I am sure that the hon. Member for Buckingham (Mr. Bercow) is not suggesting that I wait until they are in action. They are designed to refresh old assets, as they are politely called in the trade. The purpose of the legislation was to operate forwards from last year, not backwards from the date of the legislation. Some fresh old assets—if such a term could be used—will not need to use the related-party mismatch. To deal with those, and also to close the door on schemes that have yet to be designed—that is, to anticipate subsequent exploitation—we also need the general cover provided by the wider anti-avoidance rule.

    The House is rightly sensitive about the use of wider anti-avoidance rules, and it expects Ministers to be sensitive about that as well, but the rules are needed in this case. By virtue of its less mechanistic approach of testing the main object of the scheme, the provision can apply in a wider range of circumstances. In simple cases, it is easier to test for the group relationship than to examine the various possible objectives of transactions.

    From that, I am sure that it is immediately obvious to the hon. Member for Buckingham how much mischief could be made with regard to those two rules, and that he will be able to think up many examples for himself. I commend the new clause to the House.

    Question put and agreed to.

    Clause read a Second time, and added to the Bill.

    New Clause 7

    Inheritance Tax: Gifts With Reservation

  • '(1) Section 102 of the Finance Act 1986 (c. 41) (gifts with reservation) is amended as follows.
  • (2) In subsection (5) (section not to apply where disposal is an exempt transfer by virtue of any of the provisions of the Inheritance Tax Act 1984 specified in the paragraphs of that subsection) at the end of paragraph (a) (section 18: transfers between spouses) insert", except as provided by subsections (5A) and (5B) below".
  • (3) After subsection (5) insert—
    "(5A) Subsection (5)(a) above does not prevent this section from applying if or, as the case may be, to the extent that—
  • (a) the property becomes settled property by virtue of the gift,
  • (b) by reason of the donor's spouse ("the relevant beneficiary") becoming beneficially entitled to an interest in possession in the settled property, the disposal is or, as the case may be, is to any extent an exempt transfer by virtue of section 18 of the 1984 Act in consequence of the operation of section 49 of that Act (treatment of interests in possession),
  • (c) at some time after the disposal, but before the death of the donor, the relevant beneficiary's interest in possession comes to an end, and
  • (d) on the occasion on which that interest comes to an end, the relevant beneficiary does not become beneficially entitled to the settled property or to another interest in possession in the settled property.
  • (5B) If or, as the case may be, to the extent that this section applies by virtue of subsection (5A) above, it has effect as if the disposal by way of gift had been made immediately after the relevant beneficiary's interest in possession came to an end.
  • (5C) For the purposes of subsections (5A) and (5B) above—
  • (a) section 51(1)(b) of the 1984 Act (disposal of interest in possession treated as coming to end of interest) applies as it applies for the purposes of Chapter 2 of Part 3 of that Act; and
  • (b) references to any property or to an interest in any property include references to part of any property or interest.".
  • (4) The amendments made by this section have effect in relation to disposals made on or after 20th June 2003.'.
  • [Dawn Primarolo.]

    Brought up, and read the First time.

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

    This new clause introduces the changes announced on 20 June to the inheritance tax rules on lifetime gifts. The changes come in response to a recent Court of Appeal decision in the Eversden case. Everyone who has commented on the case has noted the wide-ranging tax-avoidance opportunities that it opens up. Almost all have gone on to say that they were too good to last and were bound to be tackled by early countervailing legislation. I agree with that assessment, and the Government have introduced this clause to achieve it.

    I shall set out the relevant factors briefly. The Court of Appeal confirmed that married wealth owners could make what are called gifts with reservations. They are permanently free of the normal tax consequences, so long as the gifts are made to a trust and the trust initially provides an interest in possession to the donor's spouse. That means that married couples could remove assets from their inheritance estates, effectively without limit, by making lifetime gifts into the trust in the way that I have described, without losing any effective ownership. They could do so by using schemes where the interest for the donor's spouse is quite blatantly inserted purely to get the desired tax effect and is predestined to disappear after the shortest decent interval once it has served its purpose.

    The schemes were of wide appeal, at least among the minority of people wealthy enough to have prospects of paying inheritance tax. The only essential requirement was that the donor should be married and have the prospect of wealth at death of more than £250,000.

    I just want to introduce the new clause, after which the right hon. Gentleman will of course want to speak. I shall be happy to respond to his points.

    I remind the House that we are talking about the inheritance tax rules that were introduced in 1986, under the previous Conservative Government, and about the ways that people try to get around them.

    The schemes could be used for all sorts of assets at all levels of wealth. They could allow married couples to remove the family home from inheritance charge on death, yet to continue to live in it during their lifetimes. That aspect has received much attention in the press, and among some of those who market these schemes.

    1.45 pm

    However, the schemes could be used equally well to shelter all sorts of other assets, including—notably—financial assets wrapped up in the form of an insurance bond. As for the amounts involved, the sums become a little more complicated if the couple's total wealth is significantly more than £1 million or so. Although executing one of these schemes at that level would not necessarily remove a couple from inheritance tax forever, it would remain a very attractive proposition.

    The Government are not stopping, as some have suggested, an innocent piece of self-help for couples with modest homes who might be taken into inheritance tax by inflation in property prices. Even if that were true, tolerating tax avoidance would not be a sensible way to deal with the issue of house prices. In reality, however, the potential avoidance goes much wider, as I said. It goes all the way up the scale of wealth, undermining all the revenue from those who pay inheritance tax and account for the lion's share of the total yield. That is not fair to the wider body of taxpayers, nor to the balance of prospective inheritance tax payers, who cannot afford this sort of avoidance, or who do not engage in it.

    Following on from the Court of Appeal ruling, it is essential that we stop now any possible future loss to the Exchequer. That is what the clause seeks to achieve, operational from 20 June.

    As happened with new clause 6, the Government are introducing this significant piece of legislation on Report. No doubt they will give the excuse that they wanted to hear the ruling in the Eversden case, but I submit that, had they wished to make changes as radical as the ones that they propose, they could easily have addressed the matter in the body of the Bill.

    The use of defeasible life interest trusts in relation to homes has not been a matter of tax avoidance, as the Paymaster General suggested. It has failed her own test, which she set out in Committee, regarding the difference between accepted tax planning and tax avoidance. It has been widely known about, and the law has provided for inheritance tax gifts with reservations to be made.

    Therefore, the new clause introduces what is, essentially, a new tax. The Paymaster General may be concerned that what has been used purely to protect the family could be used in other areas, but so far the scheme has been used solely in respect of family homes. Indeed, her own comments highlighted the problems described to me by constituents.

    As we warned in the debate on last year's Finance Bill, the problem is based in particular in the rise in home values in the south of England. The Government have done and said nothing to deal with the knock-on problems that that creates for inheritance tax. I suggest that it is very much part of British culture for people to want to be able to hand on to their children the house that they own, or the value that they have built up in it. In the south of England in particular, there are a growing number of reasonably ordinary properties whose value is in excess of the inheritance tax threshold. The number has been estimated at between 1.5 million and 2 million properties. To date, the specific defeasible life interest trust has been used by people to gift their home to their children while retaining a right for the surviving spouse to live there until death. That is hardly a wicked thing to do; most families presented with the problem would want to do that.

    Given the need to make this debate on new clause 7 intelligible to the wider public, does my hon. Friend agree that the Paymaster General has a basic responsibility to tell us in broad terms the sort of revenue to the Exchequer that the new clause would deliver?

    Yes, but she advised the press that the measure was designed to protect a significant part of the £2.4 billion per annum inheritance tax revenue. I suspect that it will do no such thing. One of our concerns, of which the Paymaster General will be aware, is that a likely reaction to not being able to achieve what most people want—what more and more couples who manage to stay together and bring up their children want—is a boost to the equity release market, in which older people can sell all or part of their homes and retain the right to stay in them, thus releasing the cash value from their homes and then donating the cash released to their children.

    There are inherent dangers in such schemes, which the Government are unwilling to regulate. With so many people's pensions wrecked by the actions of the Government, many people are looking to those schemes for a source of income in old age.

    I detected a moral judgment in the Paymaster General's statement. How does my hon. Friend think the morality of such schemes compares with the morality of using offshore trusts in the creative and perfectly legal way that a number of former and present Government Ministers have done? As one who thinks that to be perfectly reasonable, I ask my hon. Friend how he feels the relative moral charge sheet rests from the Government's point of view.

    My right hon. Friend has made his point. The middle England vote that the Labour party has been keen to retain is largely made up of citizens who believe that it is natural to want to hand on their house or its value to their children. That is much more straightforward than some of the fancy antics that certain past Labour Ministers got up to.

    New clause 7 will turn out to have unintended consequences, and the Bill is full of many such examples. I referred earlier to the fact that it is extremely unlikely to achieve the bolstering of inheritance tax revenues that the Paymaster General is expecting.

    The Paymaster General's letter refers to the fact that the Government are pursuing an application for leave to appeal to the Lords on the question of how gifts already made should be taxed. In other words, the Government are hoping to introduce retrospection; there would be no point in pursuing such an appeal were that not so. Specifically, the Government are seeking to get a ruling that the gifts of family homes made by older people who have entered into defeasible trusts will be brought back within the inheritance tax net.

    Such an initiative will be seen by ordinary middle-class voters as a means of picking on them as they carry out a straightforward action in the interests of their children, which they feel entitled to do. I have to suggest to the Government that it is reasonably unlikely that they will win, but there seems to be an element of spite in seeking to introduce a retrospective element to this new tax.

    We are not going to burn up yet more time that we do not have on a vote that we know we cannot win, but we leave the Government to reap their own bitter harvest of the growing hostility of home owners in middle England, arising from a measure that will be seen as spiteful and which will not be effective in raising inheritance tax revenue. It is understood that there is a case for preventing the use of such trusts in wider financial affairs, but the Government's approach to the fundamental wish of people to hand on their family home goes against the family and against British instincts.

    My hon. Friend the Member for Torridge and West Devon (Mr. Burnett) anticipated this debate in Committee on 17 June when he asked the Paymaster General whether she would introduce proposals at any stage on inheritance tax, to which she replied:

    "I will certainly keep him informed of developments in due course."
    On 20 June, we had the announcement of this change. I commend my hon. Friend on his precipitation and wisdom in raising the issue, and for anticipating the thrust of the new clause when he said during the same exchange that inheritance tax
    "is a tax levied on those who do not have sufficient money or assets to avoid it legitimately."—[Official Report, Standing Committee B, 17 June 2003; c. 613.]
    That is a growing perception of people in and beyond the tax world: that, increasingly, people who have large estates and can afford good tax accountants can get round paying inheritance tax altogether, whereas a much wider group of people are being absorbed into the inheritance tax net, not least as a result of the increase in property prices in the past few years.

    We welcome the fact that the Government are addressing some of those loopholes in the new clause, as those steps ensure that inheritance tax does not simply become a tax that falls on those who are not wealthy enough to afford good tax advice, but ensure that the purpose of inheritance tax is maintained and that the tax that we anticipate collecting is collected as far as possible.

    The hon. Member for Arundel and South Downs (Mr. Flight) raised a number of legitimate issues in relation to inheritance tax, but did not state whether the Conservative party's former desire to abolish it altogether still holds. He raised a number of issues that flow from the avoidance of inheritance tax, and not least from the increase in property prices in the last few years.

    Before the 1997 election the debate—in my case, it was not conducted from within this House—was about a proposal by the then Prime Minister to abolish inheritance tax. At that time, the then Chancellor of the Exchequer was keen to emphasise that inheritance tax and capital gains tax were minority taxes paid by a small proportion of the population. I suspect that we were talking about tens of thousands of people in 1997. The criticism from the Labour party at the time was that the abolition of such taxes would simply benefit a small number of people.

    I suspect that the Paymaster General is aware that concern about inheritance tax is now rising among a much broader proportion of the population and it may be that, in future, she will wish to address that concern in an amendment, a new clause or in a future Finance Bill. Property prices over the past few years have increased to such an extent that people who could by no means be considered wealthy have been caught in the inheritance tax net.

    Does my hon. Friend agree that with the dive in the value of people's pensions, their principal private residence is often the only thing they have left—especially if they are self-employed—to keep them going in old age?

    My hon. Friend is right to identify the fact that many elderly people's primary assets are the properties in which they live. Other financial assets, including shares, may have depreciated in value as a consequence of recent changes.

    The new clause is welcome, but in future it would be sensible for the Paymaster General to consider the wider issues of inheritance tax, particularly the number of people who will be pulled over the threshold in the next few years. For the reasons provided by the hon. Member for Arundel and South Downs, she should also consider reviewing that tax policy, particularly in respect of the potential to shift tax avoidance from one vehicle—we hope that that loophole has been closed by the Government—into others such as equity release schemes in which people can, through perfectly legitimate and legal tax-planning devices, seek to undermine the intention behind Government tax policy and tax legislation.

    2 pm

    Other issues that should be considered as part of any review of inheritance tax include not only the implications of rising property prices and avoidance techniques such as equity release schemes, but the wider issue of whether it is sensible to levy inheritance tax on estates as currently operated. In future, the Government should consider levying inheritance tax differently on recipients of the assets rather than on the estate itself. That might encourage people to spread wealth and provide incentives for people who may not be paying the upper rate of 40 per cent. that is applied to inheritance tax. If the Paymaster General cannot respond categorically to all those points, I hope that she will at least remember the fact that it may be worth reviewing this form of tax in the future.

    I am glad that the hon. Member for Yeovil (Mr. Laws) reminded the House of the excellent Conservative policy of getting rid of inheritance tax, and I trust that when we reach manifesto time, it will be one of the strong runners.

    I accept that the right hon. Gentleman is not currently a member of the Conservative shadow Cabinet, but he will receive all the briefing papers on Conservative tax policy. Will he tell us whether it remains Conservative tax policy to abolish inheritance tax?

    The position is well known in the House—although I fear that we might be deviating a little from the new clause, Mr. Deputy Speaker. The Conservative party will come forward with tax proposals nearer the time of the election, when it is clearer how much money the Government are wasting and how much necessary expenditure a future Conservative Government will need to incur. Many demands will be made to the shadow Cabinet of the day to offer all sorts of tax relief and tax reductions after the present Government's tax binge, which we are debating this afternoon. The Government are finding more and more ways of taking money off people, so that they can waste it on schemes such as "Notwork Rail"—with a £15 billion loss so far, and much more to come as the dreadful nationalisation policies get under way.

    Order. May I remind the right hon. Gentleman not to broaden the debate too far?

    You are right, Mr. Deputy Speaker. I am naughty and sorry, so let me return to the point at issue—inheritance tax. Conservative Members approach the subject from the proposition that as a wealth tax it is not a very desirable tax. It does not seem pleasant to tax people even in death who have been taxed quite enough during their lifetime while they were earning and saving the money in the first place.

    Order. I must tell the hon. Gentleman that he should know the procedures of the House by now, and that if he wishes to intervene, he must do so with the permission of the right hon. Gentleman who has the Floor.

    I am grateful once again for your wise guidance, Mr. Deputy Speaker.

    I wish to take up with the Paymaster General her extraordinary statement that inheritance tax is moral and fair, so that anyone who tries to pass on their primary residence to their children is somehow guilty of an immoral act against the state that should be stopped by the imposition of the tax. People work extremely hard over many years in this country to buy their primary residence. They take great pride in their ownership of it and they want to be able to pass it on to their child or children in death. I see nothing wrong in that: it is an excellent expectation and an important part of the property-owning democracy from which we all benefit. I therefore take exception to the idea that it is somehow against the rules or unsporting. The Paymaster General has not understood how far house prices have risen and how even modest dwellings throughout the south and in parts of the north and midlands are now well above the tax threshold for inheritance tax.

    I am listening carefully in an attempt to understand the logic of the right hon. Gentleman's argument. To follow it a little further, if someone dies with a property in negative equity—in other words, the amount still owed on it is greater than its value—does the right hon. Gentleman believe that the child who inherits the property should be charged with making up the difference between what is owed and what the property is worth?

    No, I do not. I do not think that children should have the sins of their parents visited on them, and it would be a foolish bank or building society that allowed circumstances to develop in that way without having any other security or guarantee. I strongly urge banks and building societies to lend only a reasonable proportion of a property to protect themselves in the likely event of the Government creating a boom-and-bust in housing to go along with their boom-and-bust in telecommunications, manufacturing and pensions, which we have seen to our cost in recent years. My worry about the measures before us is just that—that the Government are now targeting the housing market with a view to getting prices down, but that they may be too successful and produce exactly the sort of problems to which the hon. Gentleman referred. That will not be to his political advantage. On the specific matter that he raised, children should not have to make good those payments unless they were party to the transaction and offered guarantees or pledges of their own free will when the agreement was originally designed.

    I urge the House to get the Paymaster General to think again about this matter. She is being mean-minded and I do not believe that the schemes that we are talking about are immoral or unreasonable. They meet a perfectly sensible need in the marketplace for people to plan their tax affairs and pass on some of the assets that they have worked hard to accumulate over the years. To answer my own intervention on my hon. Friend the Member for Arundel and South Downs (Mr. Flight), I should have thought that those schemes are less immoral, in the Government's own terms, than some elaborate offshore schemes. I take no exception to offshore schemes, which can be sensible and are usually perfectly legal, but it is odd that a Government who set such store by stopping any tax loopholes, as they call it, but who allow in their ranks Ministers who freely use offshore schemes, should then say that much poorer people struggling to buy a semi-detached house in an expensive part of the country are not allowed to use a perfectly reasonable scheme to pass that on.

    I hope that the Paymaster General has realised how high house prices have risen in Bristol recently, because many of her constituents will be affected. I can assure her that in Wokingham, where people are not rich but work hard and have to pay a lot of money to live because of the cost of housing and the cost of living, many of my constituents will be caught by inheritance tax, yet no one could say that they were rich in the way that some of the Paymaster General's right hon. and hon. Friends in the Government are rich. I hope that the right hon. Lady will withdraw this petty and mean-minded new clause.

    I support the views of my right hon. Friend. The Paymaster General gave an accurate but complicated explanation of a position that affects many thousands of people in this country and relates to the income and estates of many.

    I should like to describe the position in plain English. Grandma gifts her house to her son, who decides to live with granny and look after her. As a result, grandma has not made the gift for tax purposes, it stays in her estate, and everyone except the taxman is the worse for it. That seems utterly ridiculous. To avoid the tax, the family has to split into two homes, breaking up the family unit into two houses. Granny will probably be looked after by social services, the cost of which will be more than the tax paid out in the first place. If granny happens to live in the south of England, she is taxed for being a southerner. House prices are more expensive in the south, so the tax will be greater.

    Indeed, at a time when we need to share our houses more and should be keeping family units together by encouraging people to stay with their families even if only because—there are lots of other good reasons too—we are short of houses, particularly in the south, we are in fact encouraging the break-up of families for no good reason. This tax, particularly as it affects homes, is unfair and senseless and should be abolished instead of being patched up by this lousy new clause.

    My hon. Friend the Member for Huntingdon (Mr. Djanogly) movingly describes the plight of over-taxed granny under the Labour Government, and he is entirely correct. I do not myself have a granny, but I feel sure that if I did, she would strongly oppose new clause 7 and would have good reasons to justify her position.

    I was rather taken aback both by the fact of the introduction of the new clause and the manner in which the Paymaster General sought to commend it to the House. It seemed obvious that there was considerable irritation in the Inland Revenue and in Her Majesty's Treasury about the alleged sauce—I use that word advisedly—of taxpayers who had sought to avoid or minimise a burden by a contrivance that was perfectly legitimate under the law. In other words, Ministers are upset because they have not been able to plan, with Kantian perfect information, for every scenario. There are eventualities in which citizens are able either entirely to avoid a burden or to keep it to a much lower level than the Government would favour.

    I say three cheers to that, and I confess that one reason—probably the principal reason—why I oppose new clause 7 is that I oppose the whole monstrous apparatus of inheritance tax. I do not seek to argue my case according to the intricacies of the tax or the arguments about revenue raised or forgone. My view is that it is fundamentally immoral and unethical.

    My only criticism of my right hon. Friend the Member for Wokingham (Mr. Redwood)—I scarcely volunteer criticism of him on any occasion—is that he was guilty of a certain understatement of his case. If he had said what he said a little more forcefully—perhaps with a degree of crudity that was lacking from his presentation—his stance on this important matter would be all the clearer.

    I am glad that the hon. Member for Yeovil (Mr. Laws) urged something of a wider review and debate. He was justified in doing so. He challenged my party—without giving any particular idea of the stance of the Liberal Democrats—to say where we stood overall on inheritance tax. I am against it, and I want to scrap it.

    Order. I understand the temptation felt by the hon. Member for Buckingham (Mr. Bercow), but the hon. Member for Yeovil (Mr. Laws) began to lead us astray on this matter, and I must remind the House that we are dealing not with inheritance tax as a whole but with new clause 7.

    You know, Mr. Deputy Speaker, that I never knowingly behave badly. My poor conduct is always entirely inadvertent, and there is nothing better than to be brought to book by your kindly but authoritative ministrations. That is what has happened to me, and I make no protest about it.

    On behalf of my constituents, many of whom have already raised their anxieties about new clause 7—others can be confidently expected to do so on Saturday in Market Hill—I inveigh in the strongest possible terms against new clause 7. If people are using the device of gifts without reservation to circumvent the frankly sinister and oppressive designs of this tax-raising, pocket-plundering, petty-minded, socialistic-oriented Government, I say three cheers to them. Unite, and fight new clause 7.

    2.15 pm

    I wish to raise a couple of points with the Paymaster General. The ramifications of any new clause—indeed any legislation—need to be properly thought through. What thought has been given to the effect that new clause 7 will have on the equity release market? There is little doubt in my mind—my hon. Friend the Member for Arundel and South Downs (Mr. Flight) briefly touched on the point—that it will lead to a dramatic increase in equity release mortgages, schemes and loans.

    We all know that the industry got off to a bad start not so long ago, with many sharks operating in the market. Has any consideration been given to whether the market should be regulated to ensure, at the least, that fair play is done and seen to be done? The schemes will be considered by many vulnerable people in the autumn of their years who are thinking about how best to release equity from what, given that the equity markets have not done so well recently, is probably their main investment. What are the Government going to do to ensure that their nudging forward of the equity release market—the interest in the market will be quite significantly increased in some instances—will not mean that vulnerable people will be taken advantage of, particularly given that many of them may live on their own and need good advice? The industry needs to be properly run and regulated, and I ask the Paymaster General to tell us her thoughts about that. What action do the Government intend to take to ensure that there is fair play in the market?

    Secondly, I want to discuss the idea that it is somehow perfectly immoral to avoid this tax. None of us wants to see legitimate tax avoided, but I think that the Paymaster General has completely underestimated the extent to which house prices have increased. My hon. Friend the Member for Arundel and South Downs mentioned that between 1.5 million and 2 million houses fall into the inheritance tax bracket. Statistics and studies exist that suggest that the figure is greater than that. No one really knows. It is completely wrong, however, to suggest that when people who have paid tax throughout their lives and simply want to hand on their assets to their children, it would be somehow immoral not to tax them. The Government need to re-examine their thinking. The new clause would tighten matters even further. It is, in effect, a new tax, whatever the Paymaster General may say.

    My hon. Friend is aiding our deliberations. In referring, as the Paymaster General did, to people who are rich enough to pay inheritance tax, was she including in her categorisation every member of the Cabinet and most members of the Government?

    I completely agree with that. The Paymaster General would also include in that threshold a large swathe of teachers, nurses and all those who work in public service, particularly in the south of England. I should appreciate her deliberations on whether that is right.

    My hon. Friend the Member for Huntingdon (Mr. Djanogly) made the excellent point that not enough thought has been given to the effect that the new clause may have on the break-up of families and homes. The Government are in complete crisis with regard to the care home sector, in which something like 45,000 to 50,000 beds have been lost because of the bureaucracy and regulation that they have introduced. This measure will not help that situation. No one knows the exact figures or the extent, but it could lead to a premature break-up of a home simply because the arrangement will no longer be available whereby a parent—an elderly person, perhaps—could live within the home that had been gifted. That may make the premature selling of the house to realise assets a reality. I hope that the Government have given that some thought, and I look forward to hearing from the Paymaster General.

    The new clause applies to an avoidance scheme used by married couples. It has nothing to do with grannies, grandsons or children; it specifically deals with the exploitation of the inheritance tax rules, especially by married couples.

    If the hon. Gentleman will wait, I shall be happy to give way in a moment, but we need to set out a few facts clearly.

    We are not discussing whether the Conservative Opposition are in favour of inheritance tax, although I should be delighted to have such a debate. Despite the fact that inheritance tax was introduced by their Government—

    No. I will give way to the hon. Gentleman in a moment, but I want to make a few points so that we can be clear about what we are discussing, rather than what Opposition Members think—

    On a point of order, Mr. Deputy Speaker. It is right to point out that the provision may relate to grannies and that husbands and wives—

    Order. I must tell the hon. Gentleman reprovingly that he has been a Member of this place long enough to know the difference between a point of debate and a point of order. That was not a point of order.

    May I remind the Minister that I had already suggested that discussion of inheritance tax in principle is outwith the scope of the new clause?

    I agree, Mr. Deputy Speaker: whether individual hon. Members like or dislike inheritance tax is not the subject of the debate. The subject of the debate is whether tax rules that were introduced in 1986 and have been variously amended should fairly apply to all taxpayers. Some taxpayers comply with their tax obligations, so the Government have responsibilities when others find ways around their compliance obligations.

    The point is whether the Government of the day should be required to ensure fairness between taxpayers. I understand the issue in terms of fairness. Tax rules should apply fairly to taxpayers who are subject to them and it is the Government's duty to ensure that that happens.

    I shall give way to the hon. Gentleman, but then I shall deal with house prices, equity release schemes and some of the other points that have been made.

    Will the Minister confirm that, putting it in simple language, the provision is about, for example, a couple who, hoping that they will both live for another seven years, give their house worth £400,000 to their children, but set up a trust so that whoever outlives the other is still able to live in the house until they die? I think that describes the main circumstances, and no one would regard that as either cheating the system or avoidance.

    There are many sections in the inheritance tax rules; one is called "Gifts with Reservations". The Court of Appeal decision in the Eversden case paved the way for artificial schemes that enable married couples to put their assets beyond inheritance tax estates while retaining the enjoyment of them for their lifetime. We want to correct that. As I said, the new clause is specifically about that issue. Opposition Members are getting too worked up. Although I understand the views of Opposition Members about other aspects of inheritance tax, we are discussing only whether a set of rules should apply to all equally.

    I want make a point about property prices and the inheritance tax threshold. If that does not answer the hon. Gentleman's point, I shall be more than happy to give way to him—as always.

    The inheritance tax threshold is still about twice the average UK house price. Only about 5 per cent. of estates will pay inheritance tax this year. However, let us look at the question the other way round: how much has the inheritance tax threshold moved since its introduction in 1986, and what has happened to house prices in that period?

    The latest statistics, for quarter one, show that house prices have risen since 1986 at much the same rate as the threshold—about 250 per cent. The UK average house price is about £140,000. Even in London and the southeast, prices are still below the threshold. The figure for Greater London is £215,000 and for the south-east, excluding London, it is £190,000. The rules are consistent with the movement of the threshold since its introduction in 1986 and its reflection in house prices. The question of property prices is not directly relevant to the new clause; the point at stake is that the movement of the threshold is keeping pace with prices.

    The Paymaster General said that she estimates that about 5 per cent. of estates are above the threshold and will be caught by inheritance tax. Will she tell us how that has changed over the last 10 years? What is the size of the increase?

    I have seen the figure, but I apologise to the hon. Gentleman for being unable to give it to him immediately. I shall be happy to send him the figures. By estates, I mean the number liable to pay inheritance tax, which may not necessarily be on property. Significant numbers of people pay inheritance tax that is not on property. Currently, about 29,000 estates are in the category; movement is more or less static, although I cannot remember the exact figure.

    The Government tend to increase thresholds in line with inflation, whereas the overall rise in property prices over a period is appreciably greater than that. I hope that the Paymaster General will reflect on that point in further deliberations. However, if the right hon. Lady's main criticism of Opposition Members is that we have identified the wrong member of the family tree, and that it is not in fact granny, but mummy, daddy, hubby and wife who are being clobbered, that is cold comfort.

    May I tell the hon. Member for Yeovil (Mr. Laws) that, if my memory serves me right, the number in the threshold rose by about 3,000 last year—more than indexation or the rate of inflation would have required? It is not unreasonable to look back over a period and to take 1986 as the base year.

    May I answer the hon. Member for Buckingham (Mr. Bercow) before moving on? On the point that he makes about the application of the new clause, I was simply seeking to help Conservative Members. I understand that they wish to abolish inheritance tax, and I look forward to finding out where the £2.4 billion that the Government currently raise from inheritance tax would come from. The hon. Gentleman will want to question many aspects, but I was seeking to correct Conservative Members by saying that the new clause does not deal with those issues; it specifically and narrowly deals with issues that arose from a particular case involving married couples.

    2.30 pm

    The Paymaster General is being slightly selective in her figures. It is all very well to go back to 1986, but I am sure that she will accept that the period included one of the biggest house price falls in recent memory. House prices fell from their peak in about 1988 and bottomed in 1994–95, after which they picked up slowly, so such a comparison does not give the complete picture. I hope that such a price crash will not happen again. Recent history—the past eight or nine years—shows that inheritance tax thresholds lagged far behind the rise in house prices.

    The facts speak for themselves in respect of the average house price throughout the country and in specific regions where house prices are much higher. The hon. Gentleman should consider the role of the Conservative party when in office in establishing the inheritance tax threshold. As I have demonstrated, the increase in the threshold has kept pace with the increase in house prices, but it is not the role of inheritance tax to help to regulate house prices; its role is fairly to tax assets according to rules that operate for all the people who are caught by them.