I am delighted to have the opportunity to debate and discuss the housing market. Macclesfield borough is a prosperous and successful borough in the north-west of England and, following the local elections a fortnight ago, is the only borough that has overall Conservative control north of a line from the Wash to the Severn. It is an area where people want to live and where people want to move to live, where businesses want to expand and where new businesses want to locate. So, quite clearly, it is a successful area.

But I know that hon. Members on both sides of the House will agree when I say that housing is fundamental to all 651 constituencies in the United Kingdom, and problems that face home owners affect all 651 constituencies.

I want to start the debate by quoting Lady Thatcher, now in another place, from her book "The Downing Street Years", page 698. She writes:

"I was … acutely conscious of what interest rate changes meant for those with mortgages … borrowers … lives … can be shattered overnight by higher interest rates. My economic policy was … intended to be a social policy. It was a way to a property-owning democracy. And so the needs of home owners must never be forgotten."

It is because I believe that my Government have forgotten about the importance of home owners that I have asked for this debate today.

Hon. Members on both sides of the House will be aware that my interest in the construction industry is of many years' standing. So concerned have I been by the lack of attention given to its problems and its potential that two years ago I formed, with all-party support, the manufacturing and construction industries alliance in Parliament.

This debate, which I have managed to obtain this morning, has also been warmly welcomed by the House-Builders Federation, the Council of Mortgage Lenders and the Building Societies Association, which all accept the fact that the health of the housing market is now so parlous that to fail to call out for understanding and support could be fatal.

The manufacturing and construction industries alliance, which I have said has all-party support and backing from every sector of industry, including trade unions, exists to move the needs of manufacturing and construction further up the public, political and parliamentary agenda.

Never has that been more necessary than it is today. The housing market has been in recession in the south of England since August 1988 and in the north since around mid-1990. As Joe Dwyer, the group chief executive of George Wimpey plc, told the alliance at its most recent presentation here in the Palace of Westminster immediately following the latest Budget, the housing industry still shows no sign of sharing in the undoubted move out of recession that much of the rest of our economy is now experiencing. That was not my view; that was the view of somebody uniquely, over many years, involved in the housing and construction industry here in the United Kingdom.

While the United Kingdom was in the exchange rate mechanism, things were especially difficult, because the very high interest rates that then prevailed deepened the recession, and the housing market could never recover in those circumstances.

However, since our happy escape from the ERM on "White Wednesday", as it has come to be called, we have been able to enjoy greatly reduced interest rates. Although, sadly, the Governor of the Bank of England appears willing to put at risk the fragile recovery that we are experiencing, there has indeed been a steady improvement in our economy—at least the part of it that is involved in exports.

Ministers have consistently told us that there would also be steady improvements in the housing market. However, after a brief improvement in late 1993 and early 1994, the housing market has again faltered. This year, there are fears that it will do far worse than falter. All the evidence that I have been able to find suggests that the housing market is far weaker than expected and that Ministers cannot—dare not—complacently await its improvement.

Estate agents report that, in the period to the end of April, their sales are almost 20 per cent. less than in the same period last year. House builders, who comprise about 11 per cent. of the market, are maintaining their share of the market, but continue to sell at about 4 per cent. below 1994 levels. Therefore, not surprisingly, total building society new lending is down. For example, the Halifax building society reports that prices are beginning to fall yet again. That is because fewer sales are bound to weaken prices.

Obviously, the evidence is mixed, but in East Anglia the first quarter of the year shows an increase in prices of 1.6 per cent. overall, and there has been an increase of 4.3 per cent. in prices of new properties. In fact, there has been an increase in new property prices in East Anglia in every quarter since the end of 1993. Does my hon. Friend believe that the evidence is slightly more mixed than he suggests?

I am not suggesting for a moment that there are not pockets of bright light and of encouragement. I can only go on the information provided to me by house builders, by the House-Builders Federation, the Council of Mortgage Lenders and the Building Societies Association—people who are uniquely in a position to provide that information—who say that the market is faltering and that overall, things are bleak for the housing sector and for all those supplying those parts of the economy, which are so important to this country.

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I will not give way again at the moment. I want to develop my argument.

The National House-Building Council reports that new house registrations—that is, new building starts—are 17 per cent. down in the first quarter, and the Brick Development Association, which should know what is going on, advises me that brick deliveries in March were 8 per cent. down on those for March 1994. That is consistent with the major house builders, who say that they are laying off bricklayers and cutting back further on production in direct response to falling sales.

On Friday night, I spoke at a dinner in the Moat House hotel at Wilmslow. After my speech, I was asked a question by a young executive, a young man from Merseyside involved with training. He said that he was deeply worried about the failure to provide jobs for young people after they had received basic training from the various schemes offered by the training and enterprise council. He highlighted especially the problems of the construction industry, which in the past has been such a major employer of young people and semi-skilled people in the Merseyside region.

The weakness of the housing market is starting to knock on to employment and spending power in the domestic economy as a whole. Building workers and building materials, as we know—and as my hon. Friend the Member for Chorley (Mr. Dover) will be more than aware—are only the start. Falling housing transactions are widely reported by retailers as a key factor in the undermining of certain markets. White goods, furnishing, timber, carpets, curtains and do-it-yourself—all are affected.

No one can claim that the condition of the housing market does not fundamentally matter to the economy and to employment in the United Kingdom. It is of great significance to the recovery of the domestic economy and it is of massive significance to the fortunes, dare I say it, of my Government, the Conservative Government.

In my opinion, the Conservative party is, and always has been, the party of home ownership. We can be rightly proud of the fact that we have expanded home ownership since 1979 from about 54 per cent. to 67 per cent. of households. When we ignore the problems of the housing market, we ignore the problems of our strongest supporters and, dare I say it, their greatest asset.

Does not the hon. Gentleman find it disturbing that so much of our country's economic prosperity has to be based on the housing market? I can well understand the way in which it affects the housing market, but the feelgood factor is absent precisely because of the facts that the hon. Gentleman is talking about. As the hon. Gentleman is a great champion of manufacturing industry, does he agree that it would be better to base our wealth and prosperity on that sector rather than on prices in the housing market?

I cannot but agree with the opinion expressed by the hon. Gentleman. Indeed, I am not in favour of people investing all their money, all their savings, in property. I was deeply unhappy about the property boom of the late 1980s, resulting from decisions of a Conservative Chancellor, who allowed property inflation to roar away. That factor contributed to many of the economic problems that we experienced shortly thereafter. I want people to be encouraged, by fiscal and other measures, to invest in manufacturing in this country. As the hon. Gentleman knows, I want a massive expansion of our manufacturing base, because only when we do so shall we have a stable, successful economy in the long term.

Every time there is hope of a housing recovery, the Governor of the Bank of England mistakes that for overheating in the economy and urges the Chancellor of the Exchequer to increase interest rates, thus undermining confidence among would-be purchasers even further. Every time he does that, he pushes more home owners and more of the Government's traditional supporters into negative equity.

More worrying still have been the policies pursued by some of my right hon. Friends and the effect that they have had on the whole housing market. The Chancellor of the Exchequer has reduced mortgage interest relief at source for two successive years. He has in that time increased interest rates three times, although I must and do sincerely congratulate him on resisting the siren calls from the Bank of England to do so yet again two weeks ago. I say to him, and make this comment very forcibly, long may he continue to resist, and long may the pound continue to confound those who criticise the Chancellor's decision.

Unfortunately, my right hon. and learned Friend the Chancellor of the Exchequer pretends that those changes in his policy, regarding MIRAS and interest rate increases, are not important to the housing market. He regularly tells house builders that the cost effects of those measures are so trivial that they are not responsible for the weakness of the housing market. In my opinion, that position is untenable, especially as the start of the current dip in the housing market coincided exactly with the first cut in MIRAS in April 1994 and with the beginning of the psychological war being waged by the Bank of England against low interest rates.

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I shall give way in a moment, but I want to develop my argument further.

The effect of those policies has been a reduction in spending power—as was intended—and a blow to confidence in the housing market.

To add to that, the Secretary of State for Social Security has published proposals to limit mortgage interest support for sick and unemployed people. Every housing market commentator and expert whom I have found and read about has condemned those proposals as being bound to eliminate marginal home buyers from the market and to put some existing and future home owners at risk. They threaten further extension of home ownership to marginal groups, something that I know is dear to the heart of our Prime Minister.

I am listening to my hon. Friend's arguments with substantial agreement and considerable admiration, but, given the fact that, for the past two years, interest rates have been lower than for most of the past 15 years, would not a longer-term benefit of cuts in MIRAS be the avoidance of a return to the position described by the hon. Member for Newham, North-West (Mr. Banks), where people could expand their capital only by investing in housing and not, as my hon. Friend wants, by investing in manufacturing industry?

There is some sense and rationale in my hon. Friend's view, but home ownership is fundamental and a way for people to invest in their future. As I said, I do not want second and third houses, which is what resulted from mistaken policies that were implemented some years ago.

We cannot continue to treat the housing market and home owners as we are now. We ignore their problems at our peril, both economically and—perhaps this has more effect on Treasury Ministers—politically. Economically, we must look to a significant strengthening of the domestic economy, and that must be soon. Exports may be benefiting from the devaluation of the pound, made possible by, for example, our exit from the exchange rate mechanism, but the domestic economy is fragile and in danger of faltering. Let us not forget that nearly four times more households are employed in the domestic sector, sadly, than in our export-led economy. I say to my colleagues in the Treasury team that it is the domestic economy and the businesses in it that will produce the employment and the profits that are needed to increase tax revenues and so reduce the public sector borrowing requirement and thus the budget deficit.

May I take the hon. Gentleman back to marginal purchasers in the housing market? Is not one of the fundamental problems in the housing market that a huge swathe of the employed population no longer feel secure in their employment? They feel threatened by the constant references to there being no secure jobs, as if that were a virtue. They are considerably concerned by the Government withdrawing cover in the event of their becoming unemployed. Other major purchases result in a long-term commitment on payments, for example, in the automobile sector, which as we know is also in recession in the domestic market—[Interruption.]—not production, if the hon. Member for Sutton and Cheam (Lady Olga Maitland) will listen to what I am saying. Sales of cars are in a serious position in the same way as sales of houses, because no one feels secure in making a long-term commitment.

One or two of my colleagues may not like me for saying it, but that is an accurate assessment of the position. It is one of the reasons why we do not have a feelgood factor. On many things in the House, there can be consensus and common ground. I am sure that, in many areas relating to housing, there is common ground between hon. Members on both sides of House.

Any upturn in the domestic economy is being retarded by the housing market weakness. The inevitable consequence of that will be a shortfall in income and corporation tax revenue, making any strategy of tax cuts in the next Budget difficult, if not impossible. Thus, there is a clear link between the weakness of the housing market and the Government's ability to deliver their key policy objective before the next general election.

I say to my colleagues on the Treasury team that, politically, we cannot afford to alienate home owners or to treat their fears or aspirations with contempt or indifference, yet sadly the Government are widely perceived to be doing just that. Voices have been raised by mortgage lenders and house builders complaining that the Government are turning their back on home owners and home ownership as a policy.

How can we have let ourselves get into a position in which articles such as this appear? One in the Daily Mail of 3 May had the headline:

"What do the Tories have against the hard pressed homebuyer?"

Another in The Times of 5 May stated:

"From subsidy to subsidence: a Tory approach to housing—Janet Bush says the Government is merely aggravating a market already deep in trouble."

That is a sorry state of affairs. Something must be done. I fear, however, that the doleful noises from the Treasury and the Bank of England about the consequences of doing something have frightened the Government into silence. Threats of a return to inflation seem to paralyse us all like rabbits in a car's headlights, yet we all know what happens to the rabbit thus paralysed with fear: he gets squashed anyway. We cannot continue to be frightened of doing what is obvious and necessary by an irrational and obsessive fear of inflation.

Expert opinion is now clear. The housing market is so depressed that a significant increase in transactions is vital immediately to stop it deflating throughout the rest of the year. There is a risk of price falls, now being reported month on month throughout the year by the building societies. I ask my Conservative colleagues—and perhaps colleagues on both sides of the House: how do they think their constituents will react to further falls in house prices?

The Government simply cannot expect to survive such a scenario. That last happened in 1992 and was brought to an end by interest rate reductions after our exit from the ERM. No similar bolthole exists for us today. There is not only a risk of deflation, leading to more home owners in negative equity, but, conversely, there is no risk of a housing market recovery triggering the return of the inflation that Eddie George claims wakes him in the night. We cannot afford to allow our entire economic strategy to be run by a single-issue fanatic sitting in Threadneedle street.

As The Sunday Times said on 30 April:

"The Prime Minister … appears unaware of the trap his government is falling into: 'The prize of keeping the economy growing steadily, with low inflation, is a prize we have not seen in the past,' he says … 'We are here,' he says, 'for the long run' … This week's local elections will confirm that it would take only the rash or brave to bet on Mr. Major's long-run hold on power. The more the chancellor, egged on by Eddie George … succeeds in slowing the economy, the larger the government's budget deficit and the more difficult for 'prudent' tax cuts to be announced before the election. Without them, the Tories' already slim chance of electoral salvation can be written off."

Again, that is a fairly accurate assessment of how many people feel.

On 30 March this year, I expressed my concern in the House to my right hon. and learned Friend the Chancellor about the crisis in the housing market. He denied that there was any crisis, but did concede, I am pleased to say, that there was a weakness. He went on to say that, regardless of that, any artificial stimulus would have even worse consequences, so he would do nothing but await a natural recovery. I wholly reject that view and would argue that it is the Government who, far from giving artificial stimulus, are kicking the housing market by specific measures that are further weakening it, when it is already facing a serious crisis.

In short, confidence in the housing market continues to suffer as a direct result of a series of Treasury-inspired blows to its head. Measures are urgently needed to avoid the crisis worsening. They must not be half-hearted, such as another stamp duty moratorium. They must put more purchasing power and confidence directly into the housing market. Above all, they cannot wait until the Budget in November. Measures delayed until then will not take effect until next April and, by then, the damage to the Government may well be irreparable. The only step open to the Chancellor is partially to reverse his cuts in MIRAS. He must specifically recognise the problems faced by first-time buyers and the significant increase that they will face in entry costs and in higher mortgage payments, especially if he should give in to the Governor of the Bank of England next month and allow interest rates to rise again.

I put it to the Under-Secretary of State for the Environment, my hon. Friend the Member for Hertfordshire, West (Mr. Jones), that the Chancellor must immediately announce a package putting MIRAS up to £50,000 at the standard rate of 25p in the pound for first-time buyers. That is a constructive proposal. He should not time-limit it, but he should retain the option of withdrawing it once the economy and the market have responded to that stimulus. Such a measure would provide him with an excellent and effective regulator, which would be much more sensitive than interest rates, should the housing market need to be reined back at some future date.

To assist in that move and to restore confidence to first-time buyers and right-to-buy purchasers, the Secretary of State for Social Security should quietly and discreetly ditch the electoral millstone of his proposals to restrict mortgage interest support for the sick and the unemployed. My right hon. Friend the Secretary of State has many good reasons for doing so and I understand that the unpublished study on mortgage arrears and repossessions, which is currently sitting in the Department of the Environment, provides ample evidence of the need for a thorough reappraisal of the proposals that my right hon. Friend has announced.

The housing market stands at a crucial crossroads, and so do our economy and the political future of the Government. All are inextricably linked. Let us recognise that and listen to what the electorate told the Government on 4 May. Let us be clear—the British housing industry is among the best in the world. Hon. Members on both sides of the House know that, not least my hon. Friend the Member for Chorley, who has wide experience of the industry. It offers home owners a wide range of high-quality products at prices that are extremely competitive. Affordability is at good levels.

The main factor that is missing from the equation is confidence, the first emerging breaths of which are repeatedly stifled by policies from the very Government who, in the past, have sought to nurture home ownership as a major electoral asset—and it has been such an asset. This is a bizarre, reckless and, ultimately, politically unsustainable position and I hope that in the coming months the Government will realise the importance of home owners and the need to encourage home ownership, and that policies to encourage and stimulate it will be introduced.

I congratulate the hon. Member for Macclesfield (Mr. Winterton) on a characteristically robust speech. He is one of those hon. Members who speaks the truth as he sees it, which is probably why he has more admirers outside his party than within it.

Housing is a massive problem in my constituency and the hon. Member for Macclesfield identified the problem in other constituencies. In the London borough of Newham, it is at crisis proportions. More than 60 per cent. of all my case work involves housing in the private and public sectors, although essentially we are debating the private sector this morning.

It is difficult to be precise, but the best figures that I have been able to produce show that nearly 60 per cent. of private sector dwellings—about 26,000 in the borough—are unsatisfactory. That is twice as high as in Greater London as a whole. It is distressing to note that the percentage of unsatisfactory dwellings has risen since 1979.

In the latter part of the 20th century it is amazing to note that some 2,000 households in my borough still have outside WCs. I remember outside WCs when I was a young lad—they were a useful way of using up old newspapers, with the nail on the wall and so on. I remember going out in the cold: it was an unpleasant experience and can be spooky for a young kid. The idea that in 1995 2,000 households in my area of east London still have outside WCs is unacceptable. A total of 1,200 have no access to a bath. Overall 3,200 households in the private sector in Newham do not have exclusive use of either a bath or an inside WC.

I am listening with interest to the hon. Gentleman's remarks about houses with outside lavatories. Will he confirm that people are entitled to a grant to ensure that they have inside sanitation?

No doubt the hon. Lady speaks with great personal experience of outside dunnies. An outside WC is one of the qualifying factors for a grant as is the absence of an inside bathroom—[Interruption.] The hon. Lady has asked the question and is now sitting there answering it, no doubt to her satisfaction but, unfortunately, not to the satisfaction of the rest of us who are trying to take a more objective view. As a result of various cuts, there is no money for improvement grants and there is an enormous backlog in the London borough of Newham. That is one of the complaints that I intended to make. The absence of an inside bathroom or WC is one of the highest qualifying factors for an improvement grant, but if the hon. Lady cares to come to Newham to see the backlog of those who are still waiting for such grants—and Newham is one of the most generous boroughs in the country for making improvement grants—she will realise the problem that we face. If we could solve the problem as easily as the hon. Lady suggests, does she not think that we would have already done it, for heaven's sake? I would not be here complaining and getting myself worked up so early in the morning because of the hon. Lady's facile intervention.

I was about to say something constructive but it has now gone out of my mind. I was going to comment on the fact that the number of houses without inside bathrooms or lavatories has declined since 1981 precisely because of the improvement grants that the London borough of Newham has been able to offer, despite which we still have the highest figure in Greater London.

The problem always comes down to economics. Newham is a poor area with a large low-income sector. A total of 50,000 people in the borough are on income support, many of whom are caught in the poverty trap. Two types of owner suffer disproportionately—the elderly and those with large families. I find it distressing and disgraceful to have to bring such statistics to the House's attention at this stage of our development. A total of 65 per cent. of elderly owners and 58 per cent. of owners with large families live in unsatisfactory housing.

One third of owner-occupiers in my borough have incomes of less than £10,000 a year and more than two thirds have incomes of less than £20,000 a year. Twenty two per cent. of owner-occupiers pay more than 40 per cent. of their net household income in mortgage payments. It is not surprising, therefore, that 10 per cent. find it difficult to meet mortgage payments and a further 19 per cent. find it very difficult. One in eight is in mortgage arrears and an estimated 1,500 households are in serious mortgage arrears.

The hon. Member for Macclesfield mentioned mortgage tax relief being increased. I am not happy about that. I can see what he is trying to say. There is a real problem in the housing sector, but we do not want to encourage taxpayers' subsidy in the owner-occupier sector. All those who have observed the housing market have said that we should reduce mortgage tax relief; therefore, the Government are doing something that other parties would support in general terms. Many devices would boost the housing market and they should be encouraged. For example, the Government could allow local authorities to spend far more of their accumulated receipts from the compulsory sale of council housing. That would give the enormous boost to the housing sector about which the hon. Member for Macclesfield is concerned. I am concerned that we should seek real growth in our economy from the manufacturing sector—the productive areas. People had a false sense of security.

The hon. Gentleman suggests that if capital receipts were available for building homes, they would in some way help the housing market, but surely the effect of the release of receipts would simply be an improvement in the construction industry. That would not help the underlying problems, described by my hon. Friend the Member for Macclesfield (Mr. Winterton), of negative equity, the lowering of prices and the depressing effect of the present situation.

It could help for the simple reason that it would free up the whole housing market. It would produce far greater mobility.

People are trapped in substandard private accommodation that their landlords or owners are perhaps loth to improve. If people were able to move out into new public sector housing, landlords or owners would have an incentive to improve the vacant property and put it on the market or employ it in some other productive fashion.

One has to look at the housing market in its totality rather than sector by sector. The fact is that there is little movement in the housing market. People find that they are trapped in the private sector or in the public sector by negative equity or simply because there is not sufficient housing stock available in the areas or sectors in which it is most required. We need to free up the public sector far more. By doing that, we would inject far greater vitality into the private sector as well.

I am concerned that the country's prosperity should not be based on people's feelgood factor and the price of their housing. People like a bit of house price inflation because they can draw on the equity if they are in an advantageous position. That money then moves through the economy. That is precisely how the Government boosted the economy in the 1980s. We are now paying the price, as the hon. Member for Macclesfield said.

What I really want to say in my brief intervention is that I want to see more responsibility in the private sector being taken by the building societies and banks. This evening, I shall speak at the launch of the annual report of the Bow county court advice service. It is an excellent service that helps people without representation in the courts who are suffering from the possibility of mortgage repossession and eviction. Through the intervention of the advice service, many people have been saved from having their house repossessed and being made homeless.

It upsets me when people constantly tell me in my advice surgery that because of the problems in the housing market they have suffered from negative equity, run into mortgage arrears, had their houses repossessed and want the council to rehouse them. The council has a statutory responsibility, but where is the responsibility of the lenders of the mortgage in the first place?

What is the responsibility of the banks and building societies? They just tell people that they have got themselves into a bad position, repossess the house and sell it on to get as much back as they possibly can of their original loan. Negative equity normally affects the person who took out the loan rather than the person or organisation that lent the money in the first place. The lenders get their money back. The council is forced to find housing for people who have been dispossessed of their owner-occupied houses. That pressure and the lack of mobility in the public sector put even greater pressure on local authorities.

I want banks and building societies to face up to their responsibilities. They lent the money in the first place and therefore they should take greater responsibility for trying to keep people in their homes in the private sector rather than throwing them out and leaving the local authority to try to rehouse them.

Housing is a serious matter that affects everyone. All hon. Members are fortunate enough to be well housed, but housing is one of the rights of our people. It is absolutely crazy that, as we approach the end of the 20th century, we still have thousands of families homeless in our cities and yet we have tens of thousands of unemployed construction workers and industries that are being laid to waste because of the failure of the housing market. There surely must be a better way to organise the housing market.

I hope that the Minister will seriously address the points made by the hon. Member for Macclesfield, because, as an independent and fearless hon. Member, he quite often speaks for all of us.

I congratulate my hon. Friend the Member for Macclesfield (Mr. Winterton) on raising this very important subject, particularly at this time, because, as he knows, in politics timing is everything.

The key word is "market". Too often, the large-volume house builders—my hon. Friend mentioned Joe Dwyer, the superb chief executive of George Wimpey—assume that there is a big market out there and that they have a God-given right to keep on building more and more houses. The fact is that, at the moment, people want to be able to buy houses, especially new houses. There is a much better market for new houses than for existing, second-hand stock.

However, the house builders must give better and better value for money. Sometimes, in a depressed market, such as we have had for the past few years, home owners are in a better situation. For instance, my stepdaughter and her husband recently purchased a house at the boom of the market for £45,000 in the west midlands. They had to sell it recently for £35,000 but, on the other hand, to upgrade to a house for which they would have had to pay £93,000 or £95,000 during the boom, they have had to pay only £75,000. That has meant that the market has continued to operate. They have been able to upgrade and, indeed, they are probably slightly better off.

In the country at large, there are huge differences. In the south-east, properties in the region have decreased in value by 25 or 30 per cent. There is a slight increase in their values at the moment, but that gap will perhaps never be made up.

On the other hand, out in the more realistic world of the north-west, as my hon. Friend the Member for Macclesfield knows only too well, and especially in the north, the rise in property values took place slightly later than elsewhere and never reached the crazy, ridiculous levels of the south-east.

I accept that there has been a slight reduction in property values in the north-west and north but it has been much smaller, perhaps 5 or 10 per cent. at the maximum. That means that there has been a more realistic approach to the value of properties in those regions. People have not overcommitted themselves and the market is now moving back towards some sort of sense of reality.

As I said, it is up to the builders to give better value for money. There have been all sorts of show house give-aways such as full sets of white goods, fridge-freezers, ovens, kitchen units and full bathroom fittings, as well as sanitary goods. Those offers are absolutely essential. I praise the efforts of the house building industry in getting its act together to give a very competitive product to buyers and in ensuring that it presents that product supremely well in all show houses up and down the country.

I never fail to be impressed by the presentation that house builders give in their show houses; it is a pleasure to go into them. House builders understand the needs of buyers. I am delighted at what they are doing.

The only interest that I have to declare is as a non-executive member of the board of Cosalt plc, which is engaged in the development of a waterfront site with some old, clapped-out factories. It had to reuse the site and decided to put in a new factory and an office block for various public sector tenants and to build four phases of housing. The company put the deal together during the boom and thought that it was on to a sure-fire winner. However, since then the proposed selling prices of four or five years ago have gone down by 15 or 20 per cent. What is it to do in such circumstances? It has managed to get builders to do the demolition, construction and finishing work at much lower prices than it expected so its original construction budget will not be exceeded four or five years on, even allowing for inflation. In other words, building packages have been bought at much lower prices and that fact is reflected in the selling price.

In the private housing market, everything depends on the rate of sales—how quickly a company can construct a building and get purchasers to commit themselves to minimise its cash flow. I am delighted that the construction industry has been able to turn its operations around even in the difficult market of the past four or five years. Previously, we had runaway inflation and the industry made enormous—even unacceptable—profits. It had it too easy, but it has proved itself lively, on the ball and able to adapt to changes. It now gives better value for money but I would still criticise house builders in one respect.

Up to a couple of years ago, house builders kept buying land as if there were no tomorrow, possibly doubling land values. That was a sure-fire way of ensuring that they would be crippled by having too much land stock without being able to provide houses at affordable prices. In fact, they are their own worst enemies in many cases.

What action can the Government take? We have already heard about the difficult political situation in which the Government find themselves with only two years to go. I join those who say that the reduction in mortgage interest tax relief has been introduced too quickly. To reduce it by 5 per cent. a year on a ratchet system means hardship for some house buyers. However, whereas we reached a peak of mortgage interest rates of 13 per cent., 14 per cent. and even 15 per cent., they are now at a more realistic and acceptable 8 per cent. In other words, buyers are now paying less, even allowing for possible tax increases and the reduction in mortgage interest tax relief, and not doing too badly at the moment.

Should the Government intervene and falsely stir inflation into the equation? I do not think so, although I accept that we all feel better if the value of our house, which is our main asset, is increasing month by month, year by year. I applaud the Chancellor's courage in holding out against further interest rate rises in the past week or so. I hope that sterling's performance against the mark and the dollar confounds all the critics and that we might already have reached the interest rate ceiling of the current cycle. That would be marvellous news.

It is not in the interests of individuals, the housing market or industry for interest rates to continue to increase.

Does my hon. Friend agree that the purchaser needs stability and to be sure that interest rates will not change as much as they have over the years, even if it means not reducing them so far? Would it not be better if we perhaps had more stable bands of interest rates as in Germany?

I could not agree more. If interest rates have already reached their ceiling with three responsible and small interest rate increases in the past few months, I believe that my hon. Friends suggestion would be acceptable to industry at large, to individual home owners and the housing market. I agree that we need stable interest rates and stable inflation, which are closely linked. The Government's targets are set in concrete, so to speak, and we are pursuing and achieving our inflation rate target. We must certainly use the interest rate indicator at all times but we must bear in mind the economy as a whole, not only the financial markets.

I deal now with the definite benefits that flow from home ownership. Home ownership is an investment for a first-time buyer, someone who is upgrading and someone who has reached the peak of his housing ambitions. That contrasts markedly with the plight of people who have spent decades paying rent that has simply gone down the drain.

It is unfortunate that more people cannot be motivated early in life to get on to the house-buying ladder. Any Government action needs to concentrate on first-time buyers, who stimulate demand. I urge people to have confidence and to continue to become home buyers and owners. We can achieve the flexibility that we seek in the housing market without nationwide rented accommodation, although I am all in favour of providing council houses for those who are sick, poor or in urgent need.

I agree with the hon. Member for Newham, North-West (Mr. Banks) as I have always supported the use of capital receipts. They need not necessarily be used to build new local authority housing stock but could certainly be used to improve their existing housing stock. However, if the Government allowed much greater use of capital receipts, would the money be well spent or would it add to public spending and debt and increase interest rates? What would it be used for?

In the local elections, we received the strong message that we were wholly out of favour. Some people argue that we should remove the reins from local authorities and stop capping their spending. I believe that it would be sensible to allow them to use their capital receipts for what they want but it would mean that their deposits of capital receipts, if they have any, would not be earning interest. They would have to convince council tax payers that they were doing something worth while on their behalf because some of their income would be lost and they would undoubtedly have to increase the council tax, which might mean they lost favour.

The debate is very welcome, and I am grateful to the hon. Member for Macclesfield (Mr. Winterton), who comes from the proud county of my birth, for speaking so strongly, as people from that part of the world usually do. I hope that this will be a prelude to a longer debate in Government time as housing is probably the issue that most affects people's sense of security. Homes and jobs, which are closely related, are matters of great concern, and probably more so now than for many years. We have heard two contributions from hon. Members representing northern constituencies and I join the hon. Member for Newham, North-West (Mr. Banks) in making a contribution from the south.

My constituency begins literally a mile from here. In Southwark, housing policy across all sectors is nothing short of disastrous. There is a crisis not only for those seeking accommodation in the rented sector, but, increasingly, for those seeking to buy or who have bought. I flag up immediately those who have gone into shared ownership and find that they can no longer sustain it but cannot get out; those who bought under the right-to-buy scheme, some of whom have recently been presented with bills of £27,000 for capital charges—as the people involved are a pensioner couple with no capital, it means that they cannot pay and that their home may cease to be their own—and people who were often forced to buy, thinking that they could just manage the purchase when the market was at its highest in the 1980s but have since seen the value of their homes drop by nearly half in some dockland areas—the price of a terraced house there has dropped from over £100,000 to about £60,000 or £70,000. Their negative equity has turned into not a slight deficit but an extraordinary liability.

The practical problem for many people is whether they will be able to keep their homes as their jobs become less secure. Therefore it is urgent that we get the policy right. The phrase that came to mind, which I suppose was prompted by the VE day background to the debate, was that never have so many owed so much—not to so few, but simply owed so much. People are desperately worried about the implications of that.

We could all cite a litany of problems, but we are here to suggest some solutions, too. There is the problem not only of about 1,000 repossessions a week and the fact that almost 500,000 people are three months behind in their repayments, but that there are increasing bills and the prospect in the autumn of reduced security to help people pay for mortgage interest if they are on income support or other benefits.

Additional uncertainty about interest rates and about the future of mortgage interest relief at source—whatever one's views—does not help.

May I make the point as strongly as I can, from a constituency which is ranked in the top five for unemployment in the country, that the best way to get people back into work is to boost the construction industry? It is proven to be the best way to get more people at all levels of skills back into work more quickly. Self-evidently also, the more people are in work, the more people can better afford their homes. We should encourage not only new build, although the hon. Member for Chorley (Mr. Dover) is right to say that there are some very good newly built properties that are well presented, but renovation, modernisation and home improvement. If we want to reduce unemployment significantly, there is no better way than to boost the housing sector.

There has always been intervention in the housing market, incentives and disincentives and a debate about how to control it. We have never left matters entirely to the marketplace. I was on the Standing Committee on the Housing Bill in 1988 when the Government legislated their policy of reducing subsidy. People predicted then, that instead of subsidy being provided by the Department of the Environment, the Department of Social Security would increasingly have to pick up the bill. All hon. Members now see graphs that show the balance changing from subsidy of the buildings to subsidy of the person. There has been a huge reversal and it is unsustainable in the long term. What should be done?

First, we need a partnership between funding through subsidy by the taxpayer, whether by mortgage tax relief or other forms of subsidy, and funding through the private sector. That partnership, especially in shared ownership and the rented sector, must be achieved to provide long-term security. Secondly—I agree with the speeches of the hon. Members for Macclesfield and for Chorley—the housing market has been nonsensical over the years because the most difficult time to get finance has been when one most needs it: when one starts out. Indeed, getting finance becomes easier for people when they least need it, when their income is more secure and their children are off their hands. Nor do we adequately look after people nearing the end of their lives who do not want responsibility, or cannot afford it, but want to stay in their own homes. We must not forget that issue.

We must ensure that we do not distort incorrigibly in Britain the balance between renting and owner-occupation. We have always made a theological distinction between those two forms of housing in this country, which does not exist in other countries. My party has long argued that people should be given housing credit and that it should be applicable equally to the rented and the private sector. Area by area and local authority by local authority, we must respond to local need and demand. The housing mix and the allocation of land should be influenced by what people want; dependent on whether they want to buy or rent.

I hope that hon. Members will take away the following theme from this debate. We should not only consider people who are taking up the right to buy or have started to buy their own home. What we need most is a policy which provides security and stability. Only in that context can people plan and make commitments. I hope that the Government will seek the widest consensus over the next few weeks and months. People can be overly partisan about housing policy. The best housing policy is one which is secure over the remaining period of this Administration and into future Governments. Only in that way will the voters and those who want, need and buy homes, thank us for being sensible about giving them security for the future.

I congratulate my hon. Friend the Member for Macclesfield (Mr. Winterton) on initiating this important debate. There is no more important issue in politics. Home ownership is one of the most deep-rooted ambitions of many people in Britain. All the surveys for many years have shown that 80 per cent. of the population aspire to owning their own home. One of the successes since 1979 has been the rise in home ownership from 45 per cent. to almost 67 per cent. I do not think that the difficulties of the recession in the housing market and negative equity have changed the essential desire among people in the United Kingdom to buy their own homes. In fact, under the right-to-buy scheme, about 1,000 properties are sold each week.

I could not agree more—unusually—with the hon. Member for Southwark and Bermondsey (Mr. Hughes), who said that, as a country, we owe security and stability to people who have the deep ambition to own a home and have perhaps saved over some years to get together a deposit to buy a house. If the housing market is like a roller-coaster, it will not meet those aspirations. So it is right to go for a policy on housing which provides security and stability.

I do not have enough time to say much about the distress and anxiety felt by those in negative equity. In the eastern region, there are something like 70,000 homes with negative equity. Indeed, we have all seen constituents in surgeries who have found saving up, buying a home and then finding that its value has fallen one of the most distressing events in their lives. I accept the point that my hon. Friend the Member for Chorley (Mr. Dover) makes about moving up in the housing market and the possibilities of lower price. He is right and the lowering of interest rates has been welcome. For the future, we should learn from the lessons of the past. We should try to achieve steady growth in house prices and not an inflationary, expansionary boom, which raises expectations and is—frankly—illusory.

There is some good news. I am not saying that the market has completely rectified itself, but it is noticeable that the number of households with mortgage arrears of more than six months has fallen substantially in the past year. It is down by 21 per cent. Certainly in the eastern region, house prices are beginning to rise. There was a 1.6 per cent. increase in the first quarter of this year. That trend has been continuing for well over a year and it is also reflected in the national figures, which I do not believe are as gloomy as one or two hon. Members have said.

Since the end of 1992, through 1993 and 1994, the Department of the Environment mix-adjusted house price index shows, quarter on quarter, year on year, an increase of between 1 and 2 per cent. Although that is not dramatic, it is in the right direction. For new houses, as my hon. Friend the Member for Chorley said, there has been a more noticeable increase. In the eastern region, in every quarter since the end of 1993, new house prices have been rising and, in the most recent quarter, they have risen by 4.3 per cent.

I am grateful to my hon. Friend for considering the national position. Perhaps we can do no better than to quote the Halifax building society. Its house price index shows that prices are down by 1.5 per cent. in the year to April 1995 and that there has been a cumulative decline of between 10 and 15 per cent. since 1990. Indeed, the Council of Mortgage Lenders says:

"Depending on the house price index used, between 7 and 10 per cent. of mortgage holders have negative equity."

Surely that shows the serious problem that I was seeking to highlight in my opening remarks.

I hope that my hon. Friend will agree that I have not sought to minimise the difficulties. If he examines the mix-adjusted house prices indices, which give the recognised national figures, he will see that at the end of 1992 the index stood at 92, whereas it now stands at 94. So far as I can see, it has risen to some extent in every quarter over that period.

The hon. Gentleman must be desperate.

The figures are provided by the Library, so they cannot be far wrong.

I believe that the real solution lies in sustained economic growth in the economy at large, with low interest rates. I entirely agree that we must have low interest rates in Britain if the housing market is to pick up and the construction industry is to thrive, and I hope that the Chancellor of the Exchequer will continue his robust stance on that matter.

Finally, if we come to the point where tax cuts can be made we should consider whether we can provide married couples with some extra assistance, so that we can build on the building block of the family. Many of the families in negative equity are young married couples, and I should like them to have extra relief.

I begin by declaring an interest as a consultant to HACAS, the social housing consultancy, but I stress that I have no financial interest in the subject of the debate—other than that which, I guess, every other Member of the House shares, as a home owner whose property value may be affected by trends in the market.

I congratulate the hon. Member for Macclesfield (Mr. Winterton) on his success in securing this important debate on the state of the housing market. I agree with almost everything that he said in his analysis, which was a trenchant and accurate assessment of the parlous state into which the housing market has fallen.

We all know that, despite frequent promises of green shoots, the private housing market has failed to show any sustained recovery from the recession. Clearly the market is jittery and consumer confidence is low. The number of transactions has been way below the level that might have been expected, given the historically favourable ratio of house prices to incomes.

That is not simply a case of a recovery being stalled. The evidence from the first three months of 1995 shows falling demand and falling output. New house building starts in the first three months of this year are 8 per cent. down on the equivalent three months of last year—a period which itself delivered a rather disappointing output. Even more worrying is the National House-Building Council's evidence that applications for new starts are 17 per cent. down on the equivalent quarter of 1994.

Those figures reflect a seriously depressed market, and do not support the arguments advanced by the hon. Members for Chorley (Mr. Dover) and for Hertfordshire, North (Mr. Heald), who seemed to assume that the market was making a slow recovery.

The hon. Gentleman seems determined to prove that the market is collapsing, even in the face of information to the contrary. I wonder whether he is aware of a press release by the estate agent Barnard Marcus, which has conducted a survey of properties in west and south-west London. For each category surveyed Barnard Marcus uses phrases such as:

"Optimism has returned … if a house is well presented and realistically priced, it will sell without too much difficulty"

In east Surrey, apparently:

"The market is very active at present",

in south-west London:

"house prices in general have increased",

and in Middlesex:

"New homes sales are increasing".

How does the hon. Gentleman equate all that good news with his attempts to knock the market down?

That is their selling technique.

Yes, the hon. Lady is confusing two things. One is the selling technique of estate agents in south-west London, and the other is the evidence available from every source, including the corporate estate agents with records from all over the country, that shows demand for housing falling. The hon. Lady is talking nonsense, as usual, and is not reflecting the real state of the housing market.

Why is the market in that parlous state? Essentially, there are three explanations. First, the recession of the early 1990s has had a long-lasting and traumatising effect; in the past five years 295,000 families have lost their homes through repossessions, and 1.2 million are still trapped in negative equity. It is hardly surprising that those human tragedies on a massive scale have cast a long shadow over the market. Hundreds of thousands of families are simply not taking the risk of buying a home or of moving, for fear of falling into debt.

The second factor, as was highlighted by my hon. Friend the Member for Warley, West (Mr. Spellar) in his brief intervention, is the impact of changes in the labour market. Uncertainty is caused by more than the fact of a continuing high level of unemployment; the fear of unemployment runs deep among many people who are currently in work. Few people now feel confident that their job will be around for the 25-year duration of the conventional mortgage. The increasing use of short-term contracts also adds to the uncertainty that inevitably inhibits people from taking on new mortgage commitments.

The third factor is the rising cost of mortgage repayments. Increased interest rates, two cuts in MIRAS and the threatened cut in the income support safety net that will force home owners to take out expensive private insurance, have all contributed to a substantial increase in home owners' costs. The costs involved in servicing a mortgage on the average-priced house will have risen by a staggering £830 between January 1994 and October 1995. With the fear of further interest rate rises adding to the misery, it is hardly surprising that the housing market is now showing a serious downturn.

The Government bear a large measure of the responsibility for that situation. They created the unsustainable boom conditions of the late 1980s, which led inexorably to the disastrous crash of the early 1990s. They encouraged people to buy their own homes, often overstretching themselves in the process, with pledges of continued Government support—pledges that have now clearly been broken, as is pithily stated by the Council of Mortgage Lenders in the evidence that it sent to hon. Members for the debate.

The Government promised to retain MIRAS. Although some commentators would question the wisdom of that pledge, it was nevertheless a firm commitment. To break it now, when so many home owners are in serious financial difficulty and market confidence is so fragile, is not only an act of betrayal but an ill-timed intervention, damaging the market and forcing up home owners' costs.

To add insult to injury, the Secretary of State for Social Security has come up with his half-baked proposals to cut the income support safety net, supposedly to make savings that on closer inspection turn out to be derisory. There are few clearer illustrations of the Government's loss of touch. They seek minuscule short-term savings, while causing immense damage to market confidence and leaving hundreds of thousands of home owners fearful about the future.

To complete the sorry picture, there has been a parallel cut in Britain's social housing programme. Local authorities are now to all intents and purposes prevented from building new homes, and housing association output has been savaged by two successive years' cuts in the Housing Corporation budget. The outcome, hugely damaging to hundreds of thousands of people in need and to our hard-pressed house building industry, has been to reduce the number of new rented housing starts in 1995 to the lowest level since the end of the second world war. As my hon. Friend the Member for Newham, North-West (Mr. Banks) said in his important speech, that has left many people living in unsatisfactory housing conditions, both in Newham and elsewhere.

When the health of the housing market is such a major component in the feelgood factor, and with a general election fast approaching, one would have imagined that the Government, fresh from their remarkable performance in the local elections, might have second thoughts about pursuing what appears to be a suicidal policy.

The truth is that the Government are caught in a time warp, driven by the fear of a lurch back to the bad old boom-bust cycles for which they were largely responsible. They are right to want to avoid unleashing another unsustainable boom, but they are wrong in failing to recognise that economic circumstances in the mid-1990s are light years away from those that applied in the late 1980s boom. The danger in the present situation is not that recovery in the housing market will spark off an unsustainable and damaging inflationary spiral, but that the housing market will not be allowed to recover because Treasury Ministers, like the generals in the first world war, are too busy fighting yesterday's battles rather than understanding today's circumstances.

I do not care if the Treasury mandarins—aided and abetted, as the hon. Member for Macclesfield rightly said, by the Governor of the Bank of England—encourage Tory Ministers to rush lemming-like over the cliff of electoral extinction, hotly pursued by many of those who currently sit on the Government Benches. However, I care passionately about the misery being caused in the lives of millions of our fellow citizens by the callous, incompetent and pig-headed policies being pursued by the Government.

We have a responsibility to act to protect the interests of the hundreds of thousands of home owners laden with debt and in fear of repossession. We have a responsibility to act on behalf of more than 1 million households who are trapped in negative equity and are unable to move home, and who have a continuing millstone of debt around their necks. We have a responsibility to act to rescue the beleaguered house building industry, which has been ravaged by the impact of more than five years of recession in which more than 500,000 construction jobs have been lost.

We have a responsibility to act in the interests of the British economy, in which the house building and construction industries play a crucial part. Restoring confidence in the market and expanding our hopelessly inadequate social housing programme will not just be good for housing in Britain, but it will be good for all those in jobs which, in one way or another, depend on a thriving industry—people who make bricks and tiles; people who manufacture kitchen and bathroom units, central heating boilers and fittings; people who manufacture doors and windows; people who weave carpets and curtains. All these, and many more, stand to benefit from a revived housing market. Many hon Members—including the hon Member for Southwark and Bermondsey (Mr. Hughes)—have rightly pointed that out.

In the interests of Britain and the British people, we call on the Government to reverse their misguided and damaging policies towards the housing market. We urge them to abandon their ill-thought-out proposals to cut income support, and we urge them do the U-turn which is vital to send the signal which the market so desperately seeks. I warn the Government that if they do not do that, they will pay a heavy price.

It was curious that the hon. Member for Greenwich (Mr. Raynsford) chose to have a swipe at the Governor of the Bank of England in his speech, since his hon. Friend the Member for Dunfermline, East (Mr. Brown) was recently talking about giving the Bank more control—not less—over interest rates and monetary policy. No doubt that debate will take place on another day.

Today's debate has been interesting, and the speeches have highlighted the complex inter-relationship between the many factors which affect the housing market. We heard some thoughtful speeches, particularly from my hon. Friends. But while I did not agree with every point that the hon. Member for Newham, North-West (Mr. Banks) made, I thought that he hit one or two nails firmly on the head. I take seriously the question of housing renovation, and I would welcome a discussion with him on the matter on another occasion. Like the hon. Gentleman, I began life with access only to an outdoor loo. Unlike him, however, I had one other hazard. When I stayed with my great aunt Linda in North Carolina, I had to bang loudly on the outdoor loo with a stick to dislodge the rattlesnakes, which one had to do if one did not want to end up with a greater vulnerability than one would have had in Newham or Bedford.

Perhaps we do not get enough opportunities to discuss the housing market, because it is an important subject. While I recognise the concerns which my hon. Friend the Member for Macclesfield (Mr. Winterton) has set out, I cannot share his overall assessment of the situation. I want to start by reaffirming the Government's complete commitment to sustainable home ownership. Owner-occupation remains the tenure of choice of eight out of 10 households. I am not surprised by that, even after the experience of the recent unsustainable boom.

Buying a home remains a sensible investment for most families. It is an investment not in the speculative, get-rich-quick sense, but an investment in choice, independence and control. It is also an investment in security, particularly later in life when mortgages are repaid. That is why home ownership has grown from 56 per cent. to 68 per cent. of all housing tenures since 1979. That is why it will continue to grow in both market share and volume.

Concern has been expressed this morning about the possible effect of the proposed changes to income support for mortgage interest. There will be an opportunity shortly to debate these proposals more fully when my right hon. Friend the Secretary of State for Social Security places his final proposals before the House. In the meantime, I would like to make two points. First, the existence of an insurance market will of itself help build confidence, and secondly the fact is that even under the present arrangements, an estimated 70 per cent. of home owners would not be entitled to state help.

What is needed is comprehensive, high-quality and reasonably priced insurance products. That need exists even under present arrangements. Until now, these products have not generally been available. Many critics have said that this will not change, and that the insurance industry cannot cope. It is important that the new insurance products which emerge should address the realities of the changing labour market, particularly as we move away from traditional patterns of employment. This represents a significant challenge, but we believe that the industry can and will rise to that challenge.

I am pleased to say that the signs are that, in part prompted by the proposed income support changes, a more positive and innovative approach is emerging from the insurance industry and the house builders. That said, it has been recognised from the outset that insurance can provide cover only for a limited and finite period and cannot cover certain eventualities. My right hon. Friend has made it clear that he will consider very carefully the need to continue to protect those whom insurance cannot reasonably cover.

On the question of mortgage interest tax relief, the staged reduction of the MIRAS rate from 25 per cent. to 15 per cent. has increased monthly mortgage payments by £20 at most. This needs to be compared with a £130 reduction in average monthly mortgage payments resulting from interest rate reductions since October 1990.

I said that we continue to support sustainable home ownership. Indeed it remains our policy to extend home ownership. Through the right to buy, shared ownership, cash incentives and other low-cost home ownership schemes, we are enabling over 200 social sector tenants a day to become home owners. It has been suggested that the success of these and other initiatives to encourage marginal first-time buyers are at risk through the increased costs of owning a home. It is not our policy to encourage people to be unrealistic about what they can afford. That is not sustainable home ownership.

Several hon. Members have referred to first-time buyers, but it is worth making the point that it is clearly not affordability which is restraining the market. The National House-Building Council first-time buyers ability to buy index is at the highest level since its introduction over 20 years ago.

I am very conscious of the problems being experienced by some home owners—particularly those in arrears with their mortgage, and those with negative equity. These problems will not disappear overnight. But the success of Government policies in securing sustained economic growth, increased employment opportunities and low interest rates means that fewer people are now likely to get into difficulty with their mortgage payments, and those in arrears are more likely to be able to pay them off.

Figures published by the Council of Mortgage Lenders show that the number of households in arrears of six months or more at the end of 1994 was down 21 per cent. on a year earlier. The number of households affected by negative equity has fallen by 44 per cent. since the 1992 peak. The number will continue to decline as house prices edge upwards. South-east England, where the negative equity problem is most concentrated, has now seen modest house price increases for six consecutive quarters. In the meantime, I am pleased to note that most of the main mortgage lenders now have arrangements to assist borrowers with negative equity who need to move home.

I know very well that recent market conditions have caused concern to the house building and building materials industries. This is a vast sector of British industry, for some 43 per cent. of the total construction market is housing-related.

There is no doubt that house builders have had a difficult time over the last few years. The total number of new house starts fell by nearly 40 per cent. between 1988 and 1992. Although there have been some improvements since then, the industry has regained nothing like its old confidence. Last year was a good one for the industry, by and large; starts were up by 13 per cent. and the total volume of output increased by 7 per cent., but many builders were hoping for a much more significant upturn.

In the early months of 1995 builders were scanning the horizon for the long-awaited resurgence in the private market. Nobody is suggesting that there is a boom at the moment, or anywhere near that. Housing market activity is generally rather lower than last year, and prices are scarcely moving from month to month.

In the nature of their business, house builders have to make considerable investments—in land, materials, machinery and people—well ahead of public demand. The housing market is not an easy one to judge. Understandably, builders have looked with concern at increased interest rates and changes to MIRAS and benefit arrangements, although these factors alone should not make much difference to the market. Nevertheless, they are part of a pattern of uncertainty, and I recognise that markets are critically sensitive to that. We are emerging from a period of many such uncertainties. The last few years have seen the firm establishment of a low-inflation economy. Housing remains a solid investment, but it is no longer a get-rich-quick gamble. That must be good for house building in the longer term, but the market is taking time to adjust to the new realism.

While unemployment continues to fall, a significant proportion of prospective buyers have been affected by unemployment over the past five years. Many of those in work are adjusting to more flexible employment arrangements, such as fixed-term contracts. In the longer term, these changes are good for the economy and the housing market. Builders need a strong, stable, responsive economy and a healthy and responsible attitude to home ownership. No one should regret it if we do not see so much of boom and bust in future. But there has undoubtedly been a hiatus and the market is taking a long time to pick up—longer than many expected and hoped.

House builders can do much to encourage a new spirit of enthusiasm for home ownership. A good product at a good price will always be the prime incentive, and there is plenty of evidence from the last few years that new housing is more popular than ever. Builders rightly look to the Government to advance the cause of home ownership for all the undoubted benefits that it brings, and we intend to do our best to encourage it.

This is the first debate that we have had for some time on the shipbuilding, ship repairing and other maritime industries. I hope that it will be the first of several exchanges to take place both here and elsewhere within the House on this important issue, because it is widely recognised that important changes have taken place in the industry over the years: it has been rationalised, privatised and then rationalised again, and it now bears no resemblance to the traditional image of shipbuilding as an old-fashioned rust bucket industry. Instead, it is a high-tech, high-skill, high-investment industry in which Britain needs to play a part in future.

For both industrial and national defence reasons, it is important that we safeguard the shipbuilding industry and do all that we can to ensure its success. Given the projected increase in the world market for shipbuilding, we must ensure that the UK gets its fair share of future orders. Hon. Members on both sides of the House should agree that we need a partnership between the public and private sectors to ensure that the industry does as well as it can. In those circumstances, the private sector's role is to ensure that the industry is efficient, adequately financed and resourced, and in a position to compete and win orders. The public sector's role is to ensure that the competition which the industry enters into is fair and that there are no hidden subsidies or support elsewhere.

Although the privately owned industry is efficient thanks to the efforts of management and unions, the danger is that it will not win orders abroad in the magnitude that its efficiency warrants because of unfair competition. There must be a level playing field or, more appropriately in these circumstances, a level swimming pool. If the effect of a tilted playing field is significant, hon. Members will realise that the impact of a tilted swimming pool is even more substantial if one is trying to swim uphill. We need a market that is fair and regulated, and we must establish that the rules are the same for everyone.

I wish to raise three major areas of concern. First, the world market is likely to be substantially affected by an unwarranted expansion of the Korean shipbuilding industry. South Korea caused a glut in the industry by its tremendous expansion during the 1970s. That led to a refinancing requirement in the 1980s, when the industry had to be bailed out by the South Korean Government. The South Koreans now propose a tremendous increase in their yards, which is not warranted by their financial circumstances. The South Koreans are showing that they are willing to buy market share using Government subsidies, both direct and indirect, which involve free and heavily subsidised financial packages.

Do the Government accept that that is the position and, if so, what do they intend to do about it? There is no point in British industry making great efforts to increase efficiency if it is to be beaten by unfair competition by foreign yards. The South Koreans have clearly decided that they have a strategic industry and want to take their share of the market in shipbuilding, but they should not be allowed to drive out British yards by unfair competition.

My second concern is about state aid in Europe. Germany is clearly prepared to pay a substantial amount for reunification, which involves propping up, modernising and investing in east Germany. The impact of that on the shipbuilding sector is to give German yards an unfair advantage over their competitors. Substantial allegations have been made that German yards are winning orders at, effectively, below real costs. I should be grateful to know whether the Minister accepts that assertion and, if so, what he intends to do about it.

Elsewhere in Europe, publicly owned yards that still operate as part of the nationalised sector, particularly in Spain and Italy, receive concealed Government subsidies to allow them to bid for orders abroad. The Minister will be aware of the current competition for orders from the South African navy. This may not be the appropriate time to discuss the details of that, but there are grave concerns about whether the Spanish competitor has an unfair advantage over Yarrow on Clydeside. I hope that, once that order is resolved, the Minister will be prepared to look into that issue.

Similarly, France has just received substantial assistance, which has been agreed by the EC, for restructuring. The danger is that that money will be used not to restructure but to buy orders. The Minister will be aware of recent reports that the Royal Caribbean order of two vessels at some $270 million each involves a subsidy of approximately $130 million per ship. With that level of subsidy, any British yard seeking to compete without state support cannot do so. That differential is so enormous that fair competition can be achieved only by ensuring that there is equality.

My third area of concern is ship financing schemes. It is widely believed that Norway outside the EC and Germany, Denmark and Spain within it have better finance schemes than those allowed by the UK Government. If the Minister accepts that that is the position, what does he intend to do about it? David Smith, president of the Shipbuilders and Shiprepairers Association, and members of that association have raised that matter with the Minister and intend to meet him in future to pursue that important question. In reflecting the industry's concerns, the shipbuilding industry, its management and unions, are noticeably not asking to be propped up or subsidised. They simply ask the Government to ensure that competition with Europe and the rest of the world is fair because they believe that the strenuous efforts that they have made to make the industry more efficient should be rewarded by the opportunity to compete fairly.

I could go into great detail, but I recognise that this is not the time to do so because many other hon. Members wish to contribute to the debate. I hope that the Minister accepts that it would be more appropriate for him to meet a delegation to discuss those points in detail so that they can be more fully explored.

On military procurement, with the ending of the cold war, this is a time for industrial regrouping and alliance forming throughout Europe and the world. While it is not entirely clear whether that regrouping will be on an international or national basis, or whether it will be because of takeovers, industrial alliances or partnerships, it will none the less take place. The Government have a clear responsibility to ensure that Britain's national defence and strategic interests are protected and that that is not left simply and solely to the market.

I support my hon. Friend's remarks. Will he join me in welcoming today's expected announcement that two additional submarines are to go to Rosyth royal dockyard for refitting, which will help to guarantee 1,000 jobs? Does he also agree, however, that, first, it is vital for the defence interests of our country that Rosyth receives the contractual guarantees for surface ship work that were promised to it? Secondly, does he agree that the Government should adopt a procurement and industrial policy that secures what is left of our shipbuilding and ship refitting industries and recognises their vital role in the defence of the country?

I agree. I hope that the Minister also agrees. It is extremely important that we ensure that any industrial rationalisation guarantees that our industrial and military capacity follows our defence policy and does not lead it. We do not want a repeat of the situation during the Gulf war, when the Belgians refused to sell us ammunition because they disagreed with our policy in that conflict. That decision could have had a horrendous impact upon our ability to exercise what we considered to be our national interest. It is important that our military shipbuilding capacity is preserved so that we can guarantee our ability to implement any policy on which we determine.

Given the limited time available to me, I shall not discuss what will happen at VSEL, but, in future, I hope that the Minister will be prepared to discuss that matter, either privately or in public, with interested Members. My hon. Friend the Member for Dunfermline, West (Ms Squire) has already referred to Rosyth, so I shall say nothing further about it or Devonport.

Sea safety is a relatively minor point compared with the sweep of issues that I have raised, but it is worth considering. It is in our national interest to ensure the highest possible safety standards for our mariners and the cargoes that come to our country. I hope that the Government will press as hard as they can to ensure that those high standards are maintained by all ships that come to our country. I hope that they will also do what they can to ensure that the shipbuilding and ship refitting industries are able to benefit from the commercial opportunities offered by such safety work.

I am following the hon. Gentleman's arguments carefully and I agree with everything that he has said. Does he agree that there is great concern throughout the industry that the Government are not paying enough attention to safety standards? As a result, we could lose our seat at the international conference that established the maritime safety conventions. The Government are failing to safeguard the rights of British people employed in the industry worldwide, who sometimes have to take orders from political commissars in contravention of those conventions. I believe that one of our representatives at the conference is a low-grade civil servant, who has little understanding of the industry. Surely that reflects the Government's concern about safety.

I am grateful to the hon. Gentleman for raising that extremely important point. I am sure that the Minister will refer to it in his response, but I hope that he will not do so at such length that the answers to my questions are squeezed out.

The environmental benefits of sea travel are worth noting, particularly when so much concern has been expressed about road traffic and the fumes that it causes. People should realise that sea travel, particularly cabotage, is an environmentally friendly method of moving goods around the European Community. The Government should encourage that practice wherever possible and ensure that our shipbuilding and ship repair industries take advantage of the related commercial opportunities.

The fact that so many other hon. Members want to take part in the debate demonstrates the importance that so many of us attach to the shipbuilding industry. I hope that this debate will not be the only occasion when shipbuilding, ship repair and other related industries are discussed in the House.

It is a pleasure to follow the hon. Member for Glasgow, Govan (Mr. Davidson), who led off this important debate extremely well. I find myself in the rather unusual position of agreeing broadly with almost everything he said—that spells the end of his political career. He was right to refer to competition, which is at the heart of shipbuilding and related maritime industries.

I must declare an interest as I am a partner in the law firm, Foot and Bowden, which has a large shipping department. I am not, however, directly involved in that work.

I am particularly proud to take part in the debate given the vast maritime history of the city of Plymouth. It is the city of Drake and of the Pilgrim Fathers, who set sail from the Mayflower steps. It still has strong maritime connections, because it is the home of the world-famous Devonport dockyard and naval base. It is the city of Millbay docks, from which Brittany Ferries takes passengers to France and Spain. It has a substantial fishing fleet and a waterfront and yachting facilities beyond compare in the United Kingdom. We hope to contribute to that maritime heritage with a national maritime aquarium. That will combine Plymouth's maritime history with our hunger for knowledge and the research carried out by the expanding and extremely successful university of Plymouth. I am sure that that aquarium will become a world-famous focal point. I look forward to its opening.

Maritime history is not just in the blood of Plymouth people but, as an island race, it is in the blood of all of us. Perhaps that is why we have a slightly different concept of the European Union than our continental partners. Perhaps, because of that, we do not want to participate in full economic and political union, unlike some of our European partners. We cannot buck not just the market, but our geography and our history.

I have an enormous sympathy for any hon. Member who represents a community in which an established and traditional industry has declined. That has happened over the centuries for a variety of reasons. Sadly, I represent such a community. When I first arrived in Plymouth in 1980, 13,500 people were employed at Devonport dockyard. That number has now fallen to 4,000. I accept that the industry was subject to overmanning in the old days and that naval requirements have changed, but that does not make it any easier for the people in that local community to cope with such downsizing, as the Americans call it. I understand the anger of the communities that have to cope with the huge impact of the decline of their traditional industries.

It is important to consider the Government's proper role in such circumstances. It is interesting that the hon. Member for Govan did not, to his credit, call for the loss-making industries to be propped up by taxpayer subsidy. He called for fair competition. That is the right approach. It is for the Government to ensure fair competition so that our shipbuilding and ship repair yards operate on a level playing field, or in a non-tilted swimming pool, with other shipyards throughout the world. I am not convinced that that is happening now. It is important that the Government do not allow competitive tenders for naval ship repair work to go to yards outside Britain, because it would be wrong for European shipyards to do such work. There is a real fear that the Government subsidies enjoyed by some shipyards on the continent enable them to compete more fully than our yards.

I was pleased that the hon. Member for Govan mentioned the Korean shipbuilding industry. Let me put down a marker on the subject of global free trade. In theory, we probably all support the concept, and if there were indeed a level playing field—as there doubtless will be in due course—such market conditions would of course be right; but the subsidies provided by other Governments, wage levels in other countries and all sorts of strange working practices make the road to our alleged goal of global free trade a rough and rocky one. Let us have competition by all means, but let it be fair.

I welcome the agreement reached by the Organisation for Economic Co-operation and Development in September 1994, which insists on the phasing out of subsidies for other shipbuilding yards and shipping industries generally. However, we must play our part in ensuring that other nations comply with their obligations. We are fed up with being the one nation that plays by the rules in Europe and the world, while others cock a snook at European directives and agreements. Let us be fair, but let us also ensure that no one takes advantage of us. There is no point in our shipyards and shipping companies being exposed to the full glare of competition and market forces if they must compete in a world in which other countries subsidise their industries.

We in Plymouth are fortunate to have Devonport Management Ltd., a highly successful company with a skilled and motivated work force that has attracted work from overseas and from outside the naval industry. That company now wants a period of stability and consolidation in the shipbuilding and ship repair industry, and fair competition.

Let me raise another constituency issue. British Aerospace Systems and Equipment Ltd., also based in Plymouth and a vital supplier of the naval industry, wants competition among major contractors. As I said on 16 February in the debate on the Royal Navy, it is important to

"encourage competition between British Aerospace, GEC and other major prime contractors, as the best means of ensuring value for money in naval, whole ship and systems procurements".—[Official Report, 16 February 1995; Vol. 254, c. 1190.]

I hope that the Government will ensure that that competition is guaranteed.

My final constituency point concerns the excellent service that Brittany Ferries runs from Plymouth. For many years, we have had a very successful roll on/roll off ferry industry: it is possible to enjoy a pleasant cruise to Roscoff in France and Santander in Spain. The industry is now developing, and other routes are being considered. I have used the company's services in recent years, and I can thoroughly recommend starting any holiday from Plymouth. Interestingly, 50 per cent. of British people who go to France and stay for more than four nights spend their time there west of a line from Le Havre to Biarritz. It is entirely wrong to begin a holiday by travelling from Dover to Calais; Plymouth is definitely the right starting place.

Many ferry operators fear that the Dover to Calais service is becoming little more than a floating supermarket. People are, in effect, enjoying an hour of duty-free shopping without even leaving the ship at its destination. Local newspapers are offering promotions enabling people to board such boats for 50p.

Does my hon. Friend agree that it is now cheaper to buy in France than to shop on the duty-free boats?

My hon. Friend may well be right. I have not so far availed myself of that opportunity.

My point is that the impact on other ferry companies that cannot offer such a floating supermarket service is very great. Consumers are entitled to ask why they should pay so much more to travel to France from Portsmouth or Plymouth when they can sail from Dover to Calais for 50p. The answer, of course, is that the service is heavily subsidised by the duty-free shopping.

On a point of order, Mr. Deputy Speaker. How much more must we hear about cross-border shopping in a debate about the shipping and shipbuilding industry?

The subject is tangential to the debate, but it has some relevance to shipping in general. Nevertheless, I ask the hon. Member for Plymouth, Sutton (Mr. Streeter) to return to the main substance of the debate.

The title of the debate on the Order Paper, Mr. Deputy Speaker, includes the words "and other maritime industries".

I am aware of the title. I have ruled, and I hope that the hon. Gentleman will respect my ruling.

I certainly will, Mr. Deputy Speaker—and you will be delighted to learn that I am approaching the end of my speech. [HON. MEMBERS: "Hear, Hear."] The ferry companies will be disappointed that Opposition Members do not consider them to be maritime industries; they employ a great many people. [Interruption.]

Order. I do not think that that remark was required. If the hon. Gentleman wants to make such remarks, he should go outside.

It is disappointing that Opposition Members remain stuck in the past. They see only the industries and businesses with which they are familiar; they forget that the world is changing all the time. My constituents who are employed by Brittany Ferries are concerned about their jobs and futures. They wanted to send me here to speak on their behalf. I am sorry that Opposition Members cannot see beyond the end of their noses.

A number of important issues need to be discussed and fair competition is at the heart of all those issues. The Government must play their part in ensuring that our shipbuilding, ship repair and other maritime industries are not prejudiced by unfair subsidies abroad, and I ask for an assurance from my hon. Friend the Minister that he is paying attention to the interests of those industries.

I congratulate my hon. Friend the Member for Glasgow, Govan (Mr. Davidson) on selecting this subject. As he said, this is the first occasion for some time—certainly the first occasion in the current Parliament—on which we have engaged in a wide-ranging debate about the shipbuilding industry: I welcome that, and I know that my constituents will as well.

It is incontrovertible that, as has already been said, the shipbuilding industry has been in steep decline for more than a generation. The results of that decline have been visible, and many Labour constituencies have lived with the consequences—massive unemployment, the end of apprentice training schemes, a fear of the future and a profound sense that job security is vanishing.

We have also seen the decline of certain famous shipyards—indeed, the disappearance of two: Cammell Laird on Merseyside and Swan Hunter on Tyneside. That is very regrettable, and could have been avoided had the Government shown the commitment and support for our shipbuilding industry that other Governments in the European Union have shown. It is a lasting indictment of the Government's record that they were prepared to sit on their hands and do nothing to support those famous shipyards.

As my hon. Friend the Member for Govan hinted, the reasons for that decline are numerous—they are also complex. They have to do with hidden subsidies, both direct and indirect, which many foreign countries have provided for their shipbuilding industries. The reasons involve the lack of investment in the industry in the 1960s and 1970s.

Whatever the reasons for the decline, it is incumbent on the Government to recognise that we can do something about it, as my hon. Friend the Member for Govan said. The Government must recognise that the prospects for the industry are not all doom and gloom. Most independent analysts expect an increase in demand for new merchant shipping throughout the remaining years of the decade. It is important that the remaining industry, which is a high-tech, state-of-the-art industry, should be able to take advantage of the increase in demand when it comes. There has been significant investment in many of the principal yards in the past 10 years.

There will be increased demand for a number of reasons. The first reason is the increasing age of our merchant shipping fleet, which is nearly 17 years old in Britain, compared with 13 years old throughout the rest of the European Union. Our shipping is ancient and needs to be replaced. There will also be an increased demand because of the improving environmental standards related to the carriage of goods by sea. Another reason for an increase in demand is the requirement for double hulling. Improvements in other aspects of the carriage of goods by sea will also lead to an increase in new merchant shipping orders. There are also chances for British yards to take advantage of increased export opportunities in the naval shipbuilding sector. All those factors should give the Government sufficient grounds to look at the industry again and review the way in which they provide practical support to shipbuilding.

One of the problems bedevilling British shipbuilding over many years has been unfair competition abroad. My hon. Friend the Member for Govan mentioned the South Korean industry, which now accounts for nearly 30 per cent. of the world market for merchant shipbuilding. Some 25 years ago, there was no South Korean shipbuilding industry, but it now accommodates about one quarter of the world demand for merchant shipbuilding.

There is no reason why the British Government should not look at a range of policies to support the British shipbuilding industry and show it the same level of support and patriotism as other countries have shown their shipbuilding industries. In particular, I hope that the Under-Secretary of State for Industry and Energy will look carefully at the capital allowance regime that applies to shipowners' purchasing decisions. It is important that we match the best fiscal policies that apply throughout the European Union; at present, we do not. As a result, British shipowners are less inclined, and have historically been less inclined, to place new orders with British yards for merchant ships. The Minister and his colleagues in the Government should consider that issue directly.

I welcome the ban in the new regime on state subsidies for shipbuilding. It is clearly important that any new fiscal regime should apply to all shipowners who want to place orders. I am not saying that there should be a hidden subsidy just for British shipowners, but I am sure that when we consider the tax rules and the fiscal regime closely, we shall find ways of providing a positive incentive for British shipowners to place new orders and work.

I congratulate my hon. Friend the Member for Govan. I know that there will be widespread interest in the British shipbuilding communities in our debate. We want the Government to give a positive message of support to the industry, to give it practical assistance and encouragement, and to take action to reverse the generation of decline that has caused unemployment and misery throughout the length and breadth of this country.

Like my hon. Friend the Member for Plymouth, Sutton (Mr. Streeter), I was impressed by the remarks of the hon. Member for Glasgow, Govan (Mr. Davidson), who could have made his speech from the Conservative Benches. I was worried when the hon. Member for Barrow and Furness (Mr. Hutton) started to go down the old Labour route; he recovered himself to support the call for the Minister to ensure that there is a level playing field in the shipbuilding industry. I say that not just because I spent the first 20 years of my life on Clydeside and saw the decline in shipbuilding, but because for a long time I have wanted world trade organisations and the European Union to ensure that competition is free and fair in all industries. Interestingly, the Transport Commissioner in the European Union may be one of those urging free and fair competition on other countries in the European Union.

My constituency has a long coastline but no traditional shipbuilding or ship repairing. I was attracted to the debate because of the mention in its title of maritime industries. I hope that I shall stay in order as there are a number of what I regard as maritime industries along the coastal strip of Hastings and Rye, all of which add employment to the area. Those industries are expanding and beginning to show that the industries now associated with the sea are not just the old traditional ones of ship repairing and shipbuilding.

One company in my constituency exports 98 per cent. of its products. It produces a propulsion backpack for divers, such as we may remember seeing in the James Bond films. The diving industry is expanding and has grown tenfold in the United Kingdom in 10 years. It is a high-tech industry that operates at the frontiers of technology and it provides an opportunity for wealth and job creation for the residents of Rye.

There has also been a recovery in the boatbuilding industry. That raises the question of definitions of boats and ships. I am talking about the small, leisure boat industry, in which a worldwide recovery is taking place. Companies around our shores have fought their way through a difficult recession. New orders are emerging and companies are developing new boats using new technology and equipment. They operate at the frontiers of technology to export and develop new and attractive packages for the international yachting and sailing world. As we have more leisure time, particularly in the rich west, there is a greater demand for such boats.

I may stray slightly out of order when I mention one developing sector. I am not sure whether it is a maritime industry, but I am sure that you, Mr. Deputy Speaker, will tell me if I stray out of order. The medical world is developing the use of sea water, along with shellfish, to produce a high-tech—

Order. I am married to a general practitioner and can say that the hon. Lady has strayed pretty wide of the subject.

I bow to your judgment, Mr. Deputy Speaker.

The more different industries develop, the more difficult we shall find it to define a maritime industry. The opportunities for developing new products, for export, and for creating jobs and wealth may come in different guises from the historic shipbuilding and ship repairing industries, but their long-term contribution to this country could be just as effective. I hope that in future debates we can extend the definition of maritime industries so that I can tell people about sea water and shellfish.

I am grateful to be called in the debate, particularly as so many hon. Members wish to contribute. Hon. Members may not realise that shipbuilding, particularly naval shipbuilding, is a large employer in my constituency, and I want to have the opportunity to press that point.

I fully endorse the remarks of the hon. Member for Glasgow, Govan (Mr. Davidson), particularly the fact that shipbuilding is often dismissed as a sunset industry, incapable of withstanding the demands of worldwide competition. There have, unquestionably, been drastic rationalisations, not least in the warship building industry that interests my constituents. Employment in that part of the industry was running at 21,500 in 1990 and is now down to below half that figure. Now, 11,000 people work in the warship building industry in this country. The decline in shipbuilding and its impact on employment is not confined to the famous yards on the Clyde and the Tyne.

In response to the remarks of the hon. Member for Plymouth, Sutton (Mr. Streeter), I should say that as a young student apprentice working in Portsmouth dockyard I remember that 22,000 people were employed to repair and refit capital and other ships for the Royal Navy. At the same time there were burgeoning shipyards along the coast around Southampton, such as Vosper, Harland and Wolff and Thornycroft. What remains of the Portsmouth dockyard today employs a mere 2,000 people—less than one tenth of the number employed when I worked in engineering as a young man.

Harland and Wolff has long since departed from Southampton waters. Vosper and Thornycroft combined to form a highly successful firm, which has shown what can be done through flexibility, innovation and export-led marketing. United Kingdom shipbuilding can succeed in the global market if we specialise in what we are good at, and I suggest that we are good at building high-value, highly sophisticated, specialised warships.

The Vosper Thornycroft shipyards in Eastleigh have shown that British shipbuilders can take on the world and win. In the past 30 years we have exported 370 ships to more than 34 navies worldwide. That is a magnificent achievement from which our shipbuilding industry can draw strength, but how can the industry benefit from the lessons that have been learned—and learned particularly hard in my constituency? The key to the industry's success is investment in skills and modern machinery, to which the hon. Member for Govan referred in his speech and which has led to increased productivity. The productivity of shipyards in Eastleigh has increased by more than 50 per cent. in the past five years. I challenge any hon. Member to find a more successful example anywhere in the world today.

We must recognise the importance of continued product innovation and move away from the traditional aspects of shipbuilding. Shipyards in my constituency have pioneered glass-reinforced plastic warships and they are leading the design development of Trimaran warships. We must also make a commitment to the motivation of the work force. Some 50 per cent. of the workers in my constituency and in nearby areas have a direct stake in the business of the shipyards for which they work. There has been no industrial disruption in the local shipyards for the past five years. That is a very telling point.

We face increasingly fierce competition in the global market. As the hon. Member for Govan pointed out, the end of the cold war, the decline in defence budgets and the potential for so-called "home competition" from our European Union counterparts have made it much more difficult for the United Kingdom shipbuilding industry. We must now contend with about 40 major competitors worldwide in bidding for orders overseas.

I hope that the Minister will concede that it is absolutely essential that we are able to continue to supply ships to the Royal Navy. It is the vital endorsement of our products at home that enables us to sell to export markets. If the Ministry of Defence is considering inviting shipyards from our European Union counterparts to tender for naval shipbuilding contracts or subcontracting in this country, surely it must first establish whether our shipyards have the same free access to bid for similar contracts in the home markets of our potential competitors. If they do not, competing shipyards should not have the opportunity to compete against our domestic companies.

Fierce competition throughout the world has led our main competitor countries to adopt the policy of choosing a single national champion, which they then support in pursuing export opportunities. I welcome the fact that the MOD has apparently decided to follow suit. The Government's support in global export markets can make the vital difference between success and failure, particularly if we are competing against combined teams of Ministry officials and Departments and shipyards overseas. However, if the Government are to choose a national champion, that decision should be made objectively.

I believe that I am correct in saying that only a handful of shipyards in this country—one of which is located in my constituency—have the capacity to act as prime contractors for naval ship construction. In choosing a national champion that the Government will promote and support in bidding for export opportunities, it is essential that that decision should be based on an objective assessment of a shipyard's capability, export contract record and its knowledge of the market being pursued. Above all, there must be an objective assessment of which company is most likely to succeed in its pursuit of that opportunity.

I know that other hon. Members are anxious to speak in the debate, so I shall summarise my comments. The United Kingdom shipbuilding industry should no longer be considered a sunset industry. Drastic restructuring and rationalisation has already taken place and we have seen huge productivity increases through the investment in state-of-the-art facilities, the development of modern management techniques and full worker participation in the yards.

If we are to succeed in a fiercely competitive market, however, we need the dedicated support of the Government—not just for spasmodic and infrequent major new-build contracts, but for regular refit and repair work. That work should be awarded to the yards that are best able to undertake it, and invariably they will be the firms which designed and built the warships. At the very least, the firms in my constituency should be allowed to compete openly with other firms to refit the ships that they built.

I hope that the Minister will take on board the points that I have raised. I look forward to his assurance that they will be considered because they are vital to the future success of the shipbuilding industry and to the interests of my constituents.

At the outset, I align myself with two important themes to which the hon. Member for Glasgow, Govan (Mr. Davidson) alluded in his speech. First, he said that it was essential that the Government should do all in their power to ensure that British shipbuilding yards are able to operate in a spirit of fair competition. That has been a bugbear in this industry for decades and we must fight zealously for fair competition. Secondly, I entirely support the hon. Gentleman's remarks about the importance of maintaining a strategic warship production industry. Heaven forbid that we should ever need to fall back on it as an absolute requirement, but, if defence is to have any meaning, it is essential that we maintain the means of warship production.

I wish to contribute to the debate for three principal reasons. First, I have a constituency interest. One might not think that the leafy, landlocked constituency of Beckenham is relevant to the shipbuilding industry, but it is. When a recent order—which, sadly, we did not win—was open to tender, I was lobbied by Swan Hunter of Tyneside and by two local companies in Beckenham, both of which would have provided a considerable amount of subcontract work. That shows that shipbuilding is important not only in those areas that have traditionally relied on it, but as a core industry that generates jobs and business elsewhere in the country—perhaps in the most unlikely places.

Secondly, I worked for a company one of whose subsidiaries, Clarke Chapman, was an important part of the shipbuilding industry on the Tyne. I know the importance of the industry to those companies and their employees.

Thirdly, one might say that I have an historic interest in the industry as my former seat of Newcastle upon Tyne, Central was particularly important to the shipbuilding industry of Tyneside. I spent a good deal of time campaigning on behalf of the industry that existed then—sadly, it hardly survives today—and I have maintained my interest in it. Only last year I was presented with a very nice booklet entitled "Swans of the Tyne" which bears the inscription:

"Best wishes on behalf of Swan Hunter Campaign Committee".

I looked nostalgically through the booklet and on the last page I saw a picture of the Ark Royal, which was completed in 1985, sailing down the Tyne. I visited the Ark Royal shortly before it began its sea trials. What a magnificent ship it was. It was a tribute to the productive capabilities and skills of the Tyneside shipbuilding industry—how sad it is that that has been almost entirely lost. It is a very sad story and one that I bitterly regret.

In 1926, 40 per cent. of world demand was met by the British shipbuilding industry: it is now about 1 per cent. In 1960, 44,000 jobs in Tyne and Wear were dependent on the shipbuilding industry: it is now a matter of a few thousand. The amount of merchant tonnage produced in Britain was 1.5 million in 1976. That has fallen to about 250,000 tonnes now. It is a very sad decline.

I want briefly to examine the lessons that can be drawn from that experience. The lessons are many, but they show what we must do to prevent other industries from making the same mistakes.

I do not believe that the decline of the shipbuilding industry was inevitable. It was inevitable that it should suffer from the cycles created by the economy and that the fall in demand should hit the British shipbuilding industry, but that it should have had such a cataclysmic result was avoidable. It is interesting that as the shipbuilding industry recovers, countries such as France and Spain, not Britain, are picking up orders, which says something principally about our structural decline.

I should like to allay the myth that the Government have done nothing to help as that is palpably untrue. Apart from the shipbuilding intervention fund paid by the British Government, which represents the 9 per cent. maximum allowed under the seventh directive, nothing more could be done to help that would be in line with international agreements. The £2 billion that was pumped into the industry between 1977 and 1988 shows that a great deal was done, but, sadly, even that was insufficient to sustain the industry.

The problem arose before then, in the 1960s and early 1970s, when order books were full or pretty near full and production was at a record level. Steps were not taken at that time to deal with the industry's ills. Had they been solved then, the industry would have survived.

I refer briefly to three of the problems. The first was a management failure. I would never blame one side of industry, but there was terrible management failure in the shipbuilding industry—old-fashioned management, a loss of entrepreneurial skills, innovative necrosis, undercapitalisation, organisational chaos and a contempt of the work force. All that was clear on Tyneside in those years. I referred to it at some length in a speech that I made in the House in 1984.

There was also, however, a bad failure of trade union practice. Labour Members have not always been prepared to admit that and I feel that they should. It is undoubtedly true that the number of disputes, the demarcation and inflexibility that led to late and cancelled orders and costly products that therefore failed in competitive terms could have been avoided if only those problems had been addressed. I pay tribute to the work force for addressing those problems, but it did so too late. By the time the problems were put right, the strength of the industry had sapped away. That was a shame.

Nationalisation in the 1970s did not help, as it introduced another organisational dimension and confusion to an industry that was already badly holed under the water. Just about everything that could go wrong with an industry went wrong in the 1960s and 1970s, except the skills, which are still there and are slowly being lost for all time. I deeply regret that.

The House can do nothing about the historic situation, but it can learn. I have no problem with Government intervention when it is necessary for an industry. It happens here and I am perfectly happy to see it continue, but, above all, we must have a duty to put in place measures that affect industry, competition and labour relations to prevent the tragedy that hit the shipbuilding industry from happening elsewhere.

I congratulate my hon. Friend the Member for Glasgow, Govan (Mr. Davidson) on introducing the debate. I take a close personal interest in it as I spent my formative years as a young lad in the docklands area of Liverpool. The lives of my family and friends were closely involved with the fate of the British merchant fleet and, of course, I represent a constituency in Merseyside, a maritime area.

I wish to relate the destiny of the shipbuilding industry to the decline of the merchant fleet. A number of points have been made in that respect and I shall not repeat them. As an island nation, there are two important strategic reasons why we need a strong merchant fleet—for the security of our trade, most of which is carried by sea and, of course, for our defence. I include the merchant fleet in my comments on defence as the Falklands campaign could not have been mounted without the magnificent support of the merchant fleet and the Gulf war amply demonstrated the dangers of losing that capacity and becoming beholden to foreign merchant shippers. Furthermore, a strong merchant fleet supports a strong shipbuilding industry.

Does my hon. Friend realise that only three of the 104 ships chartered for the Gulf war were British owned and that the rest were either flagged out or foreign?

My hon. Friend is absolutely correct. We were obliged to pay through the nose for those foreign ships.

Reference has been made to the decline in the number of ships. There were 1,305 ships of 500 gross registered tonnes in 1979; by the end of 1993 that figure was down to 258. I do not have the latest statistics, but the trend has been so steady that I doubt it has been reversed.

Reference has also been made to our declining share in the world market from nearly 7 per cent. in 1979 to less than 4 per cent. in 1992, according to the latest statistics in my personal files. We were fourth in the league table of shipping nations in 1979. By 1992 we were 31st, behind such countries as the Bahamas, Cyprus, Singapore, Malta and the Philippines, when seaborne trade was and is increasing by 4 per cent. per annum.

Reference has also been made to the age of the fleet. My hon. Friend the Member for Barrow and Furness (Mr. Hutton) referred to the average age of ships in our merchant fleet as nearly 17 years, which is absolutely true. It was six and a half years in 1979; in other words, there has been hardly any replacement since 1979. The average age of ships registered with our major competitors—Denmark, France, Germany and Japan—is nearer 10 years.

We need an increased fleet because a maritime nation needs an increased fleet, not a declining fleet. We also need a renewed fleet. That is the connection between the destiny of the merchant fleet and that of the shipbuilding industry. Obviously, a strong merchant fleet supports a strong shipbuilding industry. As the British merchant fleet will clearly require massive replacement before the end of the century, it seems crazy that Britain is not retaining the capacity to build those ships, provide those jobs and retain and develop those skills.

It has been suggested to me in discussions with the Chamber of Shipping that it does not really matter whether we retain Britain's shipbuilding capacity. It justifies building abroad on the ground that the hull of the ship is just a small proportion of the total investment in a ship; much of the investment goes into the fitting of the ship and our fitters still fit out hulls that are built abroad. However, when one asks where the engines for such ships come from, it is more reticent.

Many ship fitting skills still exist in my constituency. I was interested recently to discover that a furniture factory had set up on Merseyside because it found a dormant pool of ship fitting skills that could be transferred to furniture making. In a dock road in Liverpool recently, I noticed that, sadly, an instrument maker to the shipping industry from the early 19th century, perhaps the late 18th century, had gone out of business.

Solutions are needed. We do not have a shipbuilding capacity to build the shipping fleet that we need now and will need even more in the future. It is a matter on which owners and trade unions are agreed. I shall mention several measures briefly in passing so that others have time to speak.

We could pay more attention to the rules of cabotage, particularly with regard to coastal shipping, as many of our near neighbours do. We could give fiscal incentives to scrap ships and build new ones. We could improve our safety standards, which would give a boost to the ship repairing industry. We could give more investment to maritime transport, which is the poor relation of transport investment in Britain.

Those points could be developed further but I confine myself in the short time available to those few suggestions about what is wrong and the direction in which solutions may be found.

I am grateful to those Conservative Members who have praised the former shipyard workers of Tyneside, but I cannot truthfully say that I know any former shipyard workers on Tyneside who would return the compliment to a Conservative Member of Parliament.

The shipbuilding community of Tyne and Wear is no more. In 1979, the largest single shipbuilding community in Britain was on Tyne and Wear. It is a measure of the significance to our community of that once great industry that this short debate has been attended at different moments by my hon. Friends the Members for Newcastle upon Tyne, Central (Mr. Cousins), for Wallsend (Mr. Byers), for Gateshead, East (Ms Quin), for Jarrow (Mr. Dixon) and for Sunderland, South (Mr. Mullin).

The industry was the cornerstone of the economy of the communities that we are elected to represent. It used to be commonplace, I suspect, in debates such as this, to say that we are an island nation; that more than 90 per cent. of our trade is carried in ships; that the Royal Navy's international role and the role of the British merchant marine is of enormous importance; that the ability to have officers to serve on our merchant ships as well as with the Royal Navy, and the ability of British citizens to find employment as seafarers, is of huge importance to our nation. More recently, we could add that we have an important and expensive stake in offshore installations, particularly in the North sea, for the purposes of mineral extraction.

It is conventional also for Labour Members to say that, since 1979, the Government have neglected those areas. Frankly, the industry would be in better shape had the Government confined themselves to just neglecting this whole area of our national activity. The truth of the matter, particularly as it obtains to shipbuilding, is that the Government have intervened. Warship procurement decisions are intensely political. The calamity suffered by the community that I represent was entirely the consequence of political decision-making within Government, particularly decisions that have affected procurement decisions of huge strategic importance.

Time is short in the debate. When it was clear that Swan Hunter was doomed, and that every person who wanted to stay in the shipbuilding industry who gravitated to Swan Hunter because it was the last large yard open in Tyne and Wear would be thrown out of work, the Government made certain promises to our community about economic development and alternative employment prospects.

I want to draw to the attention of the House today the fact that not one of the promises made in May 1993 by the Prime Minister from the Dispatch Box at Prime Minister's Question Time has yet been put into effect on Tyneside. If the Minister takes one message away from the community that I represent, it must be that we want the promise of alternative employment opportunities to be kept. We want some action and we desperately need it now. We needed it last year and we certainly need it now.

When Swan Hunter went into receivership it was putting £1 million a week into our economy in wages alone, with the wages of subcontractors as well. It is an enormous blow to our community that that employment base is no longer there. Only another large fabrication project on the Tyne could immediately take people off the unemployment registers in any large numbers. I say that on the very day that scrap metal merchants are in Swan Hunter cutting the yard to pieces to ensure that it can never produce such a project. Something must be done and it must be done now.

I shall follow the fine example of brevity of the hon. Member for Newcastle upon Tyne, East (Mr. Brown). I should say at the beginning that I have an interest, since I have a modest shareholding in the finest of all shipyards in the world—Harland and Wolff of Belfast.

I congratulate the hon. Member for Glasgow, Govan (Mr. Davidson) on choosing this subject for a short debate. The general principles that he outlined are principles which I can wholeheartedly endorse.

It has been a general thread running through the debate that Members on both sides of the House believe that it is incumbent upon the Government to ensure that we have what has been described as a level playing field. We do not have that at the moment.

Even those yards, particularly in South Korea, which are now putting up their hands and claiming that they are clean and that no subsidies are being given to them, clearly are receiving hidden subsidies. Those who know anything about industry in South Korea will know that it is easy to give hidden subsidies because the people who are building ships are also turning out the steel and doing everything else connected with shipbuilding, so subsidies can be given in relation to other products and materials related to shipbuilding.

This nation must recognise that it is not in a position, certainly at present, to compete in the same market as the South Koreans. The hon. Gentleman is entirely right that the future, at least the near future, for shipbuilding in the United Kingdom must be at the high technology end of the shipbuilding market.

Harland and Wolff was forced into competing in the bulk and tanker market, but it has had to try to find a niche in the high-tech end of the industry. It now has a product far in advance of anything that can be offered anywhere else in the world.

I hope that BP in the North sea and the Gulf of Mexico, where the water levels are such as to allow oil to be pumped using ships, will consider buying British in order to ensure that our industries benefit from the oil in the North sea in particular.

The hon. Gentleman spoke of the importance of seeking orders in the industry in other directions, linking up with oil, and so forth. One matter which has not been given much airing in the debate is the need, at a time of contraction in the number of military warships and military spending, for defence diversification and perhaps the establishment of a defence diversification agency. That is the policy of my party. What is the hon. Gentleman's view on that policy? Is not that an important way to ensure that skills which cannot be retained in the shipbuilding industry can none the less be used in the future because, as has been said, they include skills at the cutting edge of technology?

I am happy to concur with the hon. Gentleman. For instance, the American navy is in our waters frequently, yet it does not come to our shipyards to have repairs done. There is a great deal of work that the Government could do to encourage further use of our shipyards.

Leaving the embarrassment of the Conservatives to one side, many people recognise that there is likely to be a Labour Government, probably fairly shortly. I notice the horror on the Minister's face. I shall pay special attention to the winding-up speech by the hon. Member for Cunninghame, North (Mr. Wilson)—I say that, not by way of a challenge, but by way of interest—to determine the attitude that the Labour party will have to the shipbuilding industry in the United Kingdom as a whole and, from my point of view especially, in Northern Ireland.

I must be brief, as you know, Mr. Deputy Speaker.

The hon. Member for Beckenham (Mr. Merchant) took us down memory lane. I think I am right in saying that, along with my hon. Friend the Member for Jarrow (Mr. Dixon), I am one of two former shipyard workers in this place. We both served our time as shipwrights.

I make a plea to the Minister. As I said to him the other evening, it is essential for the many hundreds of my constituents who work at Ferguson in Port Glasgow, at Kvaerner in Govan and at Yarrow of Scotstoun that the shipbuilding intervention fund be continued beyond 31 December 1995—European Union wide.

The Greenpeace occupation of Brent Spar prompts a question. Many of those redundant shipyard workers in Scotland might be re-employed, were the Government to adopt a more radical implementation of part I of the Petroleum Act 1987. If the Brent Spar were brought ashore to be dismantled and its materials recycled, it would provide plenty of work.

Shell Expo gave the game away. It said, in a recent publicity leaflet, that 52,000 man hours would be needed to take that redundant oil storage installation and sink it in deep water whereas, if it were brought ashore, as it should be, about 360,000 man hours would be involved in the process. The Government should be doing the latter. They have failed the fishing interests and many others in their failure to implement part I of the Petroleum Act 1987 in a more radical way.

We have had a good debate and, like everyone else, I am grateful to my hon. Friend the Member for Glasgow, Govan (Mr. Davidson) for making it possible. It has highlighted the fact that we should debate maritime issues more often and at more length, because there is obviously a great deal of interest and anxiety about them.

Conservative Members made some rather odd contributions about shellfish, sea water and duty frees, and we heard from the hon. Member for Beckenham (Mr. Merchant) a speech that he gave in 1984, which he apparently thought worth recycling 11 years later.

indicated dissent.

There has been little sign of understanding from Conservative Members that we are discussing a great national industry, which has been allowed to decline grievously as a result of criminal neglect and downright hostility. It is all very well prattling, as the hon. Member for Plymouth, Sutton (Mr. Streeter) did, about island races and maritime traditions, but those words are meaningless if they are not matched by actions.

For years, we have witnessed the relentless decline, not only of shipbuilding but—incomprehensibly—of the British Merchant Navy. As my hon. Friend the Member for Knowsley South (Mr. O'Hara) said, the issues are linked. We need a British-owned, British-registered, British-crewed Merchant Navy; that is the basis of the potential of the shipbuilding industry.

Everyone knows that there will be many merchant shipbuilding orders in the next few years; the question is whether they will be placed by British owners in British yards and whether there will be enough left of the infrastructure to allow that to happen.

The hon. Member for Beckenham spoke about learning lessons, but the lessons have not been learnt. In the same way that the British capacity to build ships was thoughtlessly, mindlessly run down, the British capacity to build trains is being thoughtlessly, mindlessly run down. In a few years' time, since there will be no York and no Derby, we shall buy trains as well as ships from Korea, Spain and America, because idiots have decided that that industry is not worth saving or helping through a difficult time.

I want to ask a few questions, in the few minutes available to me, for the Minister to answer directly. I want to ask him especially about VSEL, and I should like to know why the delay continues in publishing the Monopolies and Mergers Commission report. That report has important implications, not only for Barrow, but for Yarrow on the Clyde and the entire British naval shipbuilding capacity. If, as is widely predicted, both bids are cleared, the conditions that attach to them may be crucial. I put down that marker today.

Why is there a delay? Why has the report now been with the Department of Trade and Industry for longer than the obligatory 20 days? When may we see that report and obtain some movement on that important issue?

I shall speak briefly about Yarrow, and especially about the delegation that is in South Africa at present. On behalf of all Opposition Members, and I hope Conservative Members, I extend the best wishes of the House to Mr. Murray Easton, Mr. Gavin Laird and the Lord Provost of Glasgow, Tom Dingwall. It would be fitting indeed if Glasgow and the Clyde, with our long and proud record of solidarity with the democratic movement in South Africa, were now at the forefront of re-establishing Britain's trading links with the new South Africa. I seek an assurance from the Minister that the Government are doing everything possible to support the Yarrow bid and to ensure that that order comes to this country, and especially to the Clyde.

I shall briefly discuss a subject that was mentioned by the hon. Member for Belfast, East (Mr. Robinson). I have with me an interesting publication, commissioned by the DTI, about floating production systems. It is a report from the Oil and Gas Projects and Supplies Office. That is a subject of immense importance, not only to shipbuilding but to all the spin-off industries of shipbuilding. It would be worthy of a debate in itself.

I should be interested if the Minister would confirm that there is the prospect, in the next few years, of 30 large hulls being ordered for use in British waters, in the oilfields to the west of Shetland. That offers massive new potential for shipbuilding and marine technology in this country. We want to know today—I shall give assurances from the Opposition—the extent to which the Government will get behind the British shipbuilding industry to ensure that those orders go to British yards, and that the subcontracting goes to British companies. If not, it is distinctly possible that all, or the great majority, of those vessels will be built in Norway, Spain or in any other part of the world.

I visited the shipyard at Harland and Wolff, in the constituency of the hon. Member for Belfast, East. The future of Harland and Wolff and the large-scale employment that exists there is tied up with what is contained in that report about floating production systems. Equally, as the report recognises and as is realised in that part of the country, the prospect of a substantial shipbuilding revival at Swan Hunter is tied up with this new generation of vessels which will be ordered in the next few years.

The report is valuable and sets out the potential and the difficulties. It says that there is a lack of interest or awareness in investment circles in this country in getting behind the creation of an industry in Britain building those vessels for west of Shetland. I have the report and I am glad that it has been commissioned, but, above all, what I want from the Minister, and he can write to me on this, are the detailed responses to the report's recommendations and observations. That is vital for Harland and Wolff and for the old Swan Hunter yard. There is potential in the Clyde. Right through the maritime industries, this is an exciting, large-scale opportunity to talk, not about the past, but about the future.

Those structures will be built somewhere. Will they be built in United Kingdom yards or in overseas yards for use in British waters? I should like, although not today because there is no time for it, a detailed response from the Minister, on which we can base an urgent debate.

Only a few weeks ago, we saw the embarrassing spectacle of the Oriana arriving from a German yard to be named by the Queen in Britain. No matter how it is dressed up, it is not a British ship because it was not built in a British yard. It is to the Government's shame that it is no longer possible for such a ship to be built in a British yard when British craftsmen are available to do it and when tens of thousands of people are unemployed in every shipbuilding community.

To some extent, the saving grace was the fact that some 80 per cent. of the equipment on board that ship was made in Britain. I commend the efforts of the maritime supply industries to maintain their export effort and thereby the ability to fit out ships such as the Oriana. They have told me and, no doubt, the Government that they cannot rely indefinitely on the export market for their continuing good health. We need a British Merchant Navy. We need British merchant ships that are built in British yards by British craftsmen and crewed by British seaman. That is a maritime policy worthy of the name for an island nation.

I therefore say to Conservative Members: do not give us any flannel about island races or appeals to sentimental considerations because, unless there is a Merchant Navy and a merchant shipbuilding industry, we betray that proud heritage. The Conservative party likes to wrap itself in the flag, but I cannot comprehend what the Government have done to the red ensign. Let them start to reverse that; let them get seriously behind shipbuilding; let them recognise the urgency and address themselves in particular to the new opportunities that exist in the industry.

I add my congratulations to the hon. Member for Glasgow, Govan (Mr. Davidson) on securing the debate. In the 20 years that I have been in the House, I came only third in all the ballots in which I took part, and then I was not reached and called; but enough of that, otherwise I shall be accused of being a rugby selector.

I appreciate the importance of the subject raised by the hon. Member for Govan. He is right to say that we have not had such a debate for some time. I am grateful for the opportunity to respond. I wish I had more time, but a number of hon. Members have made comments. It will not be possible to respond to all of them, but I shall try to respond to one or two questions that have been asked.

As the Opposition spokesman, the hon. Member for Cunninghame, North (Mr. Wilson) suggested, I shall write to him about some of his points. He was a little disingenuous, if I may use that word, in his comments about the Oriana. As he knows, it was not quoted for by any British yard, which is a pity. It was made in Germany. He put the record straight, however, by saying how much British equipment was put into that great ship.

The hon. Gentleman mentioned floating production systems and what can be done in that regard. We are obviously encouraging the whole industry to supply such equipment. We are heartened by Harland and Wolff's interest in the subject. Obviously, we hope that some of those orders will be made and constructed in UK yards.

Before I turn to some of the points made by the hon. Member for Govan, and it is his debate, despite all the other comments made by other hon. Members, it would be helpful if we considered the world and European perspective. Some comments seemed to push it to one side, as if the real market did not matter. Much of what I shall say will be in agreement with the hon. Gentleman's comments.

As the House and people outside know, as a result of low ordering in recent years, on a global basis there is a significant surplus of world capacity for larger ships. As ships get older, they will be need to be replaced, but the expected upturn has not yet occurred and its timing is highly unpredictable. As one or two hon. Members have mentioned, Korean capacity in particular has been substantially expanding, creating more uncertainty for all manufacturers of such vessels.

In 1975, available capacity worldwide was estimated at some 22.4 million compensated gross tonnes. That had dropped to some 15 million by 1990 and is forecast to increase to about 21 million by 2000. The years 1975 and 2000 are roughly comparable in terms of total capacity, but during that period great changes took place in the share accounted for by individual nations. In the past 20 years, western European, Scandinavian and Japanese yards have taken considerable steps, at no little pain, as everyone in the country recognises, to reduce their shipbuilding capacity. They have sought to restore a healthy market and to reduce the possibility of a repetition of the slump in shipbuilding.

In 1975, western Europe and Japan accounted for approximately 80 per cent. of world merchant shipbuilding capacity and Korea accounted for less than 2 per cent. That is interesting, but it is a fast-moving scene. Some sources in the Korean shipbuilding industry reckon that they have just 10 years of dominance before China takes over and supplants them in turn. Over-capacity is having a dramatic effect on prices. Cash prices are significantly lower than they were five years ago. For example, a 150,000-tonne tanker can be bought today for just $40 million compared with $55 million in 1992.

On western Europe, I am glad to say that some aspects of the UK shipbuilding industry are looking a little healthier. Medium-sized yards are specialising in vehicles such as ferries and tugs, and we are achieving some significant advances.

On the Organisation for Economic Co-operation and Development agreement, I must disappoint the hon. Member for Govan. I do not think it would be advantageous to continue. The European Commission has already carried out investigations. We all know that there have been significant market distortions. By removal of all those subsidies, we will find ourselves in a much fairer market. I shall not go into the hon. Gentleman's mixed metaphors, with his comments on swimming and climbing uphill.

An OECD agreement was signed in December 1994 by representatives of the European Union, the United States of America, Japan, Korea and Norway, which account for some 70 per cent. of world capacity. That enables some control to be kept on the effect of unfair subsidies and unfair competition. The OECD agreement has power to investigate allegations of misconduct and to impose penalties. The agreement is a good one for the UK. Korea has accepted a strong anti-dumping code; Japan will modify its home credit scheme; the United States has made concessions to the applicability of the Jones Act; and the EU is giving up its direct subsidy. I hope, therefore, that we shall have a level playing field. I assure the House that the Government will have no hesitation in chasing up any areas where unfair competition exists.

I should like to turn to some success stories. We build ships, although not as many as I should like. The UK has a substantial repair industry, with a turnover of more than £250 million. It employs up to 7,000 people at peak times and they are located all around the coast. Hon. Members have remembered the contribution of those companies serving their localities—a valuable contribution to the UK economy.

Let us not forget the marine equipment industry, which was mentioned by my hon. Friend the Member for Beckenham (Mr. Merchant) and by the hon. Member for Knowsley, South (Mr. O'Hara). There is UK-made marine radar, paint, propellers, engines, and equipment to service the whole range of maritime activities. Sixty to 70 per cent. of a ship's value is in its equipment. Obviously, we want to ensure that we can expand that industry.

We can do more. Marine equipment companies have not been helped by a reduction in home production, but it would be a mistake to assume that they are no longer a world force. The industry has a substantial order book worth about £2 billion. It retains substantial engineering and design expertise and over 70 per cent. of its output is exported to yards abroad. I hope that in July I shall be leading a delegation of business men from the British marine equipment industry to Japan to continue the dialogue and maintain the momentum of our export initiatives.

I thank the hon. Member for Govan for initiating this debate. It has been valuable and I hope that next time I will have a little bit longer to give a more comprehensive response to his important questions.

I am glad to have this opportunity to raise the issue of the Department of Transport's discretionary purchase of property blighted by proposed road developments. My interest in this, as I shall explain, arises from my constituency experience, but I believe that it is a matter of very much wider importance than that affecting just my constituents.

In my view, the way in which we obtain our transport infrastructure can be described as nothing less than highway robbery at the expense of those who happen to have the misfortune to be near a proposed road development. The reality is that such people are seriously affected and, if the proposals for discretionary purchase were properly implemented, the cost might run into not tens of millions of pounds but hundreds of millions of pounds; therefore, I understand that my hon. Friend the Minister of State may be under some inhibitions from the Treasury when he replies to the debate. I should stress that that would be the gross cost. If initially the discretionary purchase of the properties took place—as I believe that it should—once the road was built it would be possible for the Department to re-sell them to new owners and recoup part of the cost.

Let me stress that I am not concerned with compulsory purchase, which is a far from perfect system and has problems associated with it. I am concerned essentially with discretionary purchase. As my hon. Friend the Minister will know, because I have raised this matter in previous Adjournment debates, it arises from experience in my constituency of Worthing where there is a proposal to develop the A27. For many years, I have maintained that the A27 should have a real bypass, completely avoiding the town of Worthing. The Government's so-called preferred route cuts the town in two and involves the demolition of a number of properties. The scheme's effect on many other properties is considerable.

My hon. Friend the Minister will know that there has been a public inquiry into this matter, and I remain strongly of the view that there should be a real bypass. We are awaiting the inspector's report after the inquiry, which lasted a year or so, and I hope that, in the light of it, we will have a satisfactory decision from my hon. Friend.

The question of discretionary purchase has some impact on the choice of route and the cost of alternative routes. I shall come to that in my concluding remarks.

Over a long time I have pursued with Ministers individual cases of properties affected by the Government's preferred route. I am concerned that such cases should be decided by ministerial discretion and I have received replies from Ministers about many cases. However, some months ago, I discovered that the Highways Agency was proposing to reply instead of a Minister, which was highly objectionable. These issues are not merely ones of finance: whether a property should be purchased may depend on the occupant's need to obtain money at short notice, perhaps to repay debts, or on his need to move to a different place to get a job, or his health might be affected by the construction work or by pollution from the road once it is built.

Decisions ought to be matters for ministerial discretion rather than for official discretion. I am glad that the present Secretary of State has now accepted that, although I understand that he has given the responsibility for dealing with these discretionary matters to the Under-Secretary, my hon. Friend the Member for Epping Forest (Mr. Norris). I am glad that my hon. Friend the Minister for Railways and Roads is to reply today, since he has overall responsibility for the development of the roads programme.

The essential matter that we must consider is the improvement, as it seemed at the time, that was brought about by section 62(2) of the Planning and Compensation Act 1991. It states that the highway authority

"may acquire by agreement land the enjoyment of which will in their opinion be seriously affected by the carrying out of the works or the use of the highway".

Many of the problems we face and the reasons why some of the deserving cases have been turned down stem from the Government's interpretation of that expression in the Act. The interpretation has been extremely restrictive. The Government have said that they will generally consider only those cases where property is within 100 m of the centre line of the proposed road. That proposed road may be six lanes wide. Considering only properties within 100 m of the centre line disregards the impact on those further away.

The legislation refers to whether the development will have serious effect. The Department has interpreted that by asking whether the impact on those in the house will be intolerable. Clearly, "intolerable" is a much tighter criterion than "serious". It is a tougher standard to meet. Instead of abiding by the wording of legislation as it has been approved by the House, the Department has sought to reduce its impact.

I want to refer to a report by the ombudsman, which is typical of a number that I have received on other constituency cases, about the way in which the Department has arrived at the guidelines used to decide whether a property should be purchased. I shall quote from the report and give the flavour of it because I have rarely seen such a damning report. It revealed the internal workings of the Department with regard to the way in which the guidelines were interpreted. I want also to deal with the court case that was decided in June 1994. It also has significant relevance to this issue.

The ombudsman's report said:

"Guidance on the operation of the discretionary scheme was published on 17 January 1992. It seems to have been internally contradictory. On the one hand it said that for property within 100 m of the centre line of the proposed road the presumption should be that it would be seriously affected … On the other hand it also said that property within the 100 m zone would be treated as outside the scope"

of the legislation

"if the reasonable expectation was that the levels of traffic noise or construction noise would not be such as to qualify for noise insulation."

The ombudsman found that the discretionary criteria were inconsistent and contradictory.

The report also said that there was an inconsistency between what was published in the highways manual and what was published in the Department's press notice. It said that if constituents sought to fill in form G1, which is relevant to discretionary purchase, it was wrong if the notes given to them made no reference to the criteria by which a serious effect would be judged.

It was pointed out also in the report that the agreement to purchase would be approved by the headquarters of the Department of Transport but that a decision to reject would be taken only by the regional office; in other words, the rejection cases were not normally going to head office, let alone to Ministers.

It was pointed out that some of the questions that the Department asked constituents to answer were so confusing that even an official who sought to amend matters got things the wrong way round. One of the questions involved a double negative. The ombudsman pointed out that that was not a helpful way of putting questions to applicants. The whole history of the matter shows that the way in which the guidelines were determined can be described only as a shambles. As a result, a number of bad decisions have been made.

Some strange excuses were produced, too. For example, the ombudsman pointed out that the crucial press notice was not withdrawn for five months after its content was found to be seriously flawed. He was told that there were legal reasons why he could not be given a proper explanation, but when he asked to see the legal advice, it turned out not to exist. For all these reasons, I believe that the criteria that have been used are not adequate and that the guidelines clearly need serious revision.

However, the main point concerns a case that has been decided in the courts.

I am grateful to my right hon. Friend for giving way in this short debate. I shall be brief.

I am dealing with what is probably the worst case that I have ever had as a constituency problem and it involves exactly the point that my right hon. Friend is raising. A man's life has been completely ruined by blight.

As a member of the Parliamentary Commissioner for Administration Select Committee, which looks after the ombudsman, I have looked into the question of redress and compensation even in cases where the letter of the law has been strictly observed.

I point out to my right hon. Friend that both my hon. Friend the Minister of State, Treasury and Sir Patrick Brown, the permanent secretary at the Department of Transport, have made it clear that, even where everything has been done correctly, maladministration can still be shown.

In Committee, I quoted the Minister of State, Treasury as telling a previous meeting of the Committee

"that failure to mitigate the effects of strict adherence to the letter of the law where this produces manifestly inequitable treatment, that will now be an example of maladministration."

I asked Sir Patrick Brown:

"Will you now confirm that?"

He responded:

"Yes, Mr. Nelson was speaking for the Government."

I understand my hon. Friend's point and I am glad that the Select Committee has looked into that subject. The crux of the matter is that the Department of Transport established certain guidelines, the first of which states:

"The Department will use its discretion to purchase … where it judges it would be intolerable for the occupier to remain in the property during works or once the road is open."

The guidelines go on to list a number of other factors that need to be taken into account, but the fact is that the form to be filled in within the Department is much more restrictive. It asks:

"Does the property lie within 100 m of the proposed centre line?"

As I said, I do not believe that that has anything to do with the legislation; it is a purely arbitrary decision by the Department. The form also asks:

"Was the road scheme known at time of purchase of the property?"

The next question is:

"In the Department's view (based mainly on forecast noise levels), will the enjoyment of the property be seriously/intolerably affected?".

If the answer is no, the other criteria are not examined.

In fact, the crucial criterion, which the courts took into account, is what has happened to the value of the property. Clearly, enjoyment of the property is seriously affected if one finds that, as a result of the road scheme—whether the property is 100 m or half a mile away—one cannot sell it at the price that applied before the scheme was introduced. I am happy to say that the courts are also of that view.

In the case of R. v. Secretary of State for Transport ex parte Owen and another, the court criticised the Department in a number of respects. The judgment states:

"It seems to me that the question of the effect, serious or otherwise, of the diminution of value was never fully or properly addressed."

A subsidiary judgment states:

"whatever view one takes of the guidelines issued by the Department …, and at best they have been characterised as ineptly drawn, they seem to me at least to support one view, which in any event I for my part would readily have arrived at, namely, that any significant depreciation of property consequent upon a road scheme indicates of itself that, looking at the matter prospectively, the scheme has a serious effect on the enjoyment of the land."

In other words, the court decided clearly that, if the value of a property has fallen as a result of a scheme, discretion should be exercised. My hon. Friend the Minister knows that I have a large number of such cases in my constituency.

I understand that the financial implications of accepting this even in my constituency are substantial and are likely to be massive across the country as a whole, although, as I said, one must take into account the eventual net cost rather than the gross cost. There will be resistance from the Treasury, but the cost is merely a reflection of the extent to which individuals living on the line of route are suffering.

I believe, therefore, that the Department should change the guidelines—I understand that they are under review—and must take into account the effects of a scheme on the value of a property. It has nothing to do with whether the property is 100 m from the centre line of the road and nothing to do with the noise or whether it will be intolerable; it has everything to do with whether the value of the property has declined. I hope that my hon. Friend the Minister will be able to accept my view, even recognising the financial consequences. The cost should rightly fall on the public purse; the effect of the Government's decisions should not fall on the unfortunate individuals who just happen to live near the line of route.

I know that time is short, so I shall deal now with another crucial point. The Department has already purchased a number of properties, which is welcome, but the way in which it has handled the affair is far from satisfactory. Even in a small close in my constituency—one with perhaps a dozen houses—it is possible to find that eight have been purchased while four have not. The tenants whom the Department has put in the purchased houses have, in many cases, been highly unsatisfactory. Some have criminal records and have to be evicted, so the area has been run down. I fear that that will continue for a long time.

If it is accepted that discretionary purchases should be made because of the reduction in the value of a property and the other criteria that I have mentioned, there will clearly be important social and economic effects. In fact, the choice of route will depend on how much the Treasury has to pay to purchase the relevant properties.

The public inquiry to which I referred has been examining the arguments for more than a year. I should stress that the bypass route will be largely in tunnels, to avoid possible adverse effects on the downs. The result of the investigation shows that, in purely financial terms, the arguments may seem fairly finely balanced. None the less, I believe that the case for the bypass remains overwhelming. However, if one takes into account the true effect on constituents, or if one were to quantify the cost to the Department of purchasing the properties affected by the road construction and the road itself once it is built, the balance goes very much against the preferred scheme advocated by the Government in favour of the real bypass route.

I hope that a rapid decision will be made in favour of a bypass. Perhaps my hon. Friend the Minister can tell me when he expects the inspector's report to be received and when he expects to make a decision. I hope that it will not be very difficult for him to accept my contention in the light of the court case that the depreciation in value must be taken into account in deciding whether there has been a serious effect on a property, and to accept that the case for the bypass, which would involve the destruction not of vast amounts of property but of only four houses, is now absolutely overwhelming.

I am grateful to my right hon. Friend the Member for Worthing (Sir T. Higgins) for providing an opportunity to debate such matters, which are of grave importance to his constituents and of great interest to a number of right hon. and hon. Members. I recognise the concern felt and the genuine hardship experienced by those who are affected by proposals to carry out public works in their vicinity.

My right hon. Friend has referred to the statutory provisions for compulsory purchase and to the fact that property owned by some people does not have to be needed for a scheme to be seriously affected by it. It was precisely to deal with such cases that the House extended, by way of the Planning and Compensation Act 1991, the discretionary purchase powers, which used to be more limited. Now public bodies and highway authorities may, in advance of a scheme, use their discretion to buy property if the enjoyment of it will, in their opinion, be seriously affected by the scheme.

Since February 1992, the Department of Transport and latterly the Highways Agency have used those powers where they have considered that motorway and trunk road proposals seriously affect nearby properties. The Highways Agency operates the scheme in accordance with guidelines which were first approved by Ministers. It is intended to ensure fairness, consistency and rationality of treatment across the country. As my right hon. Friend knows, my hon. Friend the Minister for Transport in London, who also has responsibilities for local transport and road safety, oversees the operation of the scheme. As my right hon. Friend said, my hon. Friend undertook that responsibility following my right hon. Friend's very powerful representations that there should be ministerial involvement in the final determinations made on applications under the scheme.

My right hon. Friend raised a particular case which was the subject of an investigation by the Parliamentary Commissioner for Administration. I must acknowledge that the Highways Agency was at fault, first, in not processing the application quickly enough, and, secondly, in failing to pay proper heed to the medical condition of the applicant. I am pleased to inform the House that all those matters have since been remedied and the agency has now agreed to purchase the property. Clearly, my right hon. Friend's constituent is owed an apology for the way in which the case was handled and I gladly give that apology today.

Inevitably, some applications under the discretionary scheme have had to be rejected; but I can inform the House that offers to purchase have been made in more than 70 per cent. of the qualifying cases where there has been judged to be a serious effect under the present guidelines.

On the cases associated with the A27 improvement scheme raised by my right hon. Friend, the Department of Transport and the Highways Agency between them have considered 174 fully completed applications for discretionary purchase from my right hon. Friend's constituents. Of those applications, offers to purchase have been made in respect of 118 properties and 47 have been rejected. The balance of nine is accounted for by applications that have not yet been decided.

Is it the case that, in considering those applications, the Department has not taken into account the question of the depreciation of value in the property, even though the courts have decided that it ought to do so? Unless my hon. Friend amends the guidelines to cover that point, all that will happen, given the court decision, is that all my constituents will have to bring individual cases, saying that the courts have decided that the Department must purchase.

I shall come shortly to the implications of the judgment in the Owen case, to which my right hon. Friend referred. I have reminded the House that discretionary powers are exercisable only where the enjoyment of the property will be seriously affected. Up until the applications brought by Lieutenant-Colonel Owen in the Court of Appeal last year, it was generally considered that enjoyment of land and property could be seriously affected only by physical factors, such as noise, dust, and vibration. The current guidelines were based on that premise. The House will know that, in coming to their decision on the Owen case, the Court of Appeal judges concluded that, in addition to physical factors, diminution in value should also be considered when assessing serious effect.

I confirm that the Highways Agency has complied with the Court of Appeal judgment and redetermined Colonel Owen's application. Following that judgment, the Highways Agency undertook to review and revise the discretionary purchase guidelines, taking into account the Court of Appeal judgment relating to diminution in value. That review has taken longer than I would have wished, but I hope that the House will understand our concern to get it right and to have guidelines that can be applied even-handedly to both road and rail proposals. We are in the final stages of considering new guidelines and I hope that an announcement will be made shortly.

The decision-making process in respect of discretionary purchase has two stages. First, we must determine whether serious effect arises. To comply with the Owen judgment, we will in future take account of physical factors and diminution of value in making that initial judgment. The second stage is to determine whether to exercise discretion where an application satisfies the serious effect test. I am not in a position today to say anything more about how that second stage in the decision-making process will be determined, but I hope to do so shortly.

During the period since the Court of Appeal judgment, the Highways Agency has continued to operate the pre-judgment guidelines and to buy property where there has been serious effect from physical factors and severe hardship has arisen from an inability to sell homes at a reasonable price. I reaffirm the advice that I gave to the House on 28 April 1995 that all applications made since the judgment, which have been considered and rejected under the present guidelines, will be reconsidered under the new guidelines when they are published, which, as I have already said, I hope will be very soon. Consideration is also being given to the treatment of applications made and decided before the Owen judgment, and I hope to be able to make an announcement on that aspect, too, in the near future.

My right hon. Friend has rightly drawn attention to the proposal to improve the A27 trunk road between Worthing and Lancing. As he knows all too well, that is a heavily congested stretch of road linking a number of major towns along the south coast and it is the only east-west trunk road in the south-east, south of the M25. Investigations to determine the route began in 1972, but it was not until 1993, after public consultation on four options, that the scheme reached the public inquiry stage, which opened on 28 September 1993 and ended on 24 August 1994.

I understand that the inspector is making good progress and we expect to receive his report early in the new year. It would be inappropriate for me to try to anticipate its contents, but I am sure that my right hon. Friends the Secretaries of State for Transport and for the Environment will give the findings careful consideration before coming to their decision.

Is my hon. Friend seriously saying that the inspector will take 18 months to report?

I am afraid that there is a correlation between the length of the public inquiry and the time that it normally takes for an inspector to consider the evidence presented to him and to reach his conclusions and report on them to my right hon. Friends.

A few moments ago, I referred to an horrendous case in my constituency. The gentlemen's house was not devalued; it was rendered absolutely unsaleable, which removed his collateral for his business. His house is completely ruined and he is in a desperate state. As my right hon. Friend says, time is of the essence. While we sit talking about it and inspectors are pottering around, such people are waiting for important news to drop through their letter boxes. Please may we have some real urgency?

Certainly no one would be more pleased than me if the production of inspectors' reports were speeded up so that we could make firm decisions.

My right hon. Friend also suggested that the economic evaluation of the scheme may change as a result of the operation of new guidelines on discretionary purchase. I can assure him that such matters will be reviewed when my right hon. Friends the Secretaries of State for Transport and for the Environment make their decision following receipt of the inspector's report. I assure my right hon. Friend that we shall proceed as rapidly as possible in publishing the guidelines and we shall take full account of the points that he has made in this debate.

I regret that the Minister is not yet in his place. The genesis of my interest in Gibraltar to a large extent goes back to an invitation that I received, along with a number of other parliamentarians including my hon. Friend the Member for Bolton, South-East (Mr. Young), to its national day in the autumn. I was profoundly moved by the national identity of the Gibaltarian people and the fact that they wish to continue their association with the United Kingdom.

The style and temper of my remarks may not be shared by all hon. Members, but I know that many will agree with the message that I want to convey to the Minister, because they share my outrage at the conduct of Spain in harassing and frustrating people on the Gibraltarian-Spanish border.

Many hon. Members will share my dismay at the apparent indifference and weakness of the Foreign Office, and to some extent of the Prime Minister, when it comes to promoting the interests of the Gibraltarian people in their various councils and deliberations both bilaterally with Spain and in the European Union.

The most recent event that I want to raise is the use by Spain of the so-called Schengen agreement as an excuse further to frustrate people travelling to and from Gibraltar by imposing renewed and inordinate border controls from 27 March. Incidentally, it must be said that the Gibraltarian Government drew the attention of the Foreign Office to the ramifications of the agreement, even when it was in draft form, as early as September 1991, so I would have expected and hoped that the interests of Gibraltar would, or should, have been taken into account subsequently when such matters were being discussed in the European Union.

Until now, I have referred only to the Gibraltarian people, but the wrongdoing by Spain is not confined to them. It is as relevant to people from Grantham or Grampian, and to people in Huntingdon or Sedgefield. British people who spend their holidays in Spain or reside there want free access to and from Gibraltar yet they and the Gibraltarian people are being frustrated.

What on earth is the Foreign Office doing? What on earth is it for? There cannot be any country in the world that would have tolerated its nationals being stitched up for so many weeks without there being one hell of a row both in the press and in Parliament, and without the Foreign Office demonstrating that such action by another state is intolerable.

Is not the policy of the present Spanish Government a continuation of the closed-gate policy followed by the former fascist Government of Spain in order to bring Gibraltar into submission? Does my hon. Friend agree that Spain's policy towards Gibraltar is virtually the same as the Argentine policy towards the Falklands, the only difference being that the Falklanders have been able to rely on the support of the British Government, whereas the Gibraltarians have not?

My hon. Friend makes a number of points with which I agree and which need to be emphasised. What sort of foreign policy is it that leads to our being seen to be weak and craven when our nationals are being stitched up? That sends all the wrong signals around the world, and certainly does not reassure people engaged in delicate negotiations for accommodation and agreement in Northern Ireland. It also sends the wrong signals across the Atlantic, both to the Argentine Government and to the Council of the Falkland Islands. Weakness over Gibraltar has ramifications that affect our foreign policy generally.

Will the hon. Gentleman give way?

I shall be delighted to give way to the hon. Member for the Northern line, but then I must move on.

The hon. Gentleman will realise that he has much support on both sides of the House, but as Spain and Gibraltar both have socialist Governments has the matter ever been raised in the Socialist International, and if so with what effect?

Again, that is a good point, although probably not the most relevant. I believe that all channels should be used. I, as the Member of Parliament for Thurrock, am using the constitutional channel available to me by raising the matter on the Floor of the House of Commons. This is the Parliament of the people of Gibraltar too, although they have their own legislature. There is a democratic deficit because they are not represented either here or in the European Union, so it is up to people such as the hon. Member for Romsey and Waterside (Mr. Colvin) and me to raise the matter here.

rose—

I shall give way, but this must be the last time.

Yes, Gibraltar is part of the European Union; that is an important point to reiterate. As for the debate about Schengen and the external frontier, Spain cannot regard the border crossing between Spain and Gibraltar as part of the external frontier of the European Union, because Gibraltar is within the EU.

That is absolutely right. It must be made clear that under the European treaties the Gibraltarian people and people from the United Kingdom living or travelling in Spain have rights of free mobility. The Foreign Office should jealously guard those rights, yet there is no evidence that it is doing so. That is the great charge that must be levelled against the Foreign Office today.

I am also disappointed in Her Majesty's Government because rather than meeting problems head on, they use innuendo to detract from the Gibraltarian Government's stewardship of the colony. This morning, the Select Committee on Foreign Affairs was shown a memorandum—I understand that it has not been made public, but it was made available to members of the Committee. The right hon. Member for Westmorland and Lonsdale (Mr. Jopling) referred to that document as

"a scathing attack on the Gibraltarian Government."

As a matter of justice, its contents should be made publicly available so that the Gibraltar Government can respond and give their own version.

The whole affair illustrates the way in which the Foreign Office says one thing one day to one set of people but a different thing on a different day to another. Of course there are numerous problems with the governance and the economy of Gibraltar. Obviously, the economy is in a delicate state as a result of our accelerated withdrawal from the naval base. Two thirds of the economy was directly dependent on the base. Consequently, we have a moral and economic obligation to buttress that Government and that economy. The Foreign Office is not helping that cause; it is not recognising its duty to protect and promote the interests of British subjects who wish to move in and out of Gibraltar.

On 20 December 1994, the hon. Member for Romsey and Waterside initiated a debate, to which another Minister of State, the right hon. Member for Eddisbury (Mr. Goodlad), replied. He went through the routine speech, reading from a brief that described the additional border controls late last year as "intrusive" and "unacceptable". He said that

"we have made repeated strong protests to the Spanish Government in the last few weeks … There must be no question of their"—

that is, the controls—

"being reimposed … the present level of checks is a disgrace and it is important that they cease permanently."

That is the sort of thing that Foreign Office Ministers routinely say when—prompted, it must be said, by Back Benchers—they come to the Dispatch Box. Their words have little or no substance, so I shall pay careful attention not only to the Minister of State's words but to his body language too, because so far Ministers have given no demonstration of real outrage or anger about Gibraltar.

We have let the people of Gibraltar down badly. We have had many opportunities to protect their interests, especially when Spain's accession to the European Union was being discussed. We ducked the issue then. Maastricht provided another opportunity. It is now time that the Foreign Office showed some anger.

The right hon. Member for Eddisbury further said in the same debate:

"We have asked the Spanish authorities to substantiate their allegations about Gibraltar as a money-laundering centre and to provide examples where co-operation has been refused. To date we have received nothing."—[Official Report, 20 December 1994; Vol. 251, c. 1532–35.]

Has substantiation been received yet? If so, will the Minister tell us what it is and publish it so that the Government of Gibraltar may have the opportunity to rebut it?

In the Select Committee on Foreign Affairs this morning, my hon. Friend the Member for Ilford, South (Mr. Gapes) asked whether it was considered that the most recent turning of the screw against Gibraltar was in some part due to the United Kingdom supporting Canada in the recent fishing dispute. The Minister was somewhat ambivalent in his reply, but I assume that our embassy officials in Madrid buy El Pais, the principal newspaper there, which made it clear that Spain intended to hit back at the United Kingdom for supporting our Commonwealth partner during the recent fishing dispute.

I was visited by a courteous man from the Spanish embassy yesterday, who confirmed that the newspaper article reflected in substance the view of the Spanish Foreign Ministry. The headline of the El Pais article on 15 May stated that Spain was to put sanctions on Gibraltar and the UK for not helping in the struggle against contraband. The article stated that

"the time has come for the UK to pay, and it is going to pay in Gibraltar."

The article quoted the Spanish Foreign Minister, Javier Solana, as promising to send Britain the bill for its lack of co-operation in the struggle against contraband, and for Britain's lack of support in the dispute with Canada over Greenland halibut. Mr. Solana has yet to decide how much the bill will be.

We know that Spain is contemplating additional sanctions against Gibraltar in about four weeks' time after its municipal elections. For that reason—if for no other—it is time that we drew a line and said that we are not going to tolerate this any further.

Additional sanctions have been imposed against Canadian passport holders living in Spain who wish to travel into Gibraltar. It is difficult enough for a British passport holder, but it is twice as hard for a Canadian citizen to get into Gibraltar.

I am pleased that I gave way, as I did not know that. The House of Commons needs to know that such nonsense is going on. I find it difficult to describe my dismay at the fact that there is not a much bigger row going on about the behaviour of the Spanish authorities. Where else in the world would such a situation prevail?

The British press have failed. They are often preoccupied with unimportant matters, but the freedom of British subjects should be as important to them as it should be to the Foreign Office. The Minister's stewardship is extremely weak. We have a patrician and pathetic Foreign Secretary who is prepared to do some of the apparently "big things", but when it comes to looking after a relatively small group of British subjects he ducks it. He is prepared to make perfunctory noises of irritation and outrage which are not backed up by action.

Great harm is being done to our relations with Spain, because Spain feels that it can try to wear down the British Government and make them uninterested in protecting the right of the Gibraltarian people to remain British. We should have had a statement in the House of Commons initiated by the Foreign Secretary about this matter many weeks ago. It should not be up to Back Benchers to raise the matter. The Foreign Secretary should be thumping the Dispatch Box and saying that we will not tolerate it. Previously, the House has had to depend on the hon. Member for Romsey and Waterside to raise the matter. When will the Foreign Office be proactive in promoting the interests of the Gibraltarian people?

The Foreign Office is prepared to insinuate that the Government of Gibraltar are less than diligent in trying to reduce smuggling, money-laundering and so on. However, the British Government are ultimately the police authority for Gibraltar, and not Chief Minister Bossano. The police are under the authority of the Governor and—ultimately—the Foreign Secretary. A financial services commission has been put in place that ultimately will be the responsibility of the Foreign Office, yet I understand that we are requiring the local legislature to introduce financial services legislation the powers of which exceed the legislation required of other countries in the European Union.

If there is a problem regarding speedboats working out of Gibraltar and smuggling between Morocco and the Spanish mainland, what on earth do we have the Royal Navy for? I should like to see the Royal Navy return to Gibraltar. There would, incidentally, be an economic spin-off. Some of what is left of the Royal Navy should be deployed in Gibraltar to help police to control smuggling in the area. What else is the Navy for? It is unreasonable to expect the Gibraltar Government to create a mini-flotilla to stop the contraband smuggling which clearly goes on, although the scale is exaggerated in relation to the involvement of Gibraltar. It is an excuse used by Spain to turn the screws on Gibraltar, and it provides a diversion from the Foreign Office's inactivity.

I congratulate the hon. Member for Thurrock (Mr. Mackinlay) on his good fortune in securing the debate, and I thank him for raising this important issue. It was a pity that he did not measure up to the importance of the occasion with the accuracy and understanding it deserves.

The hon. Gentleman referred to the dispute between Canada and Spain. When we started dealing with that dispute, there was much ignorant comment from the Opposition about our tactics. Those tactics delivered a good outcome, and were publicly supported by the Canadian Government at a later date. I am afraid that the hon. Gentleman's criticisms today were equally badly informed.

The delays at the Spain-Gibraltar frontier are intolerable and unjustifiable. I shall describe to the House in more detail how they came about, and I shall give some detail on what we have done to deal with the situation. Spain has attempted to justify the delays on the grounds of the Schengen convention, but I will show that that justification is wholly fallacious.

The recent delays for cross-border traffic are, sadly, not the first time that the Spaniards have tried to impede traffic at the Gibraltar frontier. Last October, they imposed a regime of secondary checks. Spain justified the checks on the ground that Gibraltar was not a member of the EC common customs territory. The checks produced delays of up to nine hours for vehicles crossing the border, and two to three hours for those crossing on foot.

The House may well remember the Spanish tactics on that occasion. Documentation was minutely checked, and members of the civil guard demanded to see spare spectacles, breakdown tools, sunglasses, fan-belts and even surgical gloves. Drivers who could not produce the required equipment were fined, and their cars impounded until the fine was paid. On some days, the civil guard relaxed its checks, checking documentation only or waving some cars through without checks. Spain claimed at the time that the checks were justified as an attempt to put an end to the problem of drug smuggling, which the hon. Gentleman mentioned.

I agree that there is a problem. We have our own concerns about it, which we have raised in private discussions with the Government of Gibraltar. My right hon. Friend the Foreign Secretary took up that matter and wider questions with Mr. Bossano on Monday evening, but this is neither the time nor the place to debate those issues. The important point is that none of them justifies Spanish attempts to impede overland traffic. The illicit traffic is done by sea in fast launches, carrying drugs from Morocco to Spain. There is no evidence of such smuggling by land; no evidence that the Spain-Gibraltar land frontier plays a role in that trade; and no evidence that controls at the land frontier have an impact on smugglers' activities. Causing delays at the land border can only damage Gibraltar's economic base.

My hon. Friend is not quite right; there is evidence of drug smuggling through the land frontier, but it is from Spain into Gibraltar.

I thank my hon. Friend. I should be interested to see that evidence.

We protested to Spain about the delays and I summoned the Spanish ambassador. The jargon in my profession is that we had a full and frank discussion. The problem was eventually resolved through dialogue. In advance of talks between Foreign Ministers in December under the auspices of the Brussels process, the blockages were lifted. It appears, however, that the Spaniards have returned to their previous tactics of squeezing Gibraltar, now using Schengen rather than customs checks as an excuse. That tactic will not succeed. It did not succeed in December and it will not be allowed to succeed now.

As the House already knows, the Schengen convention came into force on 26 March in seven European Union member states: France; Germany; the Benelux countries; Spain; and Portugal. The United Kingdom is not a party to the convention and has no intention of becoming one for reasons of which hon. Members are fully aware. On 27 March at 14:30, Spanish police began systematic passport checks on vehicle traffic and pedestrians both entering and leaving Gibraltar, causing a substantial build-up of vehicles on the Gibraltar side of the border. As yet there is no hard evidence of discrimination between Schengen and non-Schengen European nationals—discrimination between Spanish and Gibraltarians—which would be illegal, and we are monitoring the position carefully in case that arises.

Spain claims that the extra checks required by the Schengen convention cause those delays, but Schengen can be no excuse. Spain must provide adequate resources to carry out its checks without causing undue delays to European Union citizens. That has happened elsewhere in Spain, where there are no significant delays as a result of Schengen. In an extraordinary move, on 7 April the civil governor of Cadiz even went so far as to predict additional delays caused by the implementation of the Schengen convention over the Easter period, but he took no steps to increase staffing at the frontier to deal with the problem. He also announced that the Gibraltar frontier was an external frontier of Europe. That is nonsense. Gibraltar is part of the European Union.

Will the Minister give way?

If the hon. Gentleman will forgive me, I shall not do so as I am short of time.

At one point, there were teething problems with the introduction of the Schengen convention elsewhere in Europe. For example, there were queues at the German-Polish border. But those problems were nothing compared with the problem in Gibraltar. The House will realise how damaging those delays can be for Gibraltar, the economy of which depends to a considerable extent on tourists and day trippers. Delays to traffic now are frequently of one or two hours, and have been of four hours or more. Delays on 19 April were reportedly the longest since the border was reopened in 1985. Sometimes delays are shorter and sometimes the traffic even flows smoothly, but the overall effect on business and business confidence is thoroughly negative.

The Government have already made their position extremely clear to Spain. We do not dispute that Spain has a right to maintain frontier controls to ensure that non-European Union nationals remain subject to immigration controls. The Prime Minister has frequently made it clear that we shall retain our right to impose such frontier controls and we have no problem with Spain doing so. But for European Union nationals, those controls should not amount to more than a light passport or identity card check to confirm that they are indeed European Union nationals. There is no need whatever for that to generate delays. The controls at the Gibraltar frontier go well beyond any such checks. They are as unacceptable because of the extreme delays that they cause.

Will the Minister give way?

No, I have only a few minutes left. The hon. Member for Thurrock spoke for four or five minutes longer than I expected.

We do not accept that the present delays at the Gibraltar frontier can be justified by the Schengen agreement. When the civil governor of Cadiz predicted problems over Easter, he implied that Spain would knowingly understaff the Gibraltar border posts. That is unacceptable. I do not know whether that policy was co-ordinated with Madrid. I have no evidence as yet that it was, and I hope that it was not to be taken seriously as an expression of Spanish Government policy. Part of the view from Cadiz appears to be that the Spain-Gibraltar frontier is an external frontier of Europe. As hon. Members know, Gibraltar is an integral part of the European Union and it must be treated as such. Article 227(4) of the European Community treaty extends the application of the treaty to Gibraltar. It states:

"the provisions of this treaty shall apply to European Territories for whose external relations a member state is responsible."

The Schengen convention is an agreement between certain member states of the European Union but it is not a European Union agreement. It cannot supersede the rights of UK citizens, including Gibraltarians, under EC law. There should be no discrimination between Schengen and non-Schengen EU nationals at the border. We are closely monitoring the position to observe that.

Like many hon. Members, including the hon. Member for Thurrock, I saw yesterday's press reports suggesting that the Spanish Government were planning

"to introduce sanctions against Gibraltar for refusing to crack down against the Rock's multi-million pound tobacco and drug smuggling industry".

It is not entirely clear what those sanctions are supposed to entail but press reports suggest that they include

"a partial naval blockade of the Rock, virtual paralysis of the land frontier and fiscal penalties for the many Gibraltarians who commute to Spain".

As the House will understand, I have a habit of not believing everything that I read in the press. Although those reports supposedly quote authoritative sources in Madrid, I have no firm evidence that they represent the latest Spanish Government view. Let me leave the House in no doubt that, if there is any truth in press reports of Spanish intentions, I condemn them. It beggars belief that one European Union member state could even contemplate what amounts to a military blockade and sealing off its frontier with another member state. Those are the politics of the 18th century, not the 20th. I hope that that is the stuff of press speculation, and nothing more.

As the House would expect, the Government have acted promptly. We have stood up for the rights of Gibraltarians. I raised the matter with my Spanish counterpart when he was in London only a week or so ago and our ambassador in Madrid has protested to the Spanish Foreign Ministry. Our representations have had some success: the problem has not escalated further as it threatened to do in early April. I regret to report, however, that I can give little further positive news at this point.

Spain's formal response was to attempt to justify the unjustifiable. If there is no early improvement, we shall make further representations as necessary. As well as monitoring Spanish actions at the frontier, we have taken the matter up with the Schengen states and the European Commission and the Schengen secretariat and presidency. Those approaches have drawn attention to the nature and consequences of Spanish border controls.

We have made it clear to every one of Spain's Schengen partners that Spain's behaviour is unacceptable and discredits Spain. It also discredits the Schengen experiment. The Spanish action of choking the Gibraltar border is unacceptable—Schengen is no excuse. We have protested and the House has my assurance that we will continue to press our case until normal traffic at the border is restored.

I pay tribute to the patient parents of autistic children, the fine work of care workers and teachers of autistic children, the outstanding work of the North East London Autistic Society and the pioneering work of the National Autistic Society. I should like to speak, most of all, on behalf of those thousands of people who cannot speak for themselves—those who suffer from autism. I intend to refer to the definition of autism, its history, research into it and recently published reports, and to make some recommendations.

Autism is a controversial disorder, but certain factors are agreed upon. It is a human disability or disorder that is biologically based, but is believed to be caused by organic brain damage. It is a developmental disorder, but lasts throughout life. It is found in those with all levels of IQ, but is commonly accompanied by mental handicap. It is described by Lorna Wing, an acknowledged expert, as

"a severe disorder of communication, socialisation and imagination."

It is estimated that 1 million families in Britain are affected by autism, which affects far more boys than girls. It is found among those of all races, nationalities and social background, but it is reported that it is subject to cultural concealment in some groups.

The way in which autism manifests itself varies, but typical features include resistance to change, wandering about smiling—no reference to politicians—obsessional or ritualistic behaviour such head shaking or spinning, stereotyped movements, high levels of anxiety, lack of motivation, inability to transfer skills from one setting to another, vulnerability and susceptibility to exploitation, anger, depression, challenging behaviour, disregard of people with a closer attention to objects and self-injury. That is quite a daunting list.

The National Autistic Society has summed up what it calls the triad of impairments in autism as the absence or impairment of two-way social interaction; the absence or impairment of comprehension and the use of language and non-verbal communication; and the absence or impairment of true, flexible, imaginative activity, with the substitution of a narrow range of repetitive, stereotyped pursuits.

A psychologist at one of the departments of psychiatry in London, Simon Baron-Cohen, has summed up the condition as one that affects some children from birth or infancy and leaves them unable to form a normal social relationship or develop normal communication. As a result, the child may become isolated from human conduct and absorbed in a world of repetitive obsessional activities.

A parent, Mrs. X, has summed up what it is like to have an autistic child. She said that one has to have a sense of humour, otherwise one would go under. She also said:

"It's being able to eat Sunday lunch while sprinting around the house at a very quick pace. It's telling yourself that nobody has ever died with lack of sleep and life is too short to lie in bed anyway. It's being able to look calm in a packed shop when your child is having a major temper tantrum on the floor. It's being able to smile and be pleasant to people when really you could scream and shout. It's being able to pretend you're deaf when everyone around you is tutting at your child's behaviour. It's being able to say, 'Yes, my child looks beautiful, but that will never make him/her normal, so what does that matter.' And mostly, at the end of a very long day, when you look at your child asleep in bed, it's being able to say, 'I love you'."

So speaks the mother of a young child, but what of an adult with autism? A case study of a young man called Christopher, aged 24, has just been produced by the National Autistic Society. It says:

"Picture a handsome young 24-year-old accompanying his mother to Sainsbury's to do the weekly shopping. Imagine … the alarmed reaction of other shoppers and the acute embarrassment of his mother when Christopher decides to leap down the isles with the trolley, yelling exuberantly the chemical formula for manure ('S H one T' for the uninitiated)".

I hope that that last remark did not pass as unparliamentary language and that it is permitted in the context. The report also asks people to imagine what it is like when that young man, who as a child hated being cuddled or restrained in any way, now wants, in his 20s, to drape his 6 ft 2 in frame over the 5 ft 2 in frame of his mother. It asks us to consider how complete strangers feel when he decides to creep up behind them and shout "hairdryer" very loudly just for the fun of seeing their astonished reaction.

In total, there are about 25,000 children and 120,000 adults with autism in the United Kingdom. I want to consider how we can help them best. Autism was first diagnosed in 1943 by an Austrian psychiatrist, Leo Kamer. Its subsequent study has been dogged by as much misunderstanding as illumination. Autism is not caused as a result of emotional deprivation or emotional stress. It is not a withdrawal into a fantasy world or founded on a wish to avoid social contact. It is not due to parental rejection or "refrigerator" parents. It is not a middle-class disorder. It is not a mental illness, nor is it linked to genius or simply another word for mental handicap or a learning disability.

Although autism is widespread and is an important topic, there has, sadly, never been a debate in the House on it before today. Since 1971, the National Autistic Society has placed several reports in the Library of the House, but it was not until recently that a significant number of parliamentary questions have been tabled on it and reference made to it in debate. It was not, however, mentioned specifically in the Education Acts of 1981 and 1993, or in the code of practice.

The first ever published report on the facilities for autistic children in any region—north London—was published a fortnight ago. It was entitled "Going the Distance". I am pleased to see that my colleague from north London, the hon. Member for Hornsey and Wood Green (Mrs. Roche), is present. I wrote that report and I was ably assisted by Jonathan Bartley. A copy of it has been placed in the Library.

The report covers 52 constituencies in north London. We gathered evidence from 100 different sources, which revealed that there were about 1,500 cases of autism in a population of nearly 1 million. When certain facts are discounted, that means that one child in 450 under the age of 18 suffers from autism. We discounted those suffering from Asperger's syndrome, which is a similar disorder, but included all levels of autism. Of the number recorded, 75 per cent. have severe learning difficulties. That means that 1,100 children need specialist treatment in north London, but there are just 350 places for care. That means that the parents of those children have just a one in three chance of having their difficult children, whom they love, properly helped.

What is desperately needed is a broader knowledge of autism. We must identify what is needed. It is unsatisfactory that Barking and Dagenham, Brent, Camden, Hackney, Haringey, Harrow, Havering, Kensington and Chelsea, Redbridge, Tower Hamlets and Westminster have no specialist facilities. That means that 11 out of 20 north London boroughs offer no facilities for autistic children. Barnet has taken the lead with such care, but, unfortunately, its provision is one third below the London average.

I should like to pay tribute to the outstanding work of teachers and care workers in my constituency. The recent work carried out at Oakleigh school was first class. Peter Carney, the head of Oak Lodge school for the past 20 years, has been outstanding in his work to assist autistic children. This morning, he told me that the expertise of his unit needs to expand to cover all age groups.

It is sad to note that the local council in Barnet treated my report as one about a fringe interest. That is especially sad, because its work for autistic children has been excellent in the past. The report condemns the distances covered by the parents of autistic children and describes it as a national scandal.

What can be done? First, early diagnosis is vital. It permits assessment and proper specialist remedial help, which can dramatically mitigate the effects of autism. Failure to recognise the condition early denies a child the chance to benefit from what help is available, and all too often condemns that child to severely life-limiting effects of the condition. It also sentences the community to paying much higher bills to care for what will be a bigger problem in later life, and condemns thousands of marriages to huge stress while disturbing thousands of siblings.

Secondly, as the report makes clear, far more day and residential facilities for autistic children are needed, in the right place. I was prompted to write the report by the story of a child, Matty Solomon, who was taken on a day's journey to the midlands for his treatment. Others beg, borrow and sell their possessions to send their children to the Higashi unit in Boston, in the United States, or spend seven hours a day travelling across London to take their children to the only help that is available—or, indeed, travel only as far as the waiting rooms provided by local authorities, where they are told that there is no help.

Let me tell the Minister that we need more help in this country now. We need more residential educational facilities, and more respite for parents; we also need to provide more day provision for autistic adults. The Government must begin by reviewing the needs of the forgotten children. I know that my hon. Friend the Minister is concerned about this topic; I hope that he will be able to promise the representatives of autistic children who are listening in the Public Gallery, and others who will hear the debate, that the Government will undertake a proper national review of all care needs for autistic children that goes beyond the report begun in 1992 by Jones and Newson, only the first stage of which was ever produced for the Library of the House.

It is now clear that more early care can be provided and paid for from savings made by early assessment and provision. The Government should use the Cabinet Office to co-ordinate the work of the many Departments that should be involved—the Department of Health, the Department for Education, the Department of Social Security and, indeed, the Department of the Environment, which funds local authorities. I have pledged to raise the money for more residential educational facilities in north London, and—along with colleagues who attended the launch—promised to keep autistic children in the eye of Parliament. They may have been forgotten once, but they must never be forgotten again.

I am grateful to my hon. Friend the Member for Finchley (Mr. Booth) for raising this important issue. I acknowledge that—as my hon. Friend pointed out—it is surprising and disappointing to many that it has not been considered here before; he deserves credit for raising it today.

My officials and I have looked at the recent report "Going the Distance", which my hon. Friend co-authored. I, too, sympathise with the difficulties experienced by relatives and friends of those who suffer from the condition: they need the maximum support and help from schools, local authorities, Government and others.

Before dealing with the position in north London, let me say a little about the broader context. As my hon. Friend has acknowledged, the assessment of autistic children for a statement of special educational need, and then the identification of a suitable school for them, is a statutory responsibility of the local education authority in whose area they live. That is not simply an administrative matter. My hon. Friend's report rightly recognises that autistic children, like others with special educational needs, have widely differing requirements, depending on the nature and severity of their disorder. They require a range of provision to meet those needs; decisions about the provision can only be made locally, in the light of a careful assessment of the needs of each child by professionals who know the child. I am sure that that much is common ground.

As my hon. Friend said, it is not always easy to diagnose children with autism. In cases of severe disorder it is usually clear early in the child's development that something is wrong, and diagnosis may come quickly; for others, however, it may take much longer. Once the condition has been diagnosed, children may be educated in local education authority or grant-maintained special or mainstream schools, or in autistic units attached to special or mainstream schools. They may be educated in independent schools, such as those run by the National Autistic Society, or in non-maintained special schools. Placements at independent and non-maintained special schools are paid for by the LEA when that provision is specified in a child's SEN statement.

The majority of autistic children attend schools and units capable of meeting the needs of children with a range of special educational needs; perhaps one child in eight attends a school or unit that specialises solely in teaching children with autism. It does not necessarily follow that the provision for the majority of autistic children is not appropriate. In particular—as I am sure my hon. Friend is aware—the pros and cons of residential placement for autistic children remain the subject of much professional consideration and discussion.

My hon. Friend's report recommends a Government inquiry into the needs of autistic children, and he repeated that request today. As I know he is aware, the Department of Health and my Department have been sponsoring research by the university of Nottingham into current interventions for children with autism. Stage 1 of the project identified facilities and services in England and Wales that cater for children and adults, and summarised information on the current arrangements for the education, treatment and handling of those with autism. A copy of the report of stage 1 was placed in the Library of the House in 1993.

Stage 2 of the research—which goes more deeply into the main characteristics of the forms of education and treatment identified in stage 1 and evaluates the effects of these approaches on the behaviour and skills of autistic children—is now in its final stages. I hope that the team's report of that work will be available later in the year. My officials and those from the Department of Health are in contact with the NAS about taking forward the results.

The evidence on which my hon. Friend draws is up to date. The fact is, however, that, while his inquiries were being undertaken, schools and LEAs began to revise their procedures to match the new code of practice on the identification and assessment of special educational needs. The code came into force in September last year. It incorporates tight time limits on the procedures under which LEAs and other professionals have to assess children and make statements of SEN where appropriate. In particular, the new arrangements under the Education Act 1993 give parents powerful rights in the selection of the school to be named in their child's statement.

When parents are not satisfied with the statement or with the school named by the LEA, they can appeal to the independent SEN tribunal. Since last September, the tribunal has been handling the first appeals made by parents dissatisfied with aspects of the statementing process, including the school named for their child by the LEA. Although I do not wish to diminish the importance of the case made by my hon. Friend, it is a fact that, of the 559 appeals to the tribunal up to the beginning of May, just 1 per cent. have concerned autistic children. I do not know what conclusions we should draw from that; I simply state it as a fact.

Does my hon. Friend agree that that appeals procedure is very important to autistic children and their parents? A case in my constituency, involving Terry Murray junior, involved a tremendous tussle between the parents and the local authority. In making both assessment and provision, an authority can be both judge and jury, and that issue needs to be tackled.

Indeed. That is why the tribunal was established. It is now an independent and impartial body, to which parents who are not happy with what has happened can go and obtain a judgment independent of the local education authority. Early suggestions are that it will be an enormous step forward, providing new justice and fair treatment for parents of children with differing special educational needs, including autistic children. It goes further than that because part of the code of practice requires that needs specified in a child's statement must be mirrored by a clear statement of the provision that the authority is to make for that child. The link between needs and provision is more clearly established, and LEAs are better placed to judge the extent of any shortfall in provision than ever before.

I want to stress to my hon. Friend that I believe that what is new since last September—although it is early days to judge—is that a new clarity will emerge in the nature, effectiveness, use and targeting of moneys that LEAs establish for special needs provision, both at authority level and in schools. In time, there will emerge a new understanding at every level of the availability of funds and the availability and provision of places for conditions such as autism. We are now in new territory, and an increasing amount of information will be available of the sort that my hon. Friend will be able to use—and we shall want to look at—to carry forward cases such as the one that we are considering today.

Enfield has recently increased its provision for autistic children; Islington is proposing to increase provision so that it can make regional provision for autistic children in north London. I have heard that yet another LEA in the area may propose to establish a unit for autistic children at a school for pupils with moderate learning difficulties. There is some suggestion that steps are already being taken—I should think partly as a result of the clarity provided by the code of practice.

I apologise to the House for not being present for the speech of the hon. Member for Finchley (Mr. Booth).

The Minister of State is talking about expansion facilities. He will be aware that Harborough school in my constituency does excellent work with autistic children, and is a wonderful school in many ways. There are proposals to expand its provisions. What is the Government's attitude towards the expansion of provision to give better facilities? I am well aware that many people successfully appeal against the non-provision of places, but there is no special school available. Although the appeal process is welcome, it is limited if, ultimately, there are no places to be found.

The hon. Gentleman makes a fair point. The Government's attitude is that we would want to give support and a fair wind to any authority that comes forward with sensible, positive proposals to deal with such need. It is rightly a matter for the authority, with its local knowledge, to decide what should be done. We would not want to stand in the way of well-thought-out and properly designed proposals that meet a clearly identified need in the locality or beyond. I hope that there will be no problem.

Given the spectrum of needs and the range of provision that may be appropriate, it is difficult to pin down a shortfall in the way suggested by my hon. Friend the Member for Finchley. Although many LEAs maintain their own specialist provision for children with autism, there is a danger that some will be tempted to place their own children first. If that means that other autistic pupils are on lengthy waiting lists, the LEAs responsible for those children will have to give serious and early consideration to whether there are alternative approaches to meeting their needs.

Not every LEA will be able to, or need to, make its own specialist provision. In some cases, collaboration between LEAs may well be desirable; but, in the first instance, it is for each LEA to satisfy itself about the adequacy of provision for the children for whom it has responsibility. It would be open to, say, the National Autistic Society to convene discussions with LEAs to seek a common view of the position locally. If those discussions led one or more LEAs to publish statutory proposals for new schools or units, the Secretary of State would want to consider them carefully, together with any associated bids for capital support—the point made by the hon. Member for Islington, North (Mr. Corbyn).

Another factor in the equation is that 11 of the boroughs in north London are at stage 2 or 3 of the grant-maintained process. That means that the Funding Agency for Schools may also be able to propose new provision. I understand that the FAS is considering carrying out a survey of special educational needs units at grant-maintained schools. If a need were established for more autistic provision, the FAS could have a role in considering how such provision should be made. In any event, I would hope that the FAS could be associated with any local discussions on that subject. Such discussions could be fruitful for all parties involved, and I hope that they will consider that proposal with some urgency.

Another route would be for voluntary bodies or charities to consider establishing, or expanding existing, non-maintained special schools to cater for children with autism. Those are schools run by voluntary bodies on a non-profit-making basis. The voluntary body would need to apply to the Secretary of State to open a school or change the status of an existing school. Such applications are considered sympathetically, but stringently. A non-maintained special school can apply to the Secretary of State for capital grants to improve existing buildings or to build new premises, although I must stress—nobody will be surprised to hear me say it—that the money for such purposes is, of necessity, limited. We try to use it in the most effective way. I would therefore expect most of the money in those cases to come from the charity's private income. The running costs of such schools are normally covered by payments from LEAs that place children at them.

I hope that I have demonstrated to my hon. Friend the Member for Finchley that the Government are well aware of the importance of appropriate provision for autistic children. The Government's job is to ensure that there is a clear framework in which local authorities and other professional services, together with parents, can work out solutions to match each child's needs and to ensure that information is available nationally to help authorities determine best practice. We have achieved that in the Education Act 1993 and the code of practice.

We now have the opportunity to identify the needs more clearly and to match them to the provision. We can judge more clearly the effectiveness of existing funds at every level. There is scope for further action to be taken—perhaps headed by the NAS, and no doubt helped by my hon. Friend the Member for Finchley. That action would involve the LEAs and the FAS and would carry forward my hon. Friend's work, for which I praise him. We must ensure that the provision for this vulnerable group of school-age children—and those who are older—is the best available. We must give every support, not only to the young people involved but to their families. I am sure that we all share that aim.

I hope that my brief remarks have contained some hopeful signs for the future. I wish my hon. Friend well in pursuing the interests that he has brought before the House today.

I regret to have to report to the House the death of Geoffrey Kenneth Dickens Esq., the Member for Littleborough and Saddleworth. I am sure that hon. Members on both sides of the House will join me in mourning the loss of a colleague and in extending our sympathy to the hon. Member's family and friends.