To ask the Secretary of State for Wales if he will make a statement on current trends in the level of unemployment in Wales. [18861]

To ask the Secretary of State for Wales if he will make a statement about unemployment in Wales. [18836]

Unemployment is falling fast in Wales. It has fallen by 9,200 in the past three months.

I thank my right hon. Friend for his reply. I extend my hearty congratulations on his recent engagement. I know that we all wish him the very best for the future. His announcement coincides with the excellent unemployment figures. Is he aware that, at 7 per cent., unemployment in Wales is far lower than unemployment in the European countries, such as France, Germany and Italy, and in Spain, where it is 22 per cent? That is because those countries have been saddled with the social chapter and the minimum wage. Does my right hon. Friend agree that the people of Wales would be cruelly cheated if this country should ever support a Labour Government, who would cost them their jobs and their livelihoods?

I am grateful to my hon. Friend: she is correct about unemployment in Wales. The Government have brought new jobs to Wales in record numbers in recent years. Week after week, there have been new announcements of additional employment. This weekend, Optical Fibres—an extremely high-technology company based in north Wales—announced that it has a thriving order book and that it expects its output to quadruple by 2001, and announced 200 new jobs in north Wales. Hon. Members on both sides of the House will no doubt welcome that announcement, but only Conservative Members are prepared to pursue the policies that will keep such announcements coming.

Will my right hon. Friend join me, as a regular visitor to Welsh questions, in welcoming the hon. Member for Stratford-on-Avon (Mr. Howarth) to his first Welsh Question Time? Does my right hon. Friend agree that the improvement in the Welsh economy is due to the fact that we have modern industrial relations and low corporate taxes and have not signed the social chapter? Does he also agree that a party that is in hock to the trade unions would destroy our industrial relations, and that a party whose Chief Whip says that it wants to refine the tax system would soon deal with corporate taxes too?

My hon. Friend is right. The Opposition want to pursue, in Wales and in the rest of the United Kingdom, policies that have thrown millions of people out of work in continental Europe. Unemployment in Wales has fallen by more than 9,000 in the past three months, while unemployment in Germany and France has reached post-war highs. The Opposition propose that other countries should decide our social and labour rules and regulations.

It would be churlish of me not to welcome the hon. Member for Stratford-on-Avon (Mr. Howarth) to Welsh questions—although heaven knows what the people of Newport, East will think that they are being asked to vote for in the election, or which party the hon. Gentleman will end up in by the end of the next Parliament. Nevertheless, I hope that he will join me in welcoming a 19 per cent. fall in unemployment last year in the constituency that he seeks to represent.

I assure the right hon. Gentleman that the people of Newport will vote for a Labour Government because they know that a Labour Government will give steady and reliable support to higher and further education. Does he accept that it is crucial to the employment prospects of the people of Newport and to the success of inward investment in Wales that we should have full-hearted support for education? Does he share my grave concern at the closure of the engineering course at the university of Wales institute in Newport?

The hon. Gentleman is right: education is extremely important to future job creation in Wales. I hope that he will join me in welcoming a newspaper headline of two weeks ago which said that south-east Wales will be the best place in the United Kingdom to get a job for several years to come—perhaps it sent him off in that direction. It is important to invest in education and training. That is why much of the assistance that we are giving to the LG project, which will benefit the Newport area, is in the form of help with training. We shall continue such support.

I also extend my welcome to my hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) on his first attendance at Question Time on Welsh affairs, and offer him my congratulations on winning the nomination for his new constituency of Newport, East. I am sure that it will be the last for a long time while sitting on the Opposition Benches.

Any fall in unemployment is obviously to be welcomed, but why does not the Secretary of State present the more rounded picture of the Welsh economy? Will he confirm that we now have 200,000 fewer people in Wales in employment than we did when the present Prime Minister took office? As the low pay unit showed last Friday, in addition to Wales having the highest proportion of full-timers earning less than that represented by the European decency threshold, the pay gap between Wales and the rest of the United Kingdom is widening.

Now that the election is upon us, the choice for the people is clear. The Labour party offers hope for the future with plans for the young and long-term unemployed, improvements to training and education, the establishment of the university for industry, investment incentives and infrastructure investment, along with welfare-to-work programmes, partnership with the private sector and a revitalised Welsh Development Agency.

How proud is the Secretary of State that, after 18 years in office, all that his Government have to offer is a divided party, a weak leader and excuses for past failures?

The hon. Gentleman says that any fall in unemployment is obviously welcome. That has become a routine comment for Opposition Members because a fall in unemployment has become routine. It would not be a routine thing if we were to follow the Labour party's policies. Adoption of the social chapter and a minimum wage would price tens of thousands out of their jobs along with hundreds of thousands throughout the rest of the United Kingdom.

The hon. Member for Caerphilly (Mr. Davies) asked whether I am proud of what we have done in Wales. I am proud of what we have done in building a stronger economy, investing in infrastructure and delivering the best prospects in the lifetime of my generation in Wales and in the rest of the United Kingdom. The Welsh economy needs the hon. Gentleman presiding over it as it needs a hole in the head.

I, too, extend my felicitations to my right hon. Friend on his engagement.

Is not one of the reasons for the favourable disparity between the 7 per cent. unemployment rate in Wales and the 12.5 per cent. in Germany, with 12.4 per cent. in France, the fact that we have cut public expenditure as a proportion of gross domestic product? Is it not becoming clear that, were the Labour Opposition to return to government, that policy would be abandoned, causing a devastating rise in unemployment in the longer term?

I thank my right hon. Friend for his personal remarks. As I do not have any briefing on those, I do not think that it falls within my ministerial responsibilities more fully to respond. My right hon. Friend has asked what must be the last question that he will be asking at Welsh Question Time during a long career in the House. I am sure that the entire House would wish to pay tribute to him and to the work that he has done for Wales and his constituents over so many years.

My right hon. Friend is right about expenditure, and he is right about the Labour party's policies. Labour says that it would not spend any more money in Wales over the next two years than that which is set out in our plans. It says also that it wants to give more money to local authorities and to the Welsh Development Agency. At the same time, it will have to finance a Welsh Assembly. The people know that that does not add up. The Labour party will be rumbled.

To ask the Secretary of State for Wales when he last met the board of Cardiff Bay development corporation. [18828]

My right hon. Friend and I have regular meetings with the chairman and my right hon. Friend last met the board in May 1996.

Is the Minister aware of the remarks made by his right hon. Friend the Member for Wokingham (Mr. Redwood), who recently described quangos as being logo manufacturers and gatherers of knighthoods? I cannot think in what context that comment would apply in Cardiff bay. Does the Minister agree with the Secretary of State that decisions are best taken by people elected to office and not by people appointed to quangos who meet in secret behind closed doors?

From his time in the Welsh Office and since, I know that my right hon. Friend the Member for Wokingham (Mr. Redwood) and I share similar approaches towards quangos. I find the hon. Gentleman's remarks somewhat odd as he is a Johnny-come-lately into Welsh politics who has been saddled with trying to breathe life into the corpse of a Welsh Assembly. He is the proponent of the arch quango.

Does my hon. Friend agree that all development corporations have brought investment and work into their areas? Is not the Cardiff Bay development corporation an example of the good things that the Conservatives have done, despite opposition from the Labour party?

My hon. Friend is right; he points to the reality of the situation. We have lame acceptances from Labour Members that any fall in unemployment is welcome. We get equally lame acceptances of any new announcement. The Cardiff bay redevelopment is confidently expected to generate 29,000 jobs in the capital city of Wales and throughout south Wales. Who were the stoutest opponents of the scheme? They were Welsh Members sitting on the Labour Front Bench.

To ask the Secretary of State for Wales what action has recently been taken to raise the level of manufacturing skills in Wales. [18830]

A great deal of action is being taken. That includes provision for a further 4,800 young people to start modern apprenticeships in 1997–98; increased funding for adult technician training; and initiatives to meet the need for skills in the electronics and semi-conductor sectors.

We take for granted falls in unemployment and we are beginning to take for granted the fact that Wales is becoming the silicon valley of Europe. Will my hon. Friend pay tribute to liquid manufacturers, such as Ty Nant, the water manufacturers in Lampeter? Will he also pay tribute to Swy y Mor, the Welsh whisky manufacturer, whose product is available throughout the known world? What would be the effect on those manufacturers of the imposition of European employment law?

I happily respond to my hon. Friend's invitation in relation to the Welsh whisky company because it is based in my constituency. I have noted my hon. Friend's welcome for the great success of Ty Nant water. A number of water companies within the Principality have managed to develop a high international profile. My hon. Friend is right to say that that does not just happen, as Labour Members believe. It is the product of investment in the skills of the people who work in those businesses. The difference between us and Labour Members is that we understand that, whereas they do not.

Is not the true answer to the question that little has been done to raise manufacturing skills in Wales? Is that not the reason why the average wage in Wales is the lowest in the United Kingdom, with some workers getting as little as £1.61 an hour? Is not the low pay unit report a fitting epitaph for this Government? On 1 May, the people of Wales and of Great Britain as a whole will say that enough is enough.

I preface my remarks by saying that I anticipate that that question will be one of the last contributions made by the hon. Gentleman. Whatever political differences there have been between us, he well knows that I very much respect him. I find it rather strange, however, to see him sitting with the hon. Member for Stratford-on-Avon (Mr. Howarth) and the hon. Member for Newport, West (Mr. Flynn). What an incongruous threesome they make. The hon. Member for Newport, East (Mr. Hughes) used to understand that introducing a minimum wage was a way in which to destroy jobs. It is rather sad that he is singing a different tune now.

Would my hon. Friend care to speculate on the effect on jobs in Wales, particularly in the telecommunications industry, were BT to lose £2 billion or £3 billion in a windfall tax and the money that supports those jobs were transferred to make-work schemes and training schemes that have no jobs at the end of them?

My hon. Friend is absolutely right. That is why the Labour party says so little about the implications of the windfall tax. Many people who work for the privatised utilities in Wales have good cause to take on board the points raised by my hon. Friend and, furthermore, the effect on jobs of the introduction of the social chapter—a matter that has been raised not only by my hon. Friends. I had the opportunity of visiting one of our biggest mid-Wales businesses and the first point raised with me expressed concern about Labour's policy in that respect.

If this is indeed the hon. Gentleman's last Welsh Question Time, may we wish him well in his future incarnation? May I press him on the point that the most relevant investment in manufacturing industry is often in higher and further education, which provide the necessary skills. In that context, is the Minister happy, after receiving representations from the university of Wales and other colleges concerning the reduction in the funding available for education and research? Is he aware that we shall lose considerable input into the Welsh economy unless the shortfall is found? The Secretary of State says that the money is not available for higher education because it has gone into LG, but surely we need to find money for both if we are to invest in the future.

There has been a significant expansion over the years in investment in higher and further education in Wales, as the hon. Gentleman is aware. His point relates to this year's provision in respect of further education, which has increased to some £162.5 million. Against the background of some of the representations from the sector, last year there was clear recognition that the settlement for Wales was higher than that for England.

The Minister gives a rather belated example of conversion to sensible policies on training when it was a Conservative Government who slaughtered apprenticeship schemes in the 1980s. While we welcome his new conversion to modern apprenticeships and the additional money provided for technicians this year, is it not true that there have been cuts in the budgets of the further and higher education funding councils and in the overall employment and training budget? Manufacturers throughout south Wales remain concerned about the shortage of training skills and the Government's own target for training and skills is still woefully behind what is really needed. Will it not be a real blessing when, in May this year, we have a Government who will truly concentrate on improving skills and education in Wales?

All that I would say to the hon. Gentleman is that the Council of Welsh Training and Enterprise Councils recently published an action plan for manufacturing. The hon. Gentleman tells us that he has read it, so perhaps he will have read the response from a range of agencies—the Welsh Development Agency, the Development Board for Rural Wales, the Further Education Funding Council for Wales and the Confederation of British Industry—and from their paymasters, the Trades Union Congress. They all welcomed the approach in that document and I urge Opposition Members to do so as well.

To ask the Secretary of State for Wales what representations he has received about appointment to quangos in Wales during 1996. [18831]

My Department has received several representations.

Does the Secretary of State acknowledge that one of the most miserable and disreputable aspects of the Conservative Government in the past 18 years has been the way in which they have appointed their friends to run quangos in Wales? What could be more damaging to the cause of democracy than for Members of Parliament rejected by the electorate to be appointed to run the health service and represent the interests of consumers in Wales? With one or two notable exceptions, does he not realise that all he and his friends have done is further the cause of the Conservative party in Wales? We deserve a far better system of government and we shall vote for it on 1 May.

After the question by the hon. Member for Caerphilly (Mr. Davies) earlier, I thought that it was impossible to hear more rubbish in one question time. However, we have now heard more from the hon. Member for Ynys Môn (Mr. Jones) who says that we have filled boards with political friends of the Conservative party. Lord Elis-Thomas does a good job for the Welsh Language Board and he was appointed by the Conservative Government. I have recently appointed to the WDA board Councillor Noel Crowley of Neath and Port Talbot, who is a leading member of the Labour party in Wales. There is also George Wright, who is a leading representative of the trade unions in Wales. Those people sit on those bodies because we select people for them on merit—and that is how it should be.

Will the Secretary of State confirm that the recent group of people that he appointed to monitor appointments to quangos were themselves appointed without any advertisements being placed—on his say-so only? Is it satisfactory to have a quango monitoring appointments to quangos? Would it not be far better to have an elected assembly monitoring the performance of quangos?

What we have under the new arrangements is an independent element in the selection of people for public office. If the hon. Gentleman or anybody else suggests people for those lists, they would of course be considered. The idea that better appointments would be made because there was a room full of people in an assembly arguing about it, and claiming a fat expense account for doing so, is absolutely ludicrous.

I invite my right hon. Friend to reflect on the irony that many Opposition Members who campaigned vigorously against quangos want to hand their country over to the ultimate quango—the European Commission in Brussels.

My hon. Friend raises an important issue. It is the Labour party's policy to sign away—no doubt it would do it at the Amsterdam summit if it had the chance—and get rid of the British veto on social policy, regional policy, industrial policy and environmental policy. That is not a policy that will win the support of the British people.

To ask the Secretary of State for Wales what recent assessment he has made of job insecurity in Wales. [18832]

In spring 1996, according to the labour force survey, 8.3 per cent. of Welsh employees were in temporary employment.

Has the Minister had any discussions with Lucas Industries Ltd. over the closure of its Neath factory and the transfer of 170 jobs to Poland? Why does he keep denying that job insecurity in Wales is rife, when the number of temporary workers has increased since the last election by more than a quarter, and in his own backyard in the Welsh Office, it has increased by a half? He will soon understand a great deal more about job insecurity when the voters of Wales sack all the Conservative Members on 1 May.

The hon. Gentleman would do better not to prejudge the outcome of the election. As he is interested in international comparisons, let me point out that the number of people who are engaged in temporary employment is higher in France, Germany and Spain than in Wales. Furthermore, if he is concerned about the exportation of jobs, it is rather odd that he should be spending his time arguing in favour of a national minimum wage and the social chapter, which will destroy jobs in Wales.

Will my hon. Friend confirm that job insecurity is a function of unemployment—the higher the unemployment, the more insecure people feel about their jobs? The policies that lead to higher unemployment are those that the socialists would introduce, such as the minimum wage and the social chapter; policies that would see the expansion of the Welsh Assembly, which would deter inward investment to Wales, destroy Welsh jobs and increase job insecurity.

My hon. Friend is absolutely right. Every week, we hear of new inward investment projects in Wales and of jobs going to the Principality. The United Kingdom stands at the top of the tree of performance in Europe in attracting new inward investment, and Wales is taking more than its proportional share of that. Wales has been pursuing that success under a Conservative Government—success that would come to an end if there were to be a change on 1 May.

The Secretary of State said a few minutes ago that he was proud of the employment record under his Government. Is he proud of the fact that 40 per cent. of men aged between 50 and 64 are economically inactive? That is the highest percentage of any region or nation in the United Kingdom. Is he proud of the fact that, despite many representations, he and his predecessor have done nothing about one of the most serious social and economic problems that has faced our communities?

The Secretary of State and I are proud of all of the efforts that are being made to attract new job opportunities to Wales and, especially, to the hon. Gentleman's constituency. Significant investment has been made in the road network and in new job opportunities in his constituency. His constituents would not have had those opportunities under a Labour Government.

Would not one of the best ways to increase job insecurity in Wales be to introduce some of the working practices of mainland Europe? For example, is my hon. Friend aware that it is illegal to work more than 80 hours a year overtime in Spain; it is illegal to work any overtime at all in Luxembourg without informing the authorities; and it is illegal to work overtime in Belgium without the express permission of the authorities? Are not those the policies of the European social model that is warmly advocated by the Labour party?

That is why industrialists and those who are running businesses in Wales have expressed their concerns to us about the proposal to sign the social chapter. The Labour party advocates an idea that would destroy jobs in Wales. We must not, and we will not, go down that route.

Does the Secretary of State agree that he could reduce job insecurity in Wales by approving the Eurofreight terminal at Wentlloog between Cardiff and Newport? Unconscionable delays have been caused by his inability to make a decision, and thousands of jobs have been destroyed. Before the Secretary of State leaves Wales in his private plane to join the Tory leadership contest, will he undertake today to announce the decision on the Eurofreight terminal before the end of this Parliament? His uncertainty on the issue makes Prince Hamlet of Denmark look like General Stormin' Norman Schwarzkopf.

It is my understanding that the Secretary of State is awaiting a report from the Welsh Development Agency on that matter. [Interruption.] I recall that the hon. Member for Cardiff, West (Mr. Morgan), who is making such a noise from a sedentary position, said some months ago that it was the most important decision to be made in south Wales. He made that statement two weeks before the Secretary of State announced the biggest inward investment project in Europe by LG. That shows how in touch the hon. Gentleman is.

To ask the Secretary of State for Wales if he will make a statement about funding for district general hospitals within the Dyfed Powys health authority area. [18833]

For 1997–98, we have announced a cash increase of £6 million for Dyfed Powys health authority.

The Secretary of State has recognised already the need to reconsider funding for health care in Dyfed Powys to take account of rurality. He must know also that some trusts in the area are heading for significant deficits this time next year, because of the present funding arrangements. Does he accept that that will lead to serious problems for some district general hospitals, especially Bronglais hospital, which serves a wide area? To prevent that immediate crisis from developing, additional funding is urgent and necessary. Will the Secretary of State commit himself or his successor to provide that additional funding?

I have already announced additional funding for Dyfed Powys health authority of £6 million. I have the strangest sense of déjà vu, because the first time that the hon. Gentleman raised the matter in the Chamber he started the scaremongering about Bronglais general hospital. Now that the scare over the community hospitals, which was so wickedly whipped up by certain people—not those on the Conservative Benches—has been resolved, scares are being raised about the general hospitals. That is a contemptible way to approach health care in west Wales.

Given his answer to the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis), has the Minister read the report produced by Dyfed Powys health authority, entitled "Effective Care and Healthy People", in which it offers three options to cope with the financial crisis? The first is to close all community hospitals in the area; the second is to close two out of four of the district general hospitals; and the third is to close some of the community hospitals and cut some of the district general hospitals. Opposition Members are not scaremongering: the health authorities are telling the truth, but the Welsh Office refuses to listen.

The new Dyfed Powys health authority, which has inherited an overspending tendency, is conducting a review. My right hon. Friend the Secretary of State stated his regard for community hospitals during the Welsh affairs debate on 27 February, and added that he wanted them to continue their role. When he considers any proposals, he will have strong regard for local views about local health needs, and will not adopt the scaremongering approach advocated by the Opposition.

Will the Minister give a clear undertaking that there is no risk of closing any of the valuable community hospitals in Powys?

There is no need to say any more because my right hon. Friend the Secretary of State made the position clear on 27 February. I say simply to the hon. and learned Gentleman—before he flits off to pursue his more prosperous legal practices—that neither my right hon. Friend nor I is in the business of closing necessary hospitals anywhere in Wales. We are certainly not in the business of cutting the NHS. We are committed to expanding it—a commitment that the Labour party markedly refuses to match.

Is it not disgraceful that the Under-Secretary seeks to avoid responsibility for this serious matter by claiming that the health authority has "inherited" the relevant responsibilities? I remind him that he created the health authorities and appointed the people to run them. They are directly his creation. Is it not clear that something is fundamentally wrong with the funding of Dyfed Powys health authority? I make it clear that the Labour party supports the campaign now being waged to conduct a fundamental review of the funding formula. Is not the Under-Secretary's opposition to the closure of community hospitals by the health authority both hypocritical and dishonest, as he is directly and personally responsible for that funding crisis? In addition, all his words this afternoon have not changed the fact that that crisis remains. Is that not typical of the Government, who practise deception and evasion and advocate the fraudulent making of policies today which they have no intention of honouring tomorrow? Is it any wonder that they have lost the trust of the people?

The hon. Gentleman clearly is not aware of the circumstances. I have moved to assist Dyfed Powys health authority by extending one loan and providing another, and I am ready to assist it with transitional cash flow. It is the hon. Gentleman who is clearly ducking, as he will not make a promise—perhaps because he knows that he cannot honour it—to match our commitment to continue the real increases in spending for the health service each and every year in the next Parliament.

To ask the Secretary of State for Wales if he will establish how many jobs have been relocated from Wales to countries that have the minimum wage in each of the past five years. [18834]

There are no data readily available to perform such an analysis.

Is not Newport doubly fortunate, as it can look forward to the LG semi-conductor jobs and to being represented in the future, as in the past, by splendid Members of Parliament? Is it not extraordinary that the Government can count the number of incoming jobs and announce the figures again and again, but cannot say how many jobs have left this country to relocate in countries with both the minimum wage and the social chapter? Is it not extraordinary that when LG is up and running, it will be competing for semi-conductor jobs that used to be based in Newport but are now located in France and Germany? Why does a country such as Britain, which has won 74 Nobel prizes for science, have to buy scientific jobs from a country that has never won such a prize?

We all commend the hon. Gentleman on his becoming modesty in describing himself as a splendid Member of Parliament. I certainly hope that Newport will be represented by two splendid Members in the coming Parliament, but not necessarily the current ones. The hon. Gentleman should not presume about the outcome of elections.

If Labour Members are so in favour of the minimum wage, why cannot they say at what level they would set it? It is because it would be either so low as to be utterly irrelevant or so high that it would price people out of work. They will have to own up to that in the coming weeks.

Is the Secretary of State aware that in Blaenau Gwent we have some of the lowest wages in the United Kingdom? Would he be willing to work for £2 or £3 an hour? What advice would he give to families who have to bring up children on that kind of money?

The hon. Gentleman must recognise that wages cannot be raised by Government diktat. Wages and living standards are raised by having an enterprise economy, by the promotion of employment and by businesses doing well and having to compete to employ people. That is happening increasingly in many parts of Wales. We have already made south-east Wales the best place in Britain to get a job, and I want that to be the case in the whole of Wales. That will deliver rising living standards all round.

Is it not a fact that the company referred to by the hon. Member for Newport, West (Mr. Flynn) is a French nationalised company, Thomson SLG? Is it therefore surprising that it should behave in such an extraordinary way?

My right hon. Friend has a point—apart from having asked another question after I had paid tribute to him on his previous question. He could also have mentioned the fact that unemployment in France stands at 12.5 per cent. and has risen in the past year, whereas unemployment in Wales is about 8 per cent.—depending on which definition one uses—and has fallen dramatically in the past year.

To ask the Secretary of State for Wales what action has been taken to encourage more inward investment in Wales outside the eastern M4 and A55 corridors. [18835]

I have recently set the Welsh Development Agency new and more demanding targets to encourage more inward investment outside the eastern M4 and A55 corridors. I have also asked it to give more assistance to companies locating in those areas than to equivalent projects elsewhere.

May I congratulate my right hon. Friend on his announcement of new targets for investment outside the M4 and A55 corridors and in rural Wales? What measures does he propose to enhance the quality of life throughout rural Wales following the publication of the rural White Paper last year?

I thank my hon. Friend for his welcome for the new targets that have been set for the Welsh Development Agency. The rural White Paper published last year demonstrated the importance that we attach to the future of rural areas of Wales. I shall today publish the 1997 review of the White Paper, which is an important step in the process of building a prosperous countryside and a healthy environment for rural Wales. That will include such matters as a further round of the schools technology initiative, broadening the coverage of the rural transport innovation grant, a new native woodland challenge scheme and new advice on encouraging village shops and other services in rural areas.

Does the Secretary of State recall the constructive meeting that he had with a deputation of south-west Wales Members two months ago? Does he remember that we made it clear that we in no way regret that so much industrial development is going to south-east Wales but that we are living in the shadow of Cardiff and Newport and fear for the fact that little or no development is occurring beyond Bridgend? Does he remember giving us certain assurances in relation to his use of discretionary power? What action has he taken in the intervening two months to implement that agreement?

Yes, I well remember the meeting with the right hon. Gentleman and his colleagues. As he said—I hope that other hon. Members were listening—a great deal of industrial development has taken place in south-east Wales. It is time to ensure that that success is spread right across Wales, including to the areas that the right hon. Gentleman has represented. That is why I have set the Welsh Development Agency a new target of 50 per cent. of the new investment and jobs that it attracts to Wales in the coming financial year being outside the eastern M4 and A55 corridors. That is a major increase in the targets for those areas. I have also asked the agency to pay more for projects going to the areas that have not yet been the principal beneficiaries of inward investment than for equivalent projects elsewhere.

I have heard the Secretary of State congratulating himself so many times this afternoon that it is rather disturbing—one wonders whether he is serious about all this. I welcome his difference of emphasis on investment and job creation outside the M4 corridor and north-east Wales. May I ask him a serious question? What is he doing about youth unemployment? Does he know, for example, that north Wales has pockets of youth unemployment as high as 33 per cent? What on earth is being done to tackle that extreme problem?

What I am doing about youth unemployment in Wales is to bring more jobs to Wales than we have seen in modern times. That has an impact on youth unemployment as well as on unemployment generally. Of course, it is important to ensure that the benefits of that are shared throughout Wales. To tackle youth unemployment, in the coming year I am also increasing by £12 million—nearly doubling it—the budget for modern apprenticeships in Wales, so that young people will have the skills to take up those jobs.

To ask the Attorney-General what steps he is taking to reduce delays in dealing with young offenders. [18851]

The Crown Prosecution Service has well-established teams of specialist prosecutors to handle youth cases, which are working closely with the other agencies to develop methods of speeding up those cases. Those include the introduction of pilot schemes for lawyers in police stations, which enable police officers to obtain immediate advice on the charging of youth offenders.

Will my right hon. and learned Friend take on board the fact that there is widespread concern in the Vale of Glamorgan about young offenders who commit fresh offences while waiting to be dealt with by the courts? Those offenders also tend to forget why they are in court if there is any significant delay. Does he agree that the CPS and all the other agencies involved in the criminal justice system have an important role to play in avoiding unnecessary adjournments and speeding up justice?

My hon. Friend has great practical knowledge of both prosecution and defence and he will know from that how important it is to bring offenders promptly before the courts before they continue a spree of offending. The CPS, the Home Office and others are working together closely to tackle the issue.

Does the Attorney-General agree that it is not just the problem of delay that is creating difficulties with youth crime, but the system itself? Does he agree that there is scope for considering, for example, the introduction of an equivalent to the Scottish children's panel system, which has proved much more effective than youth courts in preventing young people from committing additional crimes? Does he not think that we should now take a root-and-branch look at the way in which youth crime is dealt with and not merely tinker with issues such as delay?

I agree to the extent that there are a number of ways in which one can approach youth crime. The police and the CPS are already making strides with interesting initiatives, one of which I saw last Thursday in Aylesbury. There is a broad spectrum of possibilities and the problem can be tackled in many effective ways, not only through the courts.

Does my right hon. and learned Friend agree that the Home Office and his Department are working vigorously to try to speed up the prosecution of young offenders, but that we are being delayed by Opposition Members, who talk tough on crime and promptly delay the passage of some of our crime laws? Is it not absolutely clear that the only way in which we will tackle the problem properly is to have another five years of Conservative government?

My hon. Friend puts his finger on the curious and muddled policy of the Opposition, which will be tested carefully over the next six weeks and about which they can think further in opposition over the next five years, after which they may come up with something better. My hon. Friend and I realise that there is a small hard core of young offenders who need to be dealt with rapidly and effectively and on whom the Government are targeting their efforts.

Will the Attorney-General take account of the fact that while youth crime has risen by 35 per cent. in the past decade, the number of young offenders dealt with by the courts has fallen by the same proportion? Reducing delay is important, especially for persistent young offenders, but it is only part of the problem. What consideration has he given to the criticism of youth justice by the Audit Commission and others? Does he not consider it extraordinary that there were no proposals to reform youth courts in the recent Government consultative paper? What are his views, given his remit and drawing on his experience, on responsibility for the Crown Prosecution Service?

The right hon. and learned Gentleman is not wholly correct. Several proposals put forward recently by my right hon. and learned Friend the Home Secretary have particular application to youth courts, as well as to courts generally. However, there are also specialist aspects that deserve further attention, which they will receive. The right hon. and learned Gentleman must remember that the problem with youth crime is the comparatively small number of multiple offenders—also a symptom of adult crime—who must be brought rapidly before the courts and, if necessary, put out of circulation with swift custodial penalties.

To ask the Attorney-General what discussions he has had with the Director of Public Prosecutions regarding the murder of Stephen Lawrence. [18853]

My right hon. and learned Friend and I meet the Director of Public Prosecutions frequently to discuss matters of departmental interest, and I have been kept informed about the case.

Is this not a case where, so far, evil has triumphed over justice? Is it not a matter of deep regret that no one has yet been brought to justice for a racially motivated crime of murder that was committed nearly four years ago, despite the fact that a newspaper has named the people whom it considers responsible for that terrible crime? What will the authorities do to try to ensure that those who put Stephen Lawrence to death will at long last be brought to justice?

The hon. Gentleman is quite right that it is a great injustice that those responsible for the killing have not been brought to justice. However, he might like to bear in mind the words of Mr. Justice Curtis, who heard evidence on the voir dire at the Old Bailey from a person who said that he had witnessed the killing. Having heard the only witness on whom the private prosecution relied, the judge said:

"Where recognition or identification is concerned, he simply does not know in ordinary parlance whether he is on his head or his heels."

In directing that the evidence should not go to the jury—and I commend these words to the House—the judge added:

"To do so would amount to an injustice. Adding one injustice to another does not cure the first injustice done to the Lawrence family."

Does my hon. and learned Friend agree that it does not impugn the sincerity of the hon. Member for Walsall, North (Mr. Winnick) to remind him that if the qualification to the right to silence had been in operation when the murder occurred, the outcome might have been very different? Perhaps he would remind the House, and the public at large, that Labour voted against that reform.

As my hon. Friend said, Conservative Members do not find it easy to forget that, in contradistinction to Opposition Members. He knows from his discussions with people who practise in the courts that the modification of the right to silence that we introduced in the teeth of protest and opposition from the Labour party is bringing great benefits. People answer questions more freely in the police station, and they go into the witness box in court.

Will the Solicitor-General join me in congratulating the Daily Mail on ensuring that the issue does not escape the public gaze? Will he also join me in praising the Prime Minister on the remarkable rebuke that he gave last week at Prime Minister's Question Time to the hon. Member for Wolverhampton, South-West (Mr. Budgen), who tried to make race an issue? Will he condemn the Conservative Members of Parliament in the west midlands who are meeting in a conspiracy to seek, once again, to make race an election issue in British politics—something that British people of all colours will utterly reject?

The hon. Gentleman's question is well away from the substantive question.

As a former Member of Parliament for Leicester, South, which had about 19,000 Asian constituents, I do not need lessons on the importance of race and the vileness of racial crimes from the hon. Gentleman or any of his hon. Friends. We have been in the vanguard in tightening up the law to ensure that a wider range of incidents involving racial misconduct are treated as criminal offences. As for the Daily Mail, we live in a free society with a free press. The hon. Gentleman might not be quite so supportive of that paper's actions if evidence comes to light relating to those against whom charges were dismissed in the magistrates court and a prosecution is brought against them. I say that because, unfortunately, the likelihood of an abuse-of-process argument succeeding on the grounds of prejudice has been increased by such publicity.

To ask the Attorney-General if he will make a statement about the use of information technology in the Serious Fraud Office. [18856]

The Serious Fraud Office makes significant use of information technology, both to support its investigations and to present complex material at court.

I welcome the publication today of figures recording the fourth annual reduction in crime—an historic first for this country—and congratulate Mrs. Wright on her appointment as head of the SFO. But will my hon. and learned Friend look at Mrs. Wright's comments on the sophistication of juries? Does he not believe that we should revisit the views of the Roskill report and decide that serious fraud is too serious a matter to be considered by unsophisticated jurors?

My hon. Friend is quite right about the crime figures. It is a great pity that we have not had more support from the Labour party for our campaign on law and order in the past five years—perhaps we shall hear a little more from it in the next few weeks. I am sure that my hon. Friend will want to join me in congratulating Mrs. Wright on her appointment as the new director. She is experienced in prosecuting and regulation, and I am sure that the House will wish her well. As for my hon. Friend's last point about jury trials, as he knows the Government are considering alternatives to jury trial in serious and complex fraud cases.

To ask the Attorney-General what measures the Serious Fraud Office has recently taken to reduce fraud. [18857]

The Serious Fraud Office continues to enhance its ability to investigate and detect, and thus deter, serious and complex fraud, including by the ever more sophisticated use of information technology, both to marshal and analyse documentation and to present cases to the jury.

How can anyone take seriously a Government who talk about restricting and dealing with serious fraud yet who allowed Asil Nadir to escape from this country? We are still waiting to know what they are going to do to get him back. He gave £400,000 of stolen money to the Conservative party. What about Mr. Octav Botnar, who gave stolen money to the Conservative party? When can we expect to see that money returned? And what about the Greek fascist, Mr. Latsis? How can the Attorney-General talk about serious fraud when all his party is a fraud; the Conservative party is funded by fascists and crooks.

The hon. Gentleman is, once again, more interested in ranting than in facts. First, he might remember that the SFO stands ready to prosecute Mr. Asil Nadir as soon as he returns to this country from Northern Cyprus, with which we have no extradition treaty, and his duty is to return as soon as possible. Secondly, the hon. Gentleman might remember that, during its eight and a half years of existence, the SFO has prosecuted almost 160 very large frauds. It has achieved the conviction of more than 62 per cent. of all defendants, but—even more important—in more than 75 per cent. of cases it has obtained the conviction of at least one person and, when only one person has been convicted, that has almost always been the chief architect of the fraud.

Does my right hon. and learned Friend agree that the participation of ordinary members of the public in the criminal justice system through sitting on juries—even on juries in fraud trials—is one of the reasons why the criminal justice system can reassure people about its fairness, and is also the surest protection of the liberty of the individual?

The importance of the jury system has motivated and governed the actions of the Government for more than 18 years. In some recent cases it has proved difficult adequately to prosecute the full ambit of fraud against an individual, which is why the Government have indicated that they will look again at that issue. However, my hon. and learned Friend raises an important point, of which we shall not lose sight.

Although my amendment to the clause—amendment No. 3—has not been selected, I believe that the clause could still be strengthened by modification. The problem is that directors are being appointed to mutual building societies even though their interests go rather wider than the building society movement. Furthermore, they do not always come from the areas in which the societies are rooted. In effect, building societies are being white-anted by these people.

With the Halifax, more and more impossibly dignified and important people, mainly from London and the financial sector of the economy, have been appointed directors. These people do not have the interests of mutuality or of the building society at heart; they are much more concerned with the wider financial markets. It would therefore be better to include in the clause—it sets out the qualifications and election procedures for directors—some way of securing these people's testimony to their devotion to the principle of mutuality and to the building society of which they are being appointed director.

The clause deals purely with the mechanics, whereas our concern is with the principle of mutuality. Thus while defining those mechanics it would have been useful to take the opportunity to require directors to show their commitment to that principle—indeed to show that they are as committed to it as those who make up the society and those who have kept it going.

I have no desire to stand in the way of the clause, but I thought that the issue should be aired before we proceed.

I rather agree with the hon. Gentleman that directors should be prepared to stand up for mutuality. After all, they will be directors of a mutual society so they need to be committed to the concept. But what concerns me about the hon. Gentleman's sentiments is that if the Bill states that someone standing for director has to commit himself to mutuality, how will we know that that is true? Surely the best way to ensure someone's commitment to mutuality is for him or her to choose of their own volition to state that mutuality is a concept that they believe to be correct. That should be included in the statement that they put to members asking them to vote. If someone does not include that in the statement being sent out to members, I suspect that those members will draw their own conclusions. That is why I propose to leave matters as they stand.

I beg to move amendment No. 4, in page 58, line 5, leave out paragraph (a) and insert—

'(a) the company or a subsidiary undertaking of the company acquires the whole or substantially the whole, of the business of a mutual financial institution;'.

With this, it will be convenient to discuss amendment No. 5, in page 59, line 5, at end insert—

'"mutual financial institution" means a financial institution—

(a) the objects of which do not include the making of profit for any persons other than the members of the institution (however described) on whose behalf the funds of the institution are held or invested; and

(b) as respects which, on the institution being wound up or otherwise ceasing to exist, any surplus assets, after providing for all liabilities and the costs of liquidation, must be distributed among such members:'.

The amendments deal with the principle of what is known as the five-year rule, imposed by the Building Societies Act 1986 to afford some measure of protection to converting societies.

Before 1986, the activities in which building societies could engage were severely limited. The 1986 Act was the first realistic attempt by the House to allow societies to engage in a greater number of activities. It was envisaged by that Act that, for some societies, the desire to offer an ever greater range of services might ultimately lead to their deciding to demutualise and become banks.

It was also recognised by the 1986 Act, however, that although a greater range of activities would be permitted under the Act, their number was still severely restricted. So it would not be possible for converting societies to have knowledge and experience of all the activities that banks could undertake. It was therefore felt that converting societies might be more vulnerable to predatory takeovers by the big banks, which might want to prevent competition by taking over the societies immediately they had converted. It was felt by Members on both sides of the House, therefore, that some protection should be given for a period of five years.

I suggest that, although certain things have changed since 1986—the world has moved on and many societies have become much more sophisticated, engaging in a wider range of activities than hitherto—the position has not changed completely. Societies still cannot engage in very many activities, and even under the Bill some activities will continue to be prohibited to those who call themselves building societies. It is appropriate, therefore, that some transitional protection remains.

It has been suggested that it would be wrong for converting societies to be protected yet be able to be predators. I have some sympathy with that view because we should retain diversity of lending. If we are not careful, mortgage lending in the United Kingdom may be dominated by a handful of major institutions—predominantly banks. That is a grave danger, because it would restrain competition and choice for the consumer and, ultimately, act against the national interest and the interests of depositors and borrowers. I am anxious, therefore, that we have as diverse a range of lending organisations as possible.

There should be three types of lending and deposit-taking institutions. The first tranche would consist of the big banks, which are very large, are established and are secure in their present activities. The second tranche would consist of several converted societies, competing with the banks. Few hon. Members would disagree that some banks need fresh competition, because for a long time they have had things far too much their own way. A little healthy competition would not go amiss and would improve their service. The converted societies would compete with the banks in their range of activities but retain some of the essential elements of service to the community that they had initially as mutual societies.

A third tranche would consist of the remaining mutual societies that it would be in the public interest to retain to a large extent. That is the purpose of the amendments tabled in my name and those of the hon. Member for Normanton (Mr. O'Brien) and others. There is widespread agreement in the Committee, at least on the Back Benches, that transitional protection is required for converting societies.

I accept that it would be wrong if the converting societies were enabled to be untrammelled predators on the mutual building societies. Indeed, my amendments seek to protect not only mutual building societies but all mutual institutions.

Mutuality is a very important concept. It is an almost uniquely British one. It is extremely valuable, and the Committee would be foolish if it were to enact legislation that would diminish it. I therefore propose effective protection for friendly societies and mutual insurance companies. All mutual financial institutions would be protected because, if a converting society bid for a mutual, it would lose the protection that it enjoyed under the five-year rule.

I know that the banks would say, "That is unfair because converting societies can bid and they receive some protection from predation, but we don't." I am not sure that I agree that the banks need such protection. They are big, grown-up boys and have been playing the game for a long time. They do not need the protection that the converting societies need and deserve.

Banks will say that converting societies could do all sorts of other things without losing protection. They could buy mortgage books—I am sure that many of the large banks would like to get rid of some of their duff mortgage books, following unwise lending—or chains of estate agents. All sorts of financial institutions were unwise in their acquisition of chains of estate agents and would dearly like to unload them on some of the converting societies. With respect, however, we want not that type of competition but competition in the key areas of banking and customer service, which the converting societies will seek to offer. Therefore I put it to my hon. Friend the Economic Secretary that there is a case for retaining a much greater measure of protection than she proposes under the Bill.

My hon. Friend the Economic Secretary says that we are giving those societies protection; in fact, we are giving them nothing. The Bill removes the protection that they enjoy under the 1986 Act without giving any reasons for doing so, other than the fact that times have changed. No other reason is given for the draconian removal of almost all the protection that the House—members of the Conservative party and of the Opposition—considered appropriate in 1986.

I ask my hon. Friend the Economic Secretary to think again because it would be tragic if, in pursuing such a course, we diminished the number of organisations that offer a service to the public.

Is not one of the best examples of the workings of competition in the financial sector the fact that the banks have extended their hours as a result of competition from building societies? Almost certainly, banks would still open from 10 o'clock to 3 o'clock and not open on Saturdays, were it not for their fear of competition from building societies.

As he so often does, the hon. Member for Burnley (Mr. Pike) has hit the nail on the head: only by encouraging such competition have we achieved as great an improvement in service as we have in recent years. I want that improvement to go much further. The big banks have great influence on Treasury officials; they have had a semi-incestuous relationship for decades. The big banks should not get their way on this matter; the Committee should ensure that true competition is retained.

I understand that it has been suggested in certain quarters that my amendments are defective—that they do not precisely achieve the object that I seek. If that is true, I should be very happy if, by agreement between the two Front-Bench teams, they were amended slightly, perhaps in another place, and brought back for notional approval in this place. However, I believe that what I suggest is desirable and is in the interests of the building society movement, the converting societies and society in general, so I hope that I shall receive a favourable response from my hon. Friend the Economic Secretary.

Clause 41 is entitled "Protective provisions for specially formed successors." The spirit of the amendments is to offer some protection for the successors of takeovers and mergers of mutual societies. During public consultation on the Bill, the five-year protection period was one of the most important subjects of debate. People who were involved in the consultation envisaged that there might be problems if the Bill did not afford protection.

Under the provisions of the Building Societies Act 1986, societies that convert to banks are protected from external takeover for five years after conversion. That protection was designed to protect those that converted from takeovers during the early years in what people in the business refer to as the stock exchange jungle. The organisations that converted to plc status had that protection. In an increasingly competitive environment, that protection gives a converting society a significant advantage.

During the Bill's consultation period, a strong body of opinion emerged that organisations that wanted the advantages of a stock market listing should also accept the disadvantages, such as the threat of a takeover. It is unacceptable to the continuing mutual societies that a plc bank that was once a building society should be able to mount hostile bids for other institutions—including mutual societies—and yet remain immune from takeover for five years. One can readily see that there is an imbalance: an organisation that converts to plc status is protected but the 70 mutual societies that remain are not.

The amendments would offer some protection not just to building societies but to mutual societies, and would apply to all mutual organisations. The Government accepted that point. The protection will be removed if a converting building society acquires another financial institution during the five-year period. That is the significant point of the amendments, and they would protect existing mutual building societies.

As the hon. Member for Bournemouth, West (Mr. Butterfill) pointed out, there may be anomalies in the drafting of the amendments, but the principle and spirit behind them are correct. I appeal to the Minister and other hon. Members to support them, because they would correct an existing imbalance. There is nothing wrong with the amendments; they are constructive and are designed to add strength to the Bill. I hope that the Minister will appreciate the sincerity and spirit behind the amendments and accept them.

Most hon. Members will agree with the spirit of the amendments. Many of us recognise that, since the 1986 Act, things have changed and that the societies that converted had a significant advantage over others. That was a key fact during consultation on the Bill. We all agree that organisations that wanted the advantages of a stock market listing should have to take on board other responsibilities as well. We have had most discussion about that requirement—so much so that the Halifax building society has accepted that argument and given up its protection. However, I am advised that the amendments, as drafted, may not do what we would all like them to do.

I think that every hon. Member in the Chamber nodded in agreement with the spirit of the amendments, but I hope that the Minister will look carefully to see whether there is any way in which she can deal with the problem of unfairness. Although I am with her in spirit in trying to get the Bill through, I pointed out on Second Reading that there would be a problem if we had to consider the Bill in Committee on the Floor of the House and then, without any time in between, had to complete its final stages. I hope that we can reach agreement on how we can deal with this despite the pressure that we are all under to try to ensure that mutual building societies get a fairer deal in the financial world.

I should like to take this opportunity to declare an interest, in that I have accounts with several building societies.

I suspect that I may be in a minority in fundamentally disagreeing with the proposition of my hon. Friend the Member for Bournemouth, West (Mr. Butterfill). One always feels a little uncomfortable disagreeing with my hon. Friend, because he is normally so sensible, but on this occasion I have great difficulty in accepting the arguments that he put before the Committee.

Under clause 41 as drafted, a society that converted to a bank would lose its immunity from takeover if it sought to take over any other financial institution. Under my hon. Friend's amendment, as I understand it, the loss of immunity would be triggered only if the takeover was of a mutual institution, thereby leaving the new bank—the newly converted society—able to take over any other type of organisation without triggering the loss of its immunity.

As I made clear on Second Reading, I am very doubtful about the general principle of protection, because it would create two classes of public limited company: those that enjoyed protection because of the route that they followed—as a building society converting to a bank—and those that did not have the immunity, and could not because they had been a bank or some other institution for a considerable time. Therefore, a seriously uneven playing field would be created: between the newly converted society and the other banks with which it was competing, and also between the new bank that was formerly a society and the society that had not converted. We should not seek to enshrine that unevenness in legislation.

Does my hon. Friend accept that there is already an unevenness? The converting societies have been restrained from engaging in a range of activities for the whole of their existence, whereas the organisations for which they may be bidding have not been subject to those constraints. Converting societies start off uneven. The purpose of the transitional relief is to give them a period within which they can come up to speed and be on equal terms with those that are already plcs and engaged in those activities.

I do not agree with that argument. My hon. Friend is looking at the matter from the perspective of the 1986 Act. He is not taking into account the new powers that the Bill confers on the building societies. In the course of time, the building societies will have been able to avail themselves of the additional powers that the Bill provides. Having done that, they will not be at a disadvantage compared with organisations that have been operating under the Banking Act 1987 for a long time. They will have operated under the new building societies legislation that we are discussing. That will give them the greater powers that they require and, having had those powers for as long as they consider necessary, they will be able to make the decision to convert.

I thank my hon. Friend for giving way again. I am sure that he has read the Bill. Under part I, there will still be considerable constraints on the activities in which the converting societies can engage.

I do not accept that, either. The restrictions that the Bill still places on building societies relate to activity which it would be best that they did not engage in. I do not believe that there is a popular view, for example, that building societies should engage in the derivatives market, which is known to be extremely risky. If the Bill provides, as it does, that in future building societies should still stay out of the derivatives market, it is showing sound judgment. That is what ought to happen.

I do not accept the thrust of my hon. Friend's arguments. I believe that a society that decides to convert and to become a bank should do so in the full knowledge that it is moving from the context of the building societies legislation into the context of the Banking Act 1987. Before it takes that fundamental step, it must be sure that it can manage in the new world in which it proposes to operate. If it considers that it cannot do that or if, as my hon. Friend would say, it considers that it has not had long enough to gain experience of indulging in the other activities that the 1987 Act permits, it has not yet reached the stage where it should be taking that decision.

If ever protection were afforded to mutual status, and the advantages and benefits of mutual status were recognised, that argument brings home the fact that such status should not be lightly abandoned.

My hon. Friend said that it had not been possible for societies to develop the range of activities that they believe they will need in order to be on an equal footing with banks. For that reason, I emphasise again that the Bill will give them the opportunity to develop their expertise in the areas from which they have up to now been excluded. Having developed that expertise, in a few years they will be able to convert to banks if they so choose, and there will be no need for any artificial protection such as that in the Bill or especially that in my hon. Friend's amendment.

My hon. Friend is extremely generous in giving way once more. Can he name a bank that would be subject to the constraints imposed by clause 4, under which it would have to keep 75 per cent. of its total assets secured in loans on residential property? That is what the societies are required to do under the Bill. It is nonsense to suggest that a bank that had experience in loans in a range of commercial activities would be constrained in that way.

If the society is of the view that the requirement to maintain 75 per cent. of its assets in mortgage lending is unduly inhibiting on its activities, it will have another reason for converting, if it wishes to do so. It is for the society to decide whether that is a condition under which it can operate, in which case it should remain a building society, or whether the condition is unduly onerous, in which case it can break free from the building societies legislation and operate under the Banking Act 1987.

I do not see why, in the course of the building society making that transition, special provisions should be made to compensate for what in other respects might be regarded as an unsound judgment on its part. Building societies must decide under which legislation they wish to operate.

I see no justification for special transitional arrangements, for the further reason that the potential loss of immunity from takeover is a matter over which the societies have control. The provisions of the Bill do not stop one of the newly converting societies going on the takeover trail. It may still do so. Building societies are in no way inhibited from expanding their position by acquisition if they want to do it that way. They would do it in the full knowledge that if they chose to take that route, they would trigger the loss of the immunity. The decision is entirely theirs to live with the consequences of their action. That is why I do not believe that transitional arrangements are necessary. The decision is part of an overall judgment as to whether plc status suits a business. If plc status does not suit it, it should not leave the legislative framework applicable to building societies.

I have the greatest difficulty in understanding the argument of the hon. Member for Normanton (Mr. O'Brien), who tried to argue that the amendment provided protection for existing mutuals. Exactly the opposite is the case. It does not provide protection for existing mutuals at all. If the hon. Gentleman contributes again to the debate, perhaps he will explain his views.

There seem to be some drafting defects in the amendments, which the Building Societies Association has clearly identified, particularly in relation to the question of when a mutual financial institution encompasses a company and when it does not. Even if one embraced the principle, which I hope the Committee will not, the amendments would have to be redrafted.

I have listened with interest to the views of the hon. Member for Bournemouth, West (Mr. Butterfill) and of my hon. Friend the Member for Normanton (Mr. O'Brien) about the five-year rule.

I have a great deal of sympathy with building societies such as the Alliance and Leicester and the Woolwich, which undertook conversion in the expectation of a five-year protection. Ten months after the Alliance and Leicester had made public its intention to convert, the Government suddenly announced in November for the first time that there would be a significant change to the five-year rule as a result of the consultation that had taken place. Naturally, the converting building societies were surprised and angry at that announcement, and I fully understand their surprise and anger. The question is whether the wording of the clause is an appropriate response.

The hon. Member for Bournemouth, West acknowledged that there might be technical problems with the amendment. I shall return to that, but let me say a word about the principle. Converted building societies want some protection to take over others in order to reach a critical mass during the five-year period, so that they will be less susceptible to takeover at the end of it. That is what the clause is about.

The hon. Gentleman advanced a sensible argument in support of his amendment. He argued that there is a public interest in maintaining a degree of diversity and choice in our financial institutions. He said that we would not want to see a mutual building society sector and a big banking sector, with very little in between, because building societies that had reached the end of their five-year protection period or had launched a takeover during that period and lost their protection had been the victims of takeovers.

There is an argument for retaining a degree of diversity and choice in the market, and for ensuring that some institutions, which are not big banks or mutual societies, are able to perform the same functions. I am not entirely sure that this is the right way to protect that area of the market. The Minister said—and we agree—that the Government should be neutral regarding whether conversion takes place in a particular building society. However, unamended, does not clause 41 impose an obstacle to conversion? Any converted building society will either already be at critical mass or seek to achieve that critical mass, to enable it to survive at the end of the five-year protection period. Many smaller unconverted societies know that, if they were to convert but failed to reach critical mass within five years, they would probably be taken over.

Clause 41 says, in effect, that building societies cannot convert and seek to achieve critical mass. Would not building societies that are contemplating converting look at that clause and cease to consider it, because it is unlikely that they would be able to survive a takeover after the cessation of the five-year protected period? Do the Government intend that clause 41 should deter mutuals from converting? That does not square with the Minister's comments. Perhaps she could clarify precisely how the clause would operate.

Does the hon. Gentleman accept that it is a question not just of critical mass—as I tried to explain to my hon. Friend the Member for Gloucester (Mr. French)—but of the nature of the loan book? A converting society will, of necessity—even after the Bill is passed—have a loan book comprising 75 per cent. loans secured on residential property. A high street bank has an entirely different loan book. Institutions require some transitional protection when changing from the loan books that they had as societies to the loan books that they will need as banks.

I do not deny that the hon. Gentleman makes a strong argument, and I shall be interested to hear the Minister respond to it. However, I am not convinced that the amendment will deal with that issue in a technical manner. Does he accept that there are technical deficiencies in the amendment, as worded?

I am advised of that.

In that case, I shall not outline those deficiencies. I certainly cannot support the amendment, as worded. I do not think that it achieves the hon. Gentleman's objectives, and it poses a number of potential threats to mutual societies which I am sure he does not intend.

However, I believe that there is something to be said for the broad principle that the amendment embodies. I shall be interested to hear the Minister respond to that point, and to whether the operation of clause 41, unamended, would discourage building societies from converting.

Contributions to the debate have highlighted the differences of opinion on this subject. My hon. Friend the Member for Bournemouth, West (Mr. Butterfill), who moved the amendment, believes that protection for converted building societies is a key issue. I think that the hon. Member for Normanton (Mr. O'Brien) was somewhat confused in his remarks. The amendments do nothing for mutual societies: they are about the degree of protection that a converted society may have. The hon. Member for Christchurch (Mrs. Maddock) sought more information, and my hon. Friend the Member for Gloucester (Mr. French) agreed with me about the matter.

At issue is the amount of protection that a converted society has, or needs, once it becomes a new bank. The consultation process produced the universal view that no protection should be necessary. In fact, we have chosen the middle course: if a converted building society requires time to stabilise once it becomes a new bank and needs to make the sort of changes to which my hon. Friend the Member for Bournemouth, West referred regarding 75 per cent. of its lending being on residential property, it has five protected years in which to do so. It loses that protection only if it goes on the acquisition trail.

Both banks and insurers—not just the mutual building society sector or the mutual sector—have expressed concern to us that such protection should not exist. My hon. Friend is a well-known business man who has operated in various fields. If, as a business man, his company was the subject of a hostile takeover bid and he was unable to defend it because the predator company had protection, I think that he would be justifiably angry. Parliament should not confer unfair protection on a particular sector of the financial services industry. It is true that widespread concern has been expressed, and that we have given the converters a concession in another way by allowing the removal of what is known as the priority liquidation distribution rights, which has benefited them to the tune of tens of millions of pounds. We have taken with one hand, and given with the other.

I should like to dispel three illusions that were created in the debate. The first is that converting societies are small institutions. They are not. The Woolwich and the Alliance and Leicester are of comparable size to the Royal Bank of Scotland and rather larger than that well-known insurer, the Guardian Royal Exchange. They are substantial organisations operating in a vibrant, thriving financial market.

Secondly, my hon. Friend the Member for Bournemouth, West and others said that converted building societies would not wish to acquire mortgage books and so forth. Yet that is precisely what has occurred. Some of the societies that are remaining mutual are making acquisitions in order to expand their activities as mutual societies.

My final point relates to the comments of the hon. Member for North Warwickshire (Mr. O'Brien), who said that he has some sympathy with concerns expressed in this area because I suddenly announced the Government's intention to change the five-year rule. Consultation in this area has been going on for some time, and organisations such as the Building Societies Association were concerned that protection should remain. I am informed that the Alliance and Leicester, which has raised hon. Members' awareness in this area, was represented at a meeting of the BSA council in June, when the association's response to our consultation was discussed and finalised. That response called for the removal of five-year protection. We are not talking about something new that represents a sudden change. Instead, we are talking about ensuring fairness in the mutual sector and in the banking sector, be it the new banks, the insurers or the traditional banks. On that basis, I ask the Committee to reject the amendments.

I am extremely disappointed by my hon. Friend's response. She said that there would be complaints if we were to give protection, which tells me that she is missing the fundamental point. The bodies concerned have the protection now, and have enjoyed it since 1986. To my knowledge, there have been no complaints of abuse by them of that protection or abuse by any of the societies that have already converted. My hon. Friend is raising a false hare when she speaks of abuse. The system has existed since 1986 and it has not been abused.

We are seeking to give transitional protection and no more. My hon. Friend suggests that the hon. Member for Normanton (Mr. O'Brien) is confused, but it would seem that the confusion lies with my hon. Friend. It is inevitable that converting societies that are anxious to change their businesses rapidly will go on the acquisition trail. If the amendments are accepted, they will not go on that trail for mutual building societies, friendly societies or mutual insurance companies. They will confine their activities to businesses that will not lead them to the risk of losing the limited protection that is proposed.

I am sorry that my hon. Friend the Minister does not accept the amendment. Those in another place may take a different view. In the meantime, as I accept that there may be drafting defects, I beg to ask leave to withdraw the amendment.

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

With this, it will be convenient to discuss the following: new clause 2—Demutualisation: proceeds for charitable purposes—

'—After subsection (4) of section 97 of the 1986 Act (transfer of business to commercial company) there shall be inserted the following subsection:

• "(4A) The Commission shall not confirm the transfer and its terms unless the terms include provision for the application of not less than 15 per cent. of the realised capital value of the society to charitable purposes appropriate to the society's existing business and geographical location.".'.

Amendment No. 9, in schedule 5, schedule 5, page 70, line 42, at end insert—

'5CC. It shall be the duty of a building society receiving a transfer proposal to appoint independent financial advisers representative of the interests of the members of the society, to obtain from those advisers an assessment of the capital value of the society, and to communicate that assessment promptly to the members of the society.'.

Given the heavy, serious and prolonged consideration that we are giving to such an important Bill, it is a pleasure to introduce the new clause. I do so while making the usual protest about the pressures that have been put on us to speed the Bill through its parliamentary passage. These pressures are effectively turning the House of Commons from the Mother of Parliaments into an abortion clinic. We are being asked, potentially, to kill infant Bills so that the mother Bill may live.

Another pressure is being brought to bear on the Committee. The Whips are saying, "Keep it short because we want to get the business statement." Younger Members such as myself have hopes of high office in the incoming Administration, and against that background it is important that Members's names are being taken. I shall, of course, comply with this pressure. At the same time, I congratulate the Minister. I hope that she gets her Bill. She has shown great perseverance, effort and charm in plucking this brand from the Prime Minister's funeral pyre. That is effectively what the hon. Lady is doing. Given the haste with which the Bill is proceeding through Parliament I have only to say, "Sister, this Bill had better be good", as we say in the new Labour party.

Order. The hon. Gentleman is supposed to be speaking to new clause 1.

I am the chair, brother.

New clause 1 is before us, Mr. Morris, and we know what is happening. We must accept that the Bill is word perfect in a way that no other Bill has been. That reflects the pressure that is upon us.

The new clause represents an attempt to introduce a greater check on the process of demutualisation. I am speaking of the transfer of mutual societies into other businesses, such as public limited companies. The process has been overhyped, with the result that the mutual principle has been grievously wounded. That is a principle that we must keep alive. It is important that we have variety and pluralism. Mutuality should be maintained as a system of corporate government because it holds out great benefits. It brings important services to both borrowers and lenders, such as better rates of interest to those who lend money to a society. The advantages of demutualisation, as I have said, have been overhyped by an organisation that was desperate to take that course.

Shareholders have been asked to believe that the money that they have been given in the form of bonus shares comes from nowhere. That is not so. The money comes from the capitalisation of the efforts and investments of previous generations. Shareholders are being asked to believe that demutualisation will revitalise the society but it will not. Instead, it will enable the society to continue in much the same fashion.

There has been no sudden or dramatic change in any of the societies that have been demutualised. Instead, they have spread into new services and new areas of business, which means meeting new risks. New status equals new risk. That could be the basis of an advertising slogan throughout the country. The process is taking societies away from their core business, which they know well, and encouraging delusions of grandeur, which are easily encouraged in building societies on the part of top brass, including directors.

Effectively, the shareholders have been conned. The real dynamic is the desire of the top brass, including the directors, to enrich themselves by increasing their salaries and returns within the new companies. To do that, they are putting over a story that is enormously exaggerated and distorted.

It is a story that can fool the shareholders. At the Halifax conversion meeting, the light of greed was glittering in shareholders' eyes. They were being given £1,000—in some cases more—for nothing. It seemed that the money was being plucked from the air. I seek a breathing space through the new clause so that the alternative view might be put more effectively.

In some respects, new clause 2, tabled by my hon. Friend the Member for Birkenhead (Mr. Field), is even better than new clause 1. My hon. Friend asks that there be actuarial advice on financial gains and losses, and in this instance it is easy to deceive shareholders.

When the Halifax conversion took place I received great wodges of documents and financial statements from the society advancing the case for demutualisation. The process was presented as the opening of a glittering future. There was little to represent the alternative argument. There was no opportunity to provide a costed and calculated reply underlining the disadvantages of demutualisation while at the same time stressing the strengths of mutuality. It was not possible to present that argument to the shareholders with the same power and effectiveness as was enabled by illustrated lectures and overhead projection to support the case of demutualisation. The alternative argument should be advanced on an alternative footing.

Investors are being conned by glittering financial prospects in a series of unsubstantiated claims and statements by the top brass in building societies, including directors—those who will be the principal beneficiaries from the process of demutualisation. We should be suspicious. Even better, information should be provided to support the other side of the argument. Let us impose a delay so that we ensure that financial calculations are properly undertaken. I do not want the mutual principle to be weakened and cut any further by the Gadarene rush of investors in large building societies such as the Halifax. That process of weakening and undermining encourages others to go the same way and get the same rewards.

My hon. Friend the Member for North Warwickshire (Mr. O'Brien) will not want to reply at length to this debate. I hope, however, that he will use a tactic different from the one he used earlier. I hope that my hon. Friend will sit and growl, and look as though he supports the new clause, gives it his good will and thinks that it is damned good—it is a damned good new clause. If he does that, we may frighten the Minister into giving us a concession.

The Minister may then say, "It is a bit late to introduce the proposal in a new clause and it is not as well worded as it would have been if the Government's draftsmen had written it, but I shall see whether we can use regulation to approach the same point and to make the process of demutualisation more difficult." If my hon. Friend the Member for North Warwickshire growls a bit, we may be able to frighten the Minister into that concession. I hope that my hon. Friend will do that.

As I am older than my hon. Friend the Member for Great Grimsby (Mr. Mitchell) and do not have his aspirations, I will take a few moments to explain new clause 2 and amendment No. 9.

It was not so long ago that a right hon. Member was reported to have said that there was no such thing as society. If one reads carefully the article in which the then Prime Minister was quoted, one discovers that she said that there was no such thing as society unless there were strong families. I suggest that one can also have no such thing as society unless there are strong feelings of mutual aid in a community. Over the past 20 or 30 years, we have seen a ripping out of what amounts to valuable social capital.

When housing was in both the public and the private sector, one was able to speak for one's family. If someone wanted to look after his mother or father, that was a good reason for being rehoused near them. Such reasons are now ignored and other reasons have been put in their place. That helps to destroy the sense of society and community, and the operation of mutual aid.

The Bill deals with the social capital that has been built up in mutual aid societies and which is being ripped out because certain individuals wish to make a small financial gain. I refer to many individuals because, as I should have declared at the beginning, I am a member of a number of building societies. If we take the Economic Secretary's advice, we should join many more to protect their status. I am also a member of Abbey National. I see no difference in the service that that bank now offers compared with the service offered when it was a building society. What we do see is that in all the groups that demutualise, the directors get very generous share options.

It is to protect the social capital that has been built up through generations of members not demanding their pound of meat, but leaving some of it there for the benefit of future generations that I have tabled new clause 2 and amendment No. 9. In new clause 2, I suggest that if a society demutualises, it should be required to put aside 15 per cent. of the value of the company that results in a charitable trust to further the aims of the former mutual society.

Under amendment No. 9, when societies contemplated demutualising, the members would have appointed for them financial advisers to tell them whether they thought it was as good a deal as the directors said it was, given that the directors would benefit through large share options.

The Minister may make points about whether the new clause and the amendment are sound; I will defer to her on that. If we withdraw the new clause, will the Government give us an undertaking that they will seek to put the provisions on the statute book by way of a statutory instrument? I hope very much that that is possible.

All our debate today—it has been a fine debate—has reflected the idea that we do not get a community by being able to spell the word or by tabling resolutions in the House of Commons, but by working at it. As the previous Prime Minister said, if we do not have strong families, we are unlikely to have a society. Similarly, if we do not have strong mutual aid organisations, we shall not have strong communities and strong societies. That is the spirit in which I speak to the new clause. I may have been less brief than my hon. Friend the Member for Great Grimsby, but I am older and without his ambitions.

The hon. Member for Birkenhead (Mr. Field) will have noticed that the Northern Rock building society, in formulating its conversion proposals, has made provision for the setting up of a charitable foundation, the purposes of which will be to meet exactly the good causes that are described in new clause 2. It is open to societies at the moment to meet the spirit of the new clause, although they are not obliged to do so.

Everyone in the House applauds Northern Rock. New clause 2 would put its action beyond any dispute in the courts. Much as I admire Northern Rock's proposal, I wonder whether some of its members may move against it in the courts because it has not given the membership all the money that is due. New clause 2 would ensure that Northern Rock's proposal is not only sound for it, but has to become the model of behaviour for all other societies that are converting.

The hon. Gentleman will also have noticed that a formula not dissimilar to his is likely to be embraced by the Alliance and Leicester building society. Of the societies currently converting, the one that stands out as refusing to meet the spirit of new clause 2 is the Halifax building society.

The hon. Member for Great Grimsby (Mr. Mitchell) is nothing if not consistent; he has made similar remarks throughout our discussion of the Bill. New clause 1 would require a delay of not less than six months between the date of the first notification of the proposed transfer to the members and the date on which they were asked to vote on it. The process takes longer than six months already. If we imposed a statutory period of delay in what is essentially a commercial, market-sensitive operation, there would be difficulties.

Members opposed to the principle of a transfer already have opportunities to make their views known. Many of those opportunities have been strengthened through the accountability package in the Bill. If the commission has evidence that material information in relation to proposals that are being put to the vote has not been given to members, it will take that into account when deciding whether to confirm the transfer.

The hon. Member for Birkenhead (Mr. Field), in amendment No. 9, would require a society that received a takeover offer, whether confidential or not, to get a valuation of the offer and to pass it to its members. That would cause immense difficulties because proposals made to a society are often confidential. Under the amendment, the society would have to publish the details of the valuation of a confidential offer. That would cause considerable instability for a society. I assure the hon. Gentleman that the regulations operated by the Building Societies Commission ensure that all details in the transfer document, which the society will ultimately give to its members, are full and correct in every respect. The issue of the valuation of an offer that is out in the open is, therefore, covered in that way.

New clause 2 would ensure that a converting society put a proportion to one side for a charity. We all congratulate Northern Rock on making that decision and I am sure that Northern Rock's members are in favour of it. If we made such a charitable option compulsory, we would be moving away from what we understand to be the necessary requirements for a charity. Although I agree with the sentiments behind the new clause and I would urge other converting societies to follow suit, I have strong reservations about making a voluntary requirement into a compulsory one.

I was disappointed with the Minister's reply. Although it is easy to pick holes in the amendments as we do not have the support of skilled civil servants and draftsmen, I wanted the Minister to express her support for the principle involved—that of making demutualisation more difficult, slowing it down and providing information of a quality, volume and weight comparable with the deluge of that put out by the directors. I am sorry that the hon. Lady did not accept that principle. I understand that she is becoming nervous about the fate of her Bill just as I am getting nervous about my future in seven weeks' time. Because of both those paroxysms of nerves, I beg to ask leave to withdraw the motion.

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

As the Minister has proceeded with great speed this afternoon, I am sure that she will happily accept new clause 4, which is straightforward. We have heard a great deal about tidying up the 1986 Act. I am asking only that we are fair to the innumerate.

The new clause requires:

"It shall be the duty of the Commission to prescribe in rules the information which must be provided"

and that

"In particular, and without prejudice… rules made by the Commission under that subsection shall prescribe that any notification of a change in the rate of re-payment … should include notification of any consequential change in the final date of completion".

The issue arose because an extremely intelligent and sensible lady of my acquaintance had arranged to repay a 15-year mortgage with the final payment just before her retirement. She was considerably upset when she queried a particular rate change to discover that the term of the outstanding mortgage was two and a half years longer than she had expected. The banking ombudsman took up her case and only then was it revealed that, because of the miscalculation by Abbey National, she had been underpaying her mortgage for more than 10 years. That would place anyone in a difficult position as it would require continuing to make repayments for a greatly extended period or doubling the repayments.

Many people would find it extremely difficult to cope with much larger repayments or an extended term. Abbey National contended that its old computer system had not alerted staff to the error. How do Abbey National customers know that the current system is working properly? Would it alert staff to a similar problem? How many others may face the same difficulty in repaying their mortgages with Abbey National or any other lending institution?

I make no apology for the fact that many borrowers are not particularly numerate. However, they are often clear about the date of the final repayment. Many of them have it engraved on their hearts. Therefore, particularly in view of the fact that all large companies will have to reprogram their computers in 2000, it would be simple to include in the information to borrowers my simple, straightforward proposals. The new clause would be of enormous use and protection to customers and it would be so simple to implement that I am sure the Government would like to do so. I am therefore very happy to give the hon. Lady the chance to accept new clause 4.

I have a great deal of sympathy for the case that the hon. Lady has made. However, there are three difficulties with new clause 4, so let me suggest another way of achieving its objective.

First, the new clause would require the commission to have a new statutory function to administer it. Clearly it does not have that statutory function. Secondly, the new clause applies only to building societies and banks also offer mortgages. Thirdly, even if an unfairness arose, the new clause provides no means of redress.

Shortly, the Council of Mortgage Lenders will be publishing its code of practice, which will cover such matters. In addition, it ties all lending institutions to the relevant ombudsman. Therefore, should similar difficulties arise in future, I am sure that they will be covered by the code and there will be redress through the relevant ombudsman. I hope that, with that assurance, the hon. Lady will see fit to withdraw the new clause, although I respect the reason why she moved it.

I am grateful to the hon. Lady, but I should say that I tabled the new clause precisely because the banking ombudsman, having considered the case and discussed it, was unable to sort it out. I shall withdraw the amendment tonight, but I shall not forget it. I shall return to the issue again and again.

I am seriously disturbed by the inordinate speed at which the Bill has been rushed through the House. Experience tells me that any Bill, no matter what the subject, taken at such speed ends up having to be done again.

I assure the hon. Lady that the case to which she referred was considered before the Council of Mortgage Lenders' code of practice, which has not been produced in its final form. I also assure her that I, too, will be looking carefully at these matters to ensure that unfairnesses are properly addressed in future.

I beg to ask leave to withdraw the motion.