I am glad to have the opportunity to initiate a debate on the proposed sale by the Bank of England of more than half of this country's gold reserves. That decision was announced by the Treasury on 7 May and has been widely and critically discussed in the financial press, but the Government have been strangely reluctant to defend it or explain it in any detail to the House.

I should start by making it clear that I have no personal financial interest in the value of gold. I have never purchased any gold bullion, gold sovereigns or shares in any gold mining company for myself, and I have no connection with any mining company or any part of the jewellery trade. However, I have always taken a keen academic interest in the economic role of gold, which has been of importance in every society in recorded history.

In the 1980s, in my capacity as a stockbroker, I was required for some years to manage a gold bullion fund, valued at many hundreds of millions of dollars, for the previous Sultan of Brunei, Sir Omar Saifuddin. I was therefore able to add practical knowledge of the gold bullion market to my academic and political studies of it.

I regard the decision to sell 415 of the 715 tonnes of our gold reserves as a reckless act, which goes against Britain's national interest. The sale of that crucial element of the United Kingdom's reserve assets will weaken our scope to operate independently, reduce our influence in international financial institutions and diminish the United Kingdom as a world financial power.

I shall briefly set out eight of my main reasons for opposing the decision. Later in my speech, I shall expand on some of those and add a few more. First, a move such as the one announced on 7 May was always likely to destabilise the gold price, as Britain is a leading G7 country whose example is likely to influunce0othur countries and because it was not expected to sell gold. Market sentiment has become overwhelmingly negative and the price has collapsed from $287 per fine ounce immediately before the announcement to $259 at the fix yesterday—a fall of 10 per cent. That has reduced the value of our gold reserves in a little over a month by about $650 million, from $6.5 billion to $5.85 billion at current prices. The Chancellor's announcement has so far cost this country's taxpayers over £400 million, which is more than the cost to us of the Kosovo war.

Secondly, the decision reduces our monetary independence. For a country to hold gold is always and everywhere seen as an affirmation of independence and monetary sovereignty. We are told that the decision is not connected with preparations for joining the euro, but if we were to join—the Treasury has said that 40 per cent. of the proceeds from those gold sales will be invested in the euro—and if the euro were then to collapse or we were obliged to leave in the future, the absence of significant gold reserves would make it much more difficult to establish the credibility of any new currency that we had to set up.

Thirdly, the decision smacks of short-termism. In their foreign reserve policy, Governments and central banks are supposed to act in the long-term interests of their country. It is true that on a short-term view, gold has not performed well purely as an investment in the past 20 years, but that reflects mainly the success, which is possibly temporary, of central banks in controlling inflation. No Government can be sure that price stability will endure for ever.

Fourthly, the decision is a threat to the London gold market because it reduces the Bank's ability to act as what is known as a swing lender to the market. Many market participants believe that after the sales have been completed, the Bank will not have enough gold to fulfil its function as a swing lender and so retain the centre of the world gold market in London.

Fifthly, about 20 per cent. of the proceeds are to be invested in yen—so the Treasury tells us. Yet, by lending gold we could earn a better return, as the rate of interest on gold is higher than that on yen investments. I have already mentioned that 40 per cent. is to be invested in euros, yet we hear that the Netherlands is already taking steps to build up its foreign reserves to protect the guilder if the euro were to collapse.

The hon. Gentleman said that the interest earned on gold was greater than that on other foreign assets—

On yen.

I did not understand that; I am not sure what the interest on gold is.

The deposit rate in Japan at the moment is about 0.5 per cent., and the normal interest rate on gold is l per cent., which is double.

Sixthly, the concept of reserve management that lies behind the decision is deeply flawed. The Treasury has argued that gold makes up almost half of the unhedged or "net reserves", to quote its press release. That concept of net reserves is arbitrary, as it all depends on what liabilities are deducted from gross assets. So far as I have been able to discover, such a concept has never been used by any other country; international gold figures are always quoted in terms of gross reserves. After the sale of 415 million tonnes of our gold, as is intended—125 million tonnes straight away and 290 million tonnes in the medium term—our gold reserves will be only 7 per cent. of our gross reserves, which is slightly less than those of Albania.

Seventhly, the history of the past 50 years shows again and again that United Kingdom Governments have from time to time been forced to intervene, either to stop the pound rising too quickly or, more frequently, to try to slow a fall in the pound. It makes no sense to throw away a key element of that instrument. No other major country is doing so. In relation to imports, our reserves are already far smaller than those of comparable countries.

Eighthly, in the view of many leading bullion dealers, the method of sale chosen—auctions—is also ill advised. Whatever the merits of transparency, the UK taxpayer has certainly lost substantially from the drop in the price consequent on the announcement and the resulting fall in the expected proceeds from gold sales. Each bi-monthly auction of our gold—the first of which will be held as soon as 6 July—is likely to worsen that problem.

Given the great criticism of the introduction of gilt auctions, which have turned out to be successful, and given that the Government have decided to sell the gold, does my hon. Friend think that there is a better method of selling it than by auction?

I did say that there was a problem about transparency. When examined on the problem of method of sale by a committee in Congress the other day, Mr. Greenspan said that it was very unsatisfactory. Incidentally, he is completely against selling gold. He said that, whereas Mr. Buffet could buy silver, and when the report came out three months later that the price of silver that he had been buying had risen, he could sell his silver at a profit, Mr. Greenspan did not think that major central banks should proceed along those lines. That is of course the problem and why, no doubt, the Bank of England has found it necessary to announce to the world that it will keep selling every other month. The penalty one pays for that—for psychological reasons mainly—is a substantial fall in the gold price.

In giving evidence to the Treasury Select Committee recently, our governor said that the fall in the price of gold had been greater than he had anticipated and he thought it to have been overdone. The authorities should have foreseen that the psychological impact of the Bank of England, of all institutions, announcing that it would take such a course of action, would be very adverse on prices.

That brings me to comment on the historical background. The argument about gold has gone on for centuries. The Bank of England was founded in the reign of King Charles II and, as early as 1717, it decided to put our reserves into gold. That was done, interestingly, on the advice of Sir Isaac Newton, who was born and brought up in Grantham in Lincolnshire—my home county. It is very appropriate that my hon. Friend the Member for Grantham and Stamford (Mr. Davies), whom I congratulate on his promotion, should today be sitting on the Opposition Front Bench.

Sir Isaac Newton, Lincolnshire's most famous son—the county has had a famous daughter since, but I shall pass over that rather more controversial point—proposed that, in effect, the Bank of England should put its reserves into gold. The matter was debated at length in the House of Commons and was approved, only after great controversy, in December 1717. Thereafter, many other central banks and other countries argued about whether they would put their reserves into gold, silver, a mixture of the two, or some other form. People have often forgotten that the great economic debate of the second half of the 19th century all over the western world was over bimetallism—in effect whether a country ought to have its reserves in gold or silver.

That debate culminated in the presidential election of 1896—the most ferociously fought and perhaps most famous of all American presidential elections, which centred on whether the United States should put its reserves entirely into gold or a mixture of gold and silver. At the Democratic convention of 1896 in Chicago, William Jennings Bryan made his famous two-hour speech on the subject, in which he used the phrase about mankind not being crucified on a cross of gold—one of the greatest speeches ever made. But William Jennings Bryan lost the presidential election by 500,000 votes, and William McKinley, the pro-gold winning candidate, ensured that the United States shortly thereafter went on to the gold standard. The Federal Reserve Board was originally established to look after the gold.

I mention all that—there is a great deal more to it; many histories of the period have been written in economic terms—to show that what we are discussing is of immense importance and has always been regarded as such. We tend in our debates in this House to think only of more recent events, such as Britain's return to a gold link in 1925, our retreat from it in 1931, the American abandonment of a fixed relationship between gold and the dollar in 1971 and about whether, today, Britain should join the single European currency—the arguments over which are very closely related to those I have been describing. It is very significant that, as recently as last Thursday, the British people were, in effect, being asked to vote on matters closely related to the subject of this debate.

Does my hon. Friend think that the whole business of the instruction given to the Bank of England to switch from gold largely into euros is simply a pathetic attempt—a device—to give credibility to, and boost the value of, the Euroflop currency?

I said that I thought that that was one of the possibilities. It is certainly among those that commentators have discussed. I have never been an advocate of the conspiracy theory of history, and I tend to think that slightly more complicated issues are involved than that, but I shall return to the issue of the relationship with the euro.

The point of my remarks about the history of the issue and the fact that it has been passionately argued about for centuries, was to show the amazing contrast with the almost furtive way in which the announcement was made on 7 May. One might have expected that the Chancellor of the Exchequer would make the announcement at the Dispatch Box—but far from it. The announcement came on a Friday afternoon, in answer to a planted written question by the hon. Member for Hove (Mr. Caplin), who is not even in the Chamber today, and who has not yet had time to establish himself in the House as a leading authority on international monetary affairs. It seems extraordinary that it should have been done in that way.

Moreover, the written answer given by the Economic Secretary to the Treasury—who I am glad to see in her place—was extremely cursory and brief, and contained only a very small part of the story. As is characteristic of the present Government, the information was contained in two press releases, each several pages long, one from the Treasury and one from the Bank of England, giving a great deal of information about the Government's intentions—vastly more than was given in the written answer—and then press conferences were held at which many questions were answered. The House of Commons was sidelined again, on this very important issue. For those reasons, the way in which the announcement was handled was disgraceful.

The immediate effect has been the loss of £400 million of our taxpayers' reserves, and so far the only beneficiaries of this event have been the foreign finance houses, which have been shorting the gold market. As I said to my hon. Friend the Member for Rochford and Southend, East (Sir T. Taylor) in all friendliness, I am not a subscriber to the conspiracy theory in any aspect of life, so I shall not go into detail about the conspiracy theories that are widely circulating in the City about that shorting of the gold market, but it is often said that some of those famous foreign finance houses have shorted gold to a huge amount—vastly greater than the tonnage of sales contemplated by the Bank of England—and that it was therefore vital for them for the gold price to fall substantially so that they could close their positions and take huge profits. I do not know whether that is true, although I think that there is no doubt that several finance houses have been shorting gold in a very large amount, so I suspect that the financial press will pursue that point with vigour in the days and weeks to come.

Everyone remembers how Mr. Soros precipitated the last Russian economic collapse by publicly declaring that, in his view, the rouble was overvalued. Not long after, he said that his funds had lost $800 million as a result of that collapse in the Russian market. I do not know whether our Chancellor has been inspired by Mr. Soros to follow in that path, but he seems to have produced a somewhat similar effect.

I have the greatest respect for the Bank of England, and it is perfectly clear that the Bank did not take the decision. I doubt whether it even favours it. It was given an instruction by the Treasury and when, at the press conference, a Bank of England spokesman was asked by a journalist whether the Bank thought that this was a good idea, that spokesman replied:

"It was a political decision."

I hope that, when the Economic Secretary replies, she will—as has not yet been done—give us all the reasons for this political decision, because the Bank of England, despite its many merits, has not always been clever at playing the market, and Governments in general are not usually very clever at playing markets. The last time that the Bank of England sold gold in sizeable quantities was in 1971, at about $40 per fine ounce. The price of gold then rocketed, reaching a peak of $850 by 1980. So when the Bank of England last sold gold, it did so at the worst possible time, and I do not know whether anyone has ever worked out the extent to which the British taxpayer was deprived of profits by that decision.

I strongly suspect that the Bank of England is now again selling at pretty near the bottom of the bear market—or what would have been the bottom if it had not made its announcement. As I said in my personal declaration of non-interest, I have never owned gold, but in recent weeks, as the gold price has declined, I have said jocularly to friends that, if I won the national lottery, I would put half the proceeds into gold bullion with the price below $300. I believe that many people who have followed these matters with interest were thinking that it was about time that the finance houses closed their short position. It is extraordinary, as a matter of market judgment, that the Treasury and Bank of England should have chosen this very sensitive moment to step in and deal that damaging blow to market confidence.

The answer that other countries have given is extremely interesting. We have not really been told the Government's reasons for their sale, but on 26 May the Prime Minister, in answer to a question by my hon. Friend the Member for Macclesfield (Mr. Winterton), said that

"throughout the world countries have been selling gold in order to diversify their reserves."—[Official Report, 26 May 1999; Vol. 332, c. 351.]

That is really the only ministerial statement that has been made, and that was elicited by an omnibus question by my hon. Friend.

The Prime Minister's answer was most misleading, as I shall show. Of the more than 100 countries that hold gold, only five, with relatively small economies, have sold. No other major economy has sold gold or intends to sell it. It must be borne in mind that the losses imposed on the British taxpayer by the Chancellor's decision have also been suffered by the French, German, Italian and American taxpayers. I cannot imagine that, when the Governor of the Bank of England next attends a cocktail party in Basle for the monthly meeting of the Bank for International Settlements, he will be the most popular chap there.

I am grateful to my hon. Friend for giving way. Several times he has instanced the potential loss to British taxpayers as a result of the Bank of England selling its gold reserves. I understand that point and entirely agree with him. However, is there not another consideration? Gold and money are a store of value. If, by selling gold, the Bank of England put that value into another currency that seems unlikely to preserve the store of value for British taxpayers, would that not have a doubly deleterious effect on taxpayers' funds, first by making a loss on the transaction, and secondly by investing the proceeds in a currency where the store of value will not be retained?

I entirely agree with my hon. Friend. I shall deal with that point later, as I intend to make a fairly comprehensive speech about gold. The point about gold, as my hon. Friend says, is that it is no one else's liability. As soon as one puts money into other stores of credit, other factors are at work.

I return to the Prime Minister's claim that so many other countries were selling gold. No major country is planning to sell gold, and other countries must be extremely irritated by the way in which the British Government have handled the matter. A series of central bank governors of major countries have issued similar statements on the subject. For example, on 19 May the governor of the Bank of France, Mr. Jean-Claude Trichet, said:

"I will simply say that as far as I am aware—and this is not just the position of the Bank of France and our country, but also the position of the Bundesbank, the Bank of Italy and of the United States, and these are the four main gold stocks in the world—the position is not to sell gold."

The chairman of the US Federal Reserve bank, Mr. Greenspan, speaking to the House banking committee in Washington the following day, 20 May—there was obviously co-ordination between the central bank governors—said:

"We should hold our gold. Gold still represents the ultimate form of payment in the world. Germany in 1944 could buy materials during the war only with gold. Fiat money in extremis is accepted by nobody. Gold is always accepted."

Those were the words of Mr. Greenspan, the world's most admired central bank governor. That takes up exactly the point made by my hon. Friend the Member for Ludlow (Mr. Gill). It is therefore not open to Ministers to say, as the Prime Minister said, that countries of our standing in the world are all selling gold.

I am grateful to the hon. Gentleman for giving way. Will he confirm that the average annual sales of gold by national central banks across the world over the past decade has averaged 300 tonnes a year—almost three times the amount that the Bank of England proposes to sell?

That is perfectly true, but the holdings of gold by central banks are only 6 per cent. lower now than they were 20 years ago. Other central banks, such as those of Russia and China, have been buying gold. It ic perfectly true that the amount of gold that the Bank of England is selling is relatively small, but the psychological impact on the market is disproportionate.

The Bank of England was the bank that set the lead. Together with Rothschilds and Mocatta, it has always been at the centre of the world gold market ever since 1717. When the Bank of England says that it is selling gold, the tonnage that it is selling is less significant than the psychological impact of that on the rest of the world.

It is true that five countries—Australia, Canada, Argentina, Belgium and the Netherlands—have each sold more than 100 tonnes of gold in recent years, but in no case have those countries done so to diversify their reserves or to increase the technical efficiency of their management. They have all had other reasons.

It would take far too long for me to go into detail about the position in each country, but briefly, Australia sold because there was a mineral price slump in the world at the time and it had an economic crisis. In any case, Australia has very large quantities of gold underground, not yet dug up, so it does not have to worry too much about its gold reserves above ground.

Canada, which also has very large quantities of gold underground, sold in preparation for joining the North Atlantic Free Trade Agreement at a time when its currency was under pressure. Argentina has a currency board-type arrangement, which is quite different from a central bank, and is in effect part of the dollar area, so the considerations about gold that would be important to other central banks do not apply. Belgium sold in order to satisfy the debt:GDP ratio criteria in the Maastricht treaty.

The Netherlands is widely believed to be concerned about the possibility that the euro may collapse entirely. It was interesting that the new president of the European central bank, who is a distinguished former governor of the Dutch central bank, went so far as to say publicly the other day that he thought, and had so advised, that the euro was introduced two years too early. The Dutch, who have traditionally run a strong and successful currency since the war, are extremely concerned about the euro. It is said that they have been trying to build up foreign reserves outside the euro, in case the euro collapses.

I shall deal now with the question why central banks should hold gold. I hope that the Minister will reply particularly to these points. It is not just a few of us specialists in the House who are interested. I assure her that the markets generally are extremely interested in the subject. I have never received so many messages from total strangers as I have in recent days, since the title of the debate appeared on the Order Paper. The financial press is also very interested. It is time that the Government explained in detail the reasons for their policy.

Why do central banks hold gold? First, as I said to my hon. Friend the Member for Ludlow, because it is no one else's liability. If one invests in the bonds, paper and Treasury bills of other countries, one can suddenly find that one's asset has greatly diminished.

A taxi driver said to me two days after the Government's announcement, "Why are we selling our gold? I don't want to sell my gold and be given toilet paper money in return." That is sound economics. The man in the street may not have read his Keynes, but he has a good grasp of the realities of economics.

If, as the Bank of England proposes to do, it puts 40 per cent. into dollars, 40 per cent. into euros and 20 per cent. into yen as a result of the sale of the gold, it will be speculating. We have seen a tremendous collapse in the yen, and the American dollar has gone up and gone down periodically, so the Bank of England is, in effect, playing the market.

To return to an earlier intervention from my hon. Friend the Member for Chichester (Mr. Tyrie), the argument about transparency also applies to currencies.

When a currency is under pressure it is difficult for a central bank to start to sell it. It is regarded as near-treachery. When the British and French currencies came under serious pressure in 1992, the US Fed and the Bundesbank were expected to support them, not to sell them. There has been some controversy over whether the Germans supported our currency as vigorously in 1992 as we think they should have done. I think that my noble Friend Lord Lamont has views on that subject, which may come out in his book to be published shortly.

In theory, central banks are supposed to co-operate with each other so that when a particular currency comes under pressure, they rally round to support it. The idea that by diversifying into foreign currencies the British Government will suddenly have much more flexibility is an illusion. I very much doubt whether the Government would like the market to see them selling their newly bought euros because they thought that the euro was about to collapse even further. That would not help the Prime Minister's position in the centre of Europe.

Does my hon. Friend agree that, in selling our precious gold reserves and putting the money into the collapsing euro, the Government will be showing much more support for the euro than those who belong to it showed support for us in 1992?

Yes, but one should not conduct economic policy on a tit-for-tat basis. Incidentally, we would all be wise not to assume that the euro will continue to weaken for ever. I can speak with a free conscience on this matter, as I voted against every clause of the Maastricht treaty. Indeed, there would never have been a European central bank if three more of my colleagues had joined me and others in voting against the paving motion.

The fact is that the euro now exists and it is just another currency, as I always predicted it would be. Currencies go up as well as down. In my view, the dollar is today over-valued and the euro is under-valued. The fact that in a few weeks or months the euro will probably go up against the dollar and the pound does not strengthen the argument for joining it. Euro-sceptic that I am, I do not believe that it would be in the British national interest for the euro to collapse because that would lead to chaos in Europe and would be damaging for our export markets.

The second reason why one should hold gold reserves is because they build public confidence. Market research carried out last year by one of the world's leading research companies in several European countries showed overwhelming support for countries maintaining gold reserves: 76 per cent. of respondents in France, 72 per cent. in Germany and 75 per cent. in Italy said that gold reserves are important in supporting a strong economy; 84 per cent. in France, 83 per cent. in Italy and 65 per cent. in Germany agreed that having a strong gold reserve helps to bolster public confidence on which economies depend. Similar results—70 per cent. opposing the sale—were received when the British public were questioned on the subject in a recent opinion poll.

Another reason why central banks should hold gold is that, over the very long term, gold maintains its value. In 1900, the value of gold was almost identical to its value in 1717. Although its soaring up to $850 in 1980 artificially over-priced the market—it has been coming down ever since—gold holds its long-term value, as we have seen throughout history. On 27 May, the Financial Times pointed out that $35 an ounce, which was what gold was in 1971 before President Nixon and Treasury Secretary Connally broke the link between the dollar and gold, would be equivalent to $281 today. Thus, despite the fact that gold is at the bottom of a long bear market, it was still worth more than $35, in today's terms, when the Government made their announcement. It has now dropped below that figure.

It all depends where one takes one's basis. However, $35 an ounce was the price before the war, so the hon. Gentleman must take that as his basis as well.

The right hon. Gentleman is a distinguished former Treasury Minister, but I must point out that that was not the price before the war. The price of $35 an ounce was fixed at Bretton Woods in 1944. In 1932, President Roosevelt devalued the dollar against gold and we devalued, under a Labour Chancellor, in 1931. However, the $35 that was officially linked to gold—which put the whole world not on a gold standard but on a dollar standard between 1945-71—clates from Bretton Woods. I have not argued that gold has been a particularly good market investment in recent years, but it has not been as bad as many people would suppose. Even since 1971, it has roughly held its value in line with inflation.

My next argument for central banks holding gold is that a country's reserves should be diversified to minimise risk. Research shows that gold is an ideal portfolio diversifier. When I was given the Brunei fund to manage, I had to go on a crash course because I knew nothing about gold management. I took much expert advice and even commissioned, at great expense, advisers to give me an idea of how much gold should be in a portfolio. The boffins who deal with those matters believe that, over a long term, the ideal gold holding in a major portfolio is about 20 per cent. That is because gold is an ideal diversifier as its returns are what is technically known as "negatively correlated", which means that they operate in a counter-cyclical manner. When bonds and equities fall in price, gold tends to go up.

Gold prices are much more volatile than other market prices. It is not unusual for gold to go up 2 or 3 per cent., or down 2 or 3 per cent. in a single day. If Wall street falls by 2 or 3 per cent. in a single day, it is headline news throughout the world. Thus gold has a stabilising effect in a long-term portfolio.

Gold is also the asset of last resort. Although it is needed in good times, it can be vital when times are difficult. The last sale of gold in France was in 1969 to deal with the financial consequences of the May 1968 uprising. In Portugal gold was last sold following the 1975 revolution. More recently, in 1991 India used its gold reserves to borrow $1 billion to avoid default.

I have already quoted Mr. Greenspan, who said that in 1944 Germany could not buy anything except with gold. In a real crisis, there is no doubt that gold is important. It is not just my taxi driver who takes that view. When I was in Vietnam last year, everybody told me that every Vietnamese peasant has gold underneath his floorboards or his straw because the Vietnamese have no confidence in their currency. We tend to talk about gold in terms of official reserves, but a lot of unofficial gold is hidden in China and Vietnam and, one is always told, in France—although I have a French wife and I have not yet managed to discover her gold hoard. It is widely believed that people hold gold all over the world secretly, against the possibility of disaster, which is a tremendously important market consideration. That is what is meant by the psychology of gold and it is extraordinary that the Bank of England should have taken this decision, and the way that they have done so.

I do not wish to go into the question of International Monetary Fund gold sales in any detail, because that is a separate, although obviously related, subject. The IMF is not a central bank. It is ironic that the Chancellor, who is understandably keen to help the poorer nations of the world, seems also to be keen to persuade the IMF to sell gold. He hopes that it will do so, but many poorer countries would be extremely hard hit by that.

Hon. Members who are interested might care to read the recently published pamphlet entitled "Gold mining's importance to sub-Saharan Africa and heavily indebted poor countries", because 41 HIPCs mine gold, and it is an extremely important part of the exports of nine of those countries. Curiously enough, the sale of IMF gold, if it depressed the price of gold still further, would seriously and adversely affect many of the poorest countries.

The sale of our gold will not increase the size of our reserves; they will remain the same, so that argument cannot be used. Many countries feel that they ought to be building up their reserves, and they are all trying to do so. An extraordinary aspect of the situation is how dangerously low Britain's net reserves are. Their net value on 7 May was only $15 billion. A more sensible policy than selling gold would be to build up our reserves by buying dollars and other currencies with our sterling. That would help to lower the exchange rate of sterling, which is a desirable objective at present, and increase our reserves of foreign currencies, which the sale of gold will not achieve.

In view of the experience in the 1990s with the huge movements of global capital, does my hon. Friend believe that open market operations are an intelligent way in which to try to alter the value of a currency?

I would not normally take that view, but our long-term economic aim ought to be the building up of our reserves. That is what every country wishes to do, and many of them are pursuing that. Our reserves in relation to our imports are very low, so any step that we can take to build up our reserves will be welcome.

I have mentioned the aspects of pubic opinion. I am not one of those who thinks that one should follow focus groups and so on, but it is overwhelmingly evident that public opinion in this country is opposed to the whole policy of selling gold by 5:2. The Government will have to be persuasive if they are to change that view.

There have been previous attempts to reduce the role of gold in central banks. The last was the introduction of special drawing rights. At that time, I happened to be an adviser to the monetary authority of Singapore. I went to see Dr. Goh Keng Swee, who was then Singapore's Finance Minister and who, in my experience, had the most subtle and brilliant financial mind of any Finance Minister or central bank governor I have ever known. I said to him, "Dr. Goh, will Singapore take SDRs?" Dr. Goh replied, "I have no intention of putting a paper tiger into Singapore's tank." That is a slogan worth keeping in mind.

The whole point about gold, and the quality that makes it so special and almost mystical in its appeal, is that it is universal, eternal and almost indestructible. The Minister will agree that it is also beautiful. The most enduring brand slogan of all time is, "As good as gold." The scientists can clone sheep, and may soon be able to clone humans, but they are still a long way from being able to clone gold, although they have been trying to do so for 10,000 years. The Chancellor may think that he has discovered a new Labour version of the alchemist's stone, but his dollars, yen and euros will not always glitter in a storm and they will never be mistaken for gold.

I congratulate the hon. Member for Louth and Horncastle (Sir P. Tapsell) on keeping to a fairly balanced view when he developed the theory of the role of gold in a modern economy. However, I disagree with his conclusions.

In answer to my intervention, the hon. Gentleman talked about the psychological importance of this sale of gold and explained the psychological role of gold in monetary economics. He was right to focus on that, because gold's main contribution in the modern monetary economy is that it is, at the last resort, the store of value and the provider of assistance in underpinning market confidence. However, many other commodities and assets retain value for investors, businesses and Governments and there are many other ways of maintaining market confidence in a modern economy, from regulation to the lessons of history.

At the end of this century, many participants in the financial markets—and in all product and labour markets, for that matter—have much greater confidence in the ability of capitalism and financial capitalism to deliver success. That was not the case centuries ago, when gold made a much more important psychological contribution. The lesson of history is that we do not need gold to underpin confidence and value. The role played by gold has been declining, which means that the hon. Gentleman's point about its psychological contribution is much less strong today.

I completely agree with the hon. Gentleman that, in the past, gold was absolutely vital—in the early days of financial capitalism, it was crucial—but the role that he wishes to attribute to it is not as strong as he suggests.

Does the hon. Gentleman think that these matters should have been discussed in the House before the decision to sell was made, given that money has been put aside in reserves by the taxpayer? The taxpayer clearly has a view, as my hon. Friend the Member for Louth and Horncastle (Sir P. Tapsell) explained in his excellent presentation. There is also the question whether the taxpayer feels that that store of value, which belongs to him, has been preserved by putting the proceeds of the sale of gold into other investments. Does the hon. Gentleman think that the House should have been granted a debate on these important matters before the Government took the decision to sell the gold?

I do not agree with the hon. Gentleman about that. One of the criticisms that can be made of the Government is that they were too open and transparent about the sale of the gold, and that that has moved the market price. I do not subscribe to the criticism that has been made of the Bank of England's approach, because I think that the way in which it has set out these sales over the next 12 months will help to bring order and stability to the gold market, which, as has been said, is characterised by volatility.

The hon. Member for Ludlow (Mr. Gill) tempts me a little. The problem with the House is that we do not analysis Government expenditure in enough detail. The House grants £300 billion to £350 billion of public expenditure without full debate. We should scrutinise the Government on that expenditure: not on technical gold sales. There is a strong argument for not having a full debate on gold sales, because that could move markets.

The role of gold can be overplayed. That is not to say that gold markets are not important and that we should not have gold reserves: of course we should. I do not pretend to have all the financial knowledge before me properly to take a view about whether the Bank of England is right in its portfolio adjustment, but I concede that the people who are overseeing the portfolio of assets that the Bank of England holds in its vaults must from time to time decide whether to make changes and adjustments. It would be nonsense if the Bank of England were to hold static for ever a particular set of assets in particular proportions.

Does the hon. Gentleman think that it is right that the Government took this decision without giving any thought to the effect on the developing world and on the gold price? Jobs are now being lost in very poor countries as a result of this decision.

I am grateful to the hon. Gentleman for raising that issue, because that is also one of my concerns. Will the Minister explain a little more the thinking behind this decision? Now that we have this debate, it would be sensible for the Government to outline the thinking behind this sale, particularly with respect to employment in developing countries that have gold as one of their key commodity exports and the Government's policy to promote the sale of gold from the International Monetary Fund to help to deal with debt relief in poor countries. I hope that all parties in the House support that policy, because it is crucial that we try to forgive the debts of the poorest countries—the debts that are deemed to be, in Jubilee 2000 language, unpayable. The Government have made a good start, and I hope that they go further. It would be wonderful if the Minister were to announce today further gold sales for that purpose, but I doubt that she will do so.

I hope that the Minister will explain the thinking to reassure us that the left hand knows what the right hand is doing, that there is some co-ordination between the Treasury and the Bank of England on all aspects of policy, and that the policy on assisting debt relief has been linked to the policy of portfolio adjustment at the Bank of England. If those decisions are not co-ordinated, the Government are not doing their job properly.

I congratulate the hon. Member for Louth and Horncastle on securing this debate. It will help the House to focus on the role of gold in a modern economy. I take a different view from his. In international monetary economics in the late 20th century, money creation and the complexity of global financial markets is such that the role of gold is much diminished. Money creation in modern financial capitalism is almost endogenous and does not rely on a stock of yellow commodity lying in the central bank's reserves. The workings of financial capitalism have almost no relation to gold.

The hon. Gentleman is right that, in extremis, if the whole structure of financial capitalism were to fall to the ground with a nuclear meltdown of the financial markets, the role of gold would come to the fore. It is right for central banks to consider all potential future risks to ensure that our society and our economy can function even in such disaster scenarios. They should hold gold, but they do not need to do so as they have in the past.

I do not know whether selling 125 tonnes of gold over the next 12 months and buying yen, euro and dollar assets is the right portfolio adjustment. Not many hon. Members have the information and expertise to make that full analysis. However, I think that it is right that the Bank of England is considering how best to deploy its assets.

The total amount being sold is very small compared with the amounts that have been sold by other countries in recent times and that are expected to be sold in the future. Switzerland has announced future sales of 1,300 tonnes of gold, which is much greater than the amount that the Bank of England proposes to sell. We should put this matter in context, and should not get too hot under the collar about it.

I agree that more attention should be given to this subject. The Government should have called a debate, and I regret that they did not. I also agree about the mystique—"Goldfinger" is on television tonight, so it is an apposite day on which to hold this debate, and I have set my video recorder.

The key issue is whether gold can still play a monetary role. It used to play a big monetary role because people did not trust paper money. It played a crucial role in the development of the international traded goods sector in the 19th century. It was very effective, because it was difficult to cheat. It coincided with a period of stable prices in the 19th century. I say coincided because it was largely luck: it was because gross domestic product grew at roughly the speed of the monetary base—the increase in the amount of gold available—and thereby serious deflation was avoided.

That history of success in the 19th century was carried over into the 20th, and gold was used as part of the stabilising function in the Bretton Woods system in 1944—the dollar link. When inflation created by the Vietnam war destroyed Bretton Woods, that should theoretically have led people to rush back to gold. They did a little, but no serious analyst suggested that gold should be brought back as the monetary base. There were more sophisticated arguments for commodity-based standards, which I think had some merit, but virtually no one, even during the crisis created by global inflation, thought that gold was the right way to go.

Since that time, gold has steadily fallen in price. Can gold once again play a role as a reserve currency? I do not think so. It is no longer a good store of value: we have seen that in recent years. I do not think that gold is a suitable vehicle for open-market operations, which are themselves far less relevant in an age of such huge global capital flows. Nor do I think that we will go back to gold as a vehicle for dealing with inflation, if that returns.

Gold is, as the famous phrase goes, a barbarous economic relic. I cannot believe that it makes good economic sense to spend a huge amount of money digging something up, turning it into ingots and then burying it again in vaults. These gold sales are not primarily a monetary issue. I note that the Monetary Policy Committee did not even discuss the matter. The case for the demonetisation of gold is strong.

I cautiously support the sales, but I am sorry that the Government have not moved more carefully. I do not think that there was any need to rush into these sales. We do not know whether the gold price will go down or up. My hon. Friend the Member for Louth and Horncastle (Sir P. Tapsell) said that he thought it was at a low point. He may be right, and he may be wrong—we do not know—but he could be right, and if he is right we should proceed more cautiously.

Will my hon. Friend give way?

If my hon. Friend will forgive me, I will not, because I have only two or three minutes in which to finish my speech.

I am a little worried that we will sell too quickly. It is a question not just of the amount, but of the speed. There are good arguments for believing that the gold price may continue to fall. The United States might start selling gold. Has the Treasury a view on whether major countries are now considering gold sales? Is there any suggestion that they might?

I think that gold will be used less in the 21st century as a store of value in Third world countries—Vietnam was mentioned earlier—and that will result in more gold coming on to the market. Improvements in mining techniques will almost certainly increase the amount of gold available. I worked in the European Bank for Reconstruction and Development for a while, and it was found to be profitable to "leach" the piles of slag that had already been used for gold mining, to obtain gold by means of more efficient industrial processes. The supply side points to a weak gold price for some time to come.

With great respect, I thought that my hon. Friend the Member for Rochford and Southend, East (Sir T. Taylor) was talking nonsense when he suggested that the Government might be selling in order to influence the price of the euro. They could do that perfectly well by using the forward book, with or without gold, as a reserve in the vaults. As I have said, I would like the Government to explain why so fast, and why so much.

I congratulate my hon. Friend the Member for Louth and Horncastle (Sir P. Tapsell) on securing this short debate, during which he raised a number of points that it would be remiss of the House not to discuss seriously. He is a distinguished parliamentarian, and brings to the subject a wealth of professional experience as well as the depth of historical knowledge for which he is famed in the House. I never listen to him without learning something that I did not know before, and I certainly was not disappointed on this occasion.

The hon. Member for Kingston and Surbiton (Mr. Davey) also made some sensible points, and we heard a valuable—but sadly, owing to the shortage of time, all too short—contribution from my hon. Friend the Member for Chichester (Mr. Tyrie), who probably knows more about the subject than any other Member except my hon. Friend the Member for Louth and Horncastle.

The Government have left two questions in the minds of parliamentarians and the public. First, why did they decide to sell the gold? We are still no clearer about that, and I hope that we shall be clearer by the end of the debate. Secondly, why have the Government adopted such an astonishing method of conducting the sales?

Because the Government had not given us sufficient explanation, my right hon. Friend the Member for Horsham (Mr. Maude), the shadow Chancellor, wrote to the Chancellor of the Exchequer, but all that he received was a lot of waffle. The reply stated:

"As we have been careful to explain this is a prudent restructuring of the reserves."

This is to do with

"Prudent management of public finances"

to achieve a

"better balance in the portfolio."

Those are evasive answers. We need an answer to the question, why is it more prudent for gold to constitute 20 per cent. of the net and 7 per cent. of the gross reserves, rather than 40 per cent. and 17 per cent., or whatever the current figures are? We have heard no explanation of the factors that determined the Government's course of action, and we badly need one.

Gold has traditionally been held as a reserve because its value is a negative function of the strength of the dollar, a positive function of inflation rates and a negative function of real interest rates. It is possible to construct a hedge against the dollar simply by holding other currencies, but there is no such obvious way of obtaining protection against a resurgence of inflation, a collapse of real interest rates or interest rates becoming negative again, as they have during all our lifetimes, that is better than holding gold. As my hon. Friend the Member for Louth and Horncastle pointed out, gold is a long-term insurance policy against contingencies that we do not foresee in the immediate future, but which could always return. We need to know why the Government have decided that they want to roughly halve that insurance policy. After all, 700 tonnes of gold is not very much for an economy the size of ours.

The Government must think that there is some reason for holding gold in the reserves, or they would have decided to get rid of the entire gold reserve. We need a clear explanation of why they think it prudent to hold a mere 300 tonnes. If they agreed with the arguments advanced by my hon. Friend the Member for Chichester, it would be logical for them to get rid of gold altogether; but they have not, and their actions lack credibility.

Do the Government have formal models for determining their management of the portfolio of the reserves? Is there a formal risk management model? If so, will they place it in the House of Commons Library, so that all of us, including the public, can learn on what the portfolio decisions are based, and why such adjustments are apparently required? After all, the Government are acting in an agency capacity, managing the taxpayer's money.

The Minister must reply to the serious point made by my hon. Friend the Member for Louth and Horncastle. We cannot allow the rumours to grow, because they are extremely dangerous to public confidence. It has been suggested that the market is very short of gold, that the short positions may be a substantial multiple of the total amount of gold currently held by the Bank of England, and that the Bank's real motive is to save the bacon of firms that are running those short positions. If such a suggestion is being made seriously, it must be dealt with authoritatively and definitively, and we want an answer from the Government now.

Apart from the question "Why do it?", the obvious question in the minds of the public is, "Why do it in what is apparently such an incredibly incompetent and foolish fashion?". Someone who is going to sell something does not announce it in advance to the world, and certainly does not try to talk down the price of a commodity in which he is rather long. In normal circumstances, that makes no sense. If these circumstances, or these rules, are abnormal, we had better hear why it is sensible to make a public announcement. On the facts, it is extremely foolish and damaging. As my hon. Friend the Member for Louth and Horncastle said, the markets have reduced the value of the whole gold reserve by 10 per cent. or more since the announcement, and it is clear that the announcement has been one of the major factors in the fall. This is, prima facie, a clear case of incompetence on the part of the new Labour Government.

As if that were not enough, how extraordinary it was to try to talk the International Monetary Fund into agreeing on a programme of gold sales a few weeks before trying to sell our own gold. That was madness. One has to be as incompetent as the Government appear to be to damage the market in advance of such a major sales operation. The Minister and, indeed, her boss the Chancellor, owe the taxpayer an explanation. Why have the taxpayer's assets been squandered and their value gratuitously reduced? No sensible business man or woman would dream of conducting his or her affairs in such a way. Or is it perhaps that the conspiracy theory is right? Has the Government's whole plan been simply to drive down the gold price by whatever means, fair or foul, to save the position of certain figures in the City—the firms that were hinted at by my hon. Friend the Member for Louth and Horncastle—which, apparently, are so short and potentially in such trouble? The Minister has an opportunity to throw light on that. I hope that she will do so.

Given the appalling mistake of having alerted the rest of the world that we were going to sell the gold, why did not the Minister think of alternative ways of proceeding? If she did, why did she not choose them? A private placing is one obvious route that I would have wanted to explore. Some central banks are buying gold. As their balance of payments improve, perhaps China and some of the far east countries will add to their reserves. We have already heard that the Bank of France and the other major gold holders are not selling. Perhaps they might have been prepared to buy a little more, particularly if the alternative was a public auction. They might have said, "We'll help the British out a bit and take some." The discount would almost certainly have been a good deal less than the 10 per cent. and more that has been the effective discount following the manner in which the Government decided to proceed.

Alternatively, what about "feeding the fix"—feeding the market over time? Was that alternative properly explored? If so, why was it not chosen? Of course, the amounts are significant, but, for years and years, the South Africans fed the fixing in the opposite direction. They sold their annual gold production over time, spreading it over the year. They found that to be a good way of doing things, so why, conversely, is it not a good way to reduce one's gold reserves? We want to hear whether that potential solution was explored and, if so, why it was rejected.

Finally, what about the idea of a millennium issue—a retail issue of gold, not sovereigns? Each coin would presumably be much more valuable these days. That might have had distinct marketing opportunities at the millennium. Had we proceeded down that route, the Government might even have sold the gold at a premium and a discount would not have been necessary. Again, we want a clear explanation of why that route was not chosen.

I congratulate the hon. Member for Louth and Horncastle (Sir P. Tapsell) on securing the debate and on his fascinating and wide-ranging speech, which, as the hon. Member for Grantham and Stamford (Mr. Davies) said, again displayed his skills and knowledge as a historian. I also congratulate the hon. Member for Grantham and Stamford on his promotion to the Front Bench. We heard in yesterday's Finance Bill Committee that we were to lose two of the Front-Bench team from the Opposition. We welcome him and his colleagues to their new places.

In this extremely interesting debate, we have heard the two traditions, if you like, of attitudes towards gold. We have heard from the hon. Member for Louth and Horncastle of the mystical significance of gold—I was waiting for that word to appear and he did not disappoint me. During the sensible contributions of the hon. Members for Kingston and Surbiton (Mr. Davey) and for Chichester (Mr. Tyrie), we heard of the alternative view that was taken by Keynes in the 1930s—of gold as a "barbarous relic".

I regret only that I have been left so little time to respond to the multiple points that have been raised, but I dismiss first the wilder rumours to which the hon. Members for Louth and Horncastle and for Grantham and Stamford both referred. They are nonsense. It is important that we do not in the House take at face value such absurd rumours, which occasionally float around the markets. We should be careful not to give currency to such rumours by remarks in the House that may verge on the irresponsible.

Several Members have asked why the Government have decided to restructure the reserves and to reduce our holdings in gold. The answer is simple. We have reviewed the nature of our portfolio—the assets that we hold in the reserves. We believe that the size of the holdings and their spread across currencies and gold should be determined by the balance of the risk and reward that is offered by gold, and how that compares with the other assets that are held in the reserves.

As some hon. Members have pointed out, gold has been a very poor investment over the past 20 years. The gold price in June 1979 was $280 dollars an ounce. It is little changed on that today, although it shot up to an unsustainable peak of some $800 an ounce in 1980. By contrast, other investments have offered capital gains, or reinvestment of substantial interest earnings over that period. What we are looking for in the restructuring of the reserves is a sensible diversification of the assets.

We are not saying that gold will continue to be a poor investment. As the hon. Member for Chichester said, none of us knows, but we would not be planning to retain a significant proportion of the reserves in gold if we believed that it had no place as a store of value. However, what has happened to the real value of gold should caution the House against some of the more exaggerated claims in its favour.

We continue to believe that gold is a valuable asset and that it performs an important role in countries' reserve assets, but it has to justify its share in terms of its contribution to the overall balance of risks in our reserves portfolio. A key objective in that portfolio's management is to minimise the risk to the taxpayer of fluctuations in the value of the reserves. Financing a large part of the reserves through borrowing in foreign currency largely eliminates that currency risk, as the hon. Member for Grantham and Stamford has acknowledged, but considerable risk is borne on the remaining net foreign currency and gold reserves, totalling the equivalent of $14 billion.

The hon. Member for Louth and Horncastle asked why we use that measure of net reserves. Perhaps I may draw his attention to the advice of the International Monetary Fund that countries should disclose not only their gross reserves, but their currency liabilities, so that a proper judgment can be arrived at of net reserves.

Almost half of this country's net reserves have been held in the form of gold. Without taking a view on the prospects for gold, that is a very big exposure to a single asset. Reducing our gold holdings from 715 tonnes to some 300 tonnes over a number of years will gradually bring gold's share of the net reserves down to about a fifth. We believe that that will achieve a better balance in the portfolio.

We will have a better diversified portfolio. We will not be as concentrated in gold as in the past. At the moment, we are twice as exposed to movements in the gold price as to movements in the value of the dollar. Therefore, it is a simple portfolio decision, designed to reduce the risk borne by the British taxpayer.

The hon. Members for Louth and Horncastle and for Grantham and Stamford raised the question, as did other hon. Members, of the timing. The decision to sell now was not motivated by any view that the gold price was about to fall further, or by any of the wilder fantasies that have been suggested. The decision follows a careful review of the role for gold in the UK's reserves. As I have said, it is about portfolio restructuring, not about playing the market, which the hon. Member for Grantham and Stamford seems to want us to do.

Of course we considered various routes for selling the gold before we decided that an auction programme offered advantages of transparency, spreading sales out over a lengthy period. If we had sold outside an auction process, we risked uncertainty over the timing of sales and much greater undermining of the gold price. If we had gone for covert sales on that scale, it is extremely likely that the sales would have been possible only at a discount to the market price. The House would rightly have been critical of such a course.

The gold market has become increasingly sensitised to central bank sales in recent years, of which, as some hon. Members have reminded us, there have been many throughout the world. There would have been a real danger that the market would have realised that a major central bank was selling and would have over-reacted to the volumes actually sold. As the Governor of the Bank of England has indicated, even with the orderly and transparent procedure that we have adopted, the market reaction has been somewhat overdone.

Order. We now come to the next debate.

In opening this debate, I do not think that it is at all inappropriate to seek your indulgence, Mr. Deputy Speaker, simply to mention that this is national bike week, and that today is national cycle to work day, which is strongly supported by the Department of the Environment, Transport and the Regions. This morning, I personally participated in the events, by cycling from Barking to Westminster, via Tower Hamlets and Covent Garden.

I am sure that the House will wish to congratulate everyone involved in supporting those events, including the all-party cycling group and the British Heart Foundation, which—wholly appropriately, Labour Members may think—was giving out red roses. I should also like to thank the Minister for Transport in London for her personal support for cycling and cyclists. Her support is very much appreciate by those who are involved in cycling.

Yesterday, in his statement, the Deputy Prime Minister best summed up the essence of this debate when he described a "joined-up London". That is exactly what is required.

I shall briefly deal with only three matters—as I know that several colleagues also wish to speak—the first of which is the definition of integration. Secondly, I shall give some examples of good practice in my own constituency and in east London generally. Thirdly, and most importantly, I shall describe the creation of a London orbital line, which would link the East London line, the South London line, the West London line and the North London line.

Integration is not only about theoretical connections or construction projects. Although those are important, integration also encompasses many other matters, such as accessibility generally, and the ability of people with disabilities to access the transport system. Integration is also about ensuring that connecting modes, such as the bus network—which is much maligned, but does an excellent job—feed adequately into the underground system, the rail network and the docklands light railway. It is also about signage—including the language used—in transport hubs and connecting stations, so that individuals feel comfortable with where they are and where they are going.

One of the most advantageous aspects of the London underground is that even tourists seem to be sufficiently comfortable with how the system operates to be able to arrive at a station, look at a map, enter the underground and arrive at a completely different part of London. Maps are therefore very important. I commend DLR for producing integrated maps showing transport modes other than DLR—a model which is being copied by other operators, and can only improve transport in London.

Security in the transport system, too, is very important, and is achieved not only by closed-circuit television but by ensuring that stations and other venues are staffed.

The debate is about user-friendly transport—which includes indicator boards notifying passengers when the next bus or tube will arrive—so that we have not only theoretical integration, but physical and even emotional integration, allowing people to feel comfortable and confident in using public transport. Everyone involved in the issue is promoting that type of integration, and much progress is being made in achieving it.

I should like to echo the comments made yesterday by the Deputy Prime Minister in paying tribute to all of London Transport's staff. In the majority of their activities, despite many problems, they are very efficient, helpful and courteous. I am sure that many hon. Members have seen many more rude passengers than rude staff members, who provide an excellent service.

In Poplar and Canning Town, unlike in some parts of London, we are well served by transport links. In my constituency, we have the docklands light railway, the Jubilee line extension, London City airport, a variety of bus routes, the District and Central tube lines and the London-Tilbury-Southend line. We are also right next door to the channel tunnel rail link, which will be in Stratford.

My constituency also has many good examples of integration, such as at Limehouse station and the newly reconstructed West Ham station, and especially at Canning Town—which has a state-of-the-art station to interface the bus network, the Jubilee line extension, Silverlink and DLR. The Canning Town station is clean, safe and efficient. Consequently, it is becoming ever more popular.

Public transport in east London generally is becoming busier, as it carries ever more passengers. DLR, for example, previously carried about 20 million passengers annually, but is now carrying 28 million passengers a year. Although passenger numbers will be reduced significantly when the Jubilee line extension opens—from 29 million passengers annually to 21 million—they will rise to 40 million when the Lewisham extension opens. The Government office for London and the Department of the Environment, Transport and the Regions are considering provision of extra DLR trains to deal with those increased numbers.

It has been well argued that east London will be the engine for this great capital city, to drive us into the next millennium. East London's transport infrastructure will be critical in ensuring that east London is successful in playing that role, and the London orbital should be one of the main aspects of that infrastructure.

The purpose of the London orbital is to link the East London, South London, West London and North London lines into a circular line. The South London line is run by Connex, the West London and North London lines by Silverlink, and the East London line—which has recently re-opened after a three year refit, and has some new connections, particularly at Canada Water—by London Underground.

The problem to date, however, has been that the lines do not quite link up. There is a missing link between Dalston and Whitechapel, where there is a disused railway viaduct, and another missing link between Surrey Quays and Queens Road station, in Peckham.

London Underground has proposed two schemes to join up those missing links. The first is a northern extension, which London Underground Ltd. authorised to proceed in 1997, but needs additional funding. The second is a southern link, on which, last year, the Deputy Prime Minister authorised preparatory work, and on which a decision will be taken this summer.

The two schemes would cost only £150 million. Moreover, when the links are built, London Underground could run a line from Highbury, down the East London line to Peckham, and then—on Connex lines—on to Clapham Junction, Wimbledon or Croydon. Although Wimbledon or Croydon are currently the preferred options, after working for 13 years as a firefighter at Battersea fire station, I prefer the Clapham Junction option. However, I do not think that that argument will sway LUL.

Completion of the links would make it possible to run trains right round an orbital route at no extra cost. I believe that that should happen, and much of the Deputy Prime Minister's statement yesterday seemed to be advocating such a course.

The main benefits of such an approach are that the initial stage could be under construction within the lifetime of this Parliament, and the links would reach parts of London that currently are not on the tube, such as Peckham, Battersea and Hackney. Such an approach would be an important step towards integrating tube and rail networks; improve the accessibility of regeneration areas, such as the docklands; and create new cross-London railways at one twentieth the cost of a new tube line.

The orbital would also give through-London passengers an alternative to going via the centre, improve radial journeys, and put more of south London—which currently has 40 per cent. of London's population, but only 11 per cent. of stations—on the tube map. I am not sure what south London ever did to offend the powers that be who originally designed the tube network.

Thus, at no great expense, an orbital network could be devised for London, because most of the lines needed for such a network are already in place. One can travel from Clapham Junction to Willesden Junction and on into the east end via Highbury and Islington and the North London lines with only one change. The East London line, which reopened in March last year, currently runs between New Cross and New Cross Gate. London Underground is currently looking into the pros and cons of extending that line north from Shoreditch, via Bishopsgate, to connect with Dalston. In a reply to a written question tabled in July last year, the Government stated that they were considering how best to take that project forward. The scheme, whose estimated cost is only £150 million, is relatively inexpensive because it uses much existing infrastructure. Yesterday's statement by my right hon. Friend the Deputy Prime Minister clearly moves that agenda forward, which is welcome.

In respect of the southern extension, London Underground appears to have two favoured alignments: New Cross Gate to East Croydon or West Croydon, or from Surrey Quays on to South London rail lines, but with services to Wimbledon via Streatham and Tulse Hill. The Surrey Quays link would make use of largely disused land to connect with existing rail lines north of Queen's road, Peckham.

London Transport, Railtrack and the Association of Train Operating Companies attended a conference last year to discuss ways in which the organisations could work more closely together. The objective was to improve integration, and I understand that my hon. Friend the Minister for Transport in London attended. As a result, four different working groups were set up to consider different aspects of integration. The first is physical integration, and LT has appointed a project manager to ensure that action is taken quickly on matters such as joint maps and a combined timetable. There are working parties on fares and ticketing to improve links; on public affairs issues; and on long-term schemes and strategies, in a joint arrangement with ATOC. The long-term working group is considering the bigger issues, preparing briefing documents for the new mayor and assembly next year, and working toward a common stance.

On the orbital network, LT would argue that, in world-city terms, there might be a role for enhancing the network, but it will obviously depend on the mayor's strategy. In addition, there is the question of funding. The Government have stated that, if road pricing is to be acceptable, the money derived from it must be used to fund public transport, such as bus priorities, road calming measures or pedestrianisation. However, revenue derived from car travel could usefully be used for schemes such as the extension of the East London line, which would be relatively inexpensive. The extended line would naturally form part of an inner orbital network. It is possible that the mayor might be encouraged to form an orbital network if it conforms with his or her other policies and priorities.

The orbital might come about naturally: as other schemes came to fruition, they would simply need to be linked up—for example, the Croydon tramlink already covers one quarter of the outer orbital network. Yesterday, the Deputy Prime Minister spoke of "joined-up London", and referred to the London link plan connecting the five airports with the channel tunnel rail link. He mentioned expanding the network from its current form by adding the Jubilee line extension, the docklands light railway extensions, the Croydon tram and the Thames water taxis. I believe that London's transport network is doing an excellent job in the circumstances, but it could do much better.

I am grateful to Archie Galloway, chairman of the East London Group, for writing to me in support of the London orbital. His group represents 10 London boroughs, the City of London corporation, local business and regeneration agencies, and it launched a brochure on the case for the orbital yesterday. I should also like to express my appreciation to my hon. Friends the Members for Battersea (Mr. Linton) and for Putney (Mr. Colman), who have worked hard to promote transport issues in London with parliamentary colleagues and those outside who are interested or involved in transport.

The case for the London orbital is well made, and my right hon. Friend the Deputy Prime Minister and his Department are clearly looking in that direction. I anticipate further progress being made between now and the arrival of the new mayor and assembly next year.

I, too, welcome the announcement made yesterday by my right hon. Friend the Deputy Prime Minister of a private-public partnership in which London Underground and Railtrack will together examine ways in which the surface railway system and the London underground can be linked. My right hon. Friend has been a long-term advocate of such a linkage between tube and rail in London, which, in a useful phrase, he described yesterday as "joined-up London". He also mentioned some of the major schemes that could flow from that linking: for example, the five airports around London and the channel tunnel rail link could all be linked into the same railway system, thus enabling swift communication between them.

In a debate such as this, we can focus closely on London and consider in detail the possibilities opened up by that statement. One scheme that is explicitly included in the discussions between London Underground and Railtrack is the East London line extensions, to which my hon. Friend the Member for Poplar and Canning Town (Mr. Fitzpatrick) referred. I am sure that the northern extension, which would link the East London line to the North London line will be mentioned by my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Sedgemore), just as my hon. Friend the Member for Lewisham, Deptford (Joan Ruddock) will refer to the southern link that will link the East London line to the line into Croydon. That will enable tubes to be run from Highgate down to Croydon and Wimbledon and give the first tube interchange for the Croydon tramlink, about which my hon. Friend the Member for Croydon, Central (Mr. Davies) is so enthusiastic.

I shall concentrate on another possibility, which is that of running trains from Highgate around to Clapham Junction, via either Brixton or Streatham Common. The important thing is the link to Clapham Junction. The reason for my interest in the scheme and for my having asked many questions about the East London line, which lies many miles from my constituency, is that my constituency contains Clapham Junction, which is one of the oldest and most famous large stations in London. It was built in 1863 and, many years ago, it became the busiest station in the United Kingdom—indeed, the busiest in Europe, and it still has signs that advertise that claim. Its name has become famous world wide: Harold Macmillan used the phrase, the "Clapham Junction of politics" to mean a place that everyone has to go through; and, in a music book, I even discovered a description of the chord of the diminished seventh as the "Clapham Junction of music", because it is the chord from which one can go anywhere.

Clapham Junction has entered popular currency in many different ways, yet it is not on the tube system. That omission is a long-standing and keenly felt grievance of the people of Battersea, and it needs to be put right. My reasons are not purely parochial; there are many reasons why that link should be made. Many commuters do not want to go to a central London terminus, but to some other part of London. Entering London from any direction other than the south or south-west, they are able to get off the train and on to the tube system before they reach a terminus; but that is not possible coming from the south or south-west, because Clapham Junction is not on the tube. More important, a scheme such as the London orbital would allow access to the tube system by many communities in London that do not currently have such access.

Quite apart from linking up with the East London and South London lines, the network would lead to a link to the West London line, which goes from Clapham Junction up to Willesden Junction. It is sorely underused by rail passengers—few even know of its existence. Until recently, there was only one stop on the line between the two junctions, at Kensington Olympia, but last month another stop was opened at West Brompton. Apart from those two stops, the line passes without stopping through the rest of Battersea, through Sands End in Fulham and through a station in the constituency of my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) which is intriguingly named North Pole—it was closed many years ago, but I believe that it should be reopened. At Willesden Junction the line joins the North London line, completing the London orbital route that we are seeking.

That orbital route has long been dreamed of. It was suggested many years ago by the Greater London council. The Railway Development Society and Transport 2000 have campaigned for it under the name Outer Circle. The story is rather like Frobisher's search for the north-west passage. Only since yesterday have we been able to say that it can be done, because only when the two missing links in the East London line are joined up does the orbital route become possible.

That creates three important possibilities for travellers in London. One is for commuters going to Docklands or north London rather than the terminus who want to avoid the hassle of going through the centre of London. They will be able to make a direct connection with an orbital route. Another important use is for through London passengers. Many people have no business in central London and come to the capital only because the railway system is so centred on it. Given the option of an orbital route they might well get off at Clapham Junction, go to Willesden Junction and get on a train in another direction. A few people do that already, but not many because there is not a regular orbital train. I am convinced that many people would happily get off at stations such as Highbury and Islington or Willesden Junction, which are two or three miles from the terminus, and change to another line if they could.

However, the most important issue for inner London Members is that many communities in inner London are disfranchised from the tube system. A London orbital line would correct an ancient injustice. Large parts of south London were bypassed by the tube system, as were Hackney and some parts of north London. That happened partly for geological reasons. When the system was built it was thought to be impossible to tunnel through clay. A tunnelling expert today would say that clay was the best material through which to tunnel. There were also historical reasons that the train services in north London were longer distance lines that were less inclined to build up commuter services, so the tube was relied on for that, whereas the south London train lines developed as commuter lines.

As a result, south London, which has nearly 40 per cent. of the population of London, has only 11 per cent. of the tube stations. More insidious than that is the fact that many lines have far fewer trains per hour, which means that access from the south London suburbs—or, indeed, from Hackney—to central London is often much more difficult. It is possible to get to the centre of London quickly from Bromley, Croydon or Clapham Junction. The system is handy for those who work near the terminus, but it is not conducive for those who want to travel to any other part of London or join in London as a metropolis. That contributes to south London's reputation for having quiet suburbs with people who do their job in the City and go home at half past five, whereas north London has a more raffish, cosmopolitan atmosphere.

Not true.

South London has changed. The train system built with that in mind is now inappropriate. Thousands of students and young people who come to work in the capital and live in south London want to be able to travel around London until late at night. They do not just want to go to work and go back home. The tourism industry in south London suffers inordinately from the fact that the area does not exist on the tube map. Millions of tourists come to London under the impression that it is almost entirely north of the Thames. Tourist attractions, as Battersea power station will become, find it difficult to persuade tourists that south London exists.

The entertainment industry suffers from the same problem. I am president of Battersea arts centre. Even though it is often the Time Out pick of the month, it is surprisingly difficult to persuade people from north London that they can catch what used to be called a British Rail train to Clapham Junction, get off, walk five minutes and find an arts centre. It is much closer than many of the arts centres that they frequently go to in north London, but it seems far less accessible. That is a problem for the parts of London not touched by the tube system.

Those in inner south London suburbs such as mine, close to the centre but far away in travel time, suffer most. My constituency is criss-crossed with hundreds of railway lines. It probably has a greater concentration of railway lines than any other constituency, even though acres upon acres of goods yards have been closed. However, it is like the ancient myth of Tantalus. We have all the railway lines, but after one stop people have to change to a different mode of transport. A two or three-mile journey to central London can often take an hour.

We should try to use the enormous possibilities that the public-private partnership opens up to revert to the original concept of the London underground. It was not built to take people to central London and dump them there. The concept was that trains would continue underground from the terminus to take people to different parts of London. That is why the Metropolitan line tunnels are wide enough to take large steam trains, although they have never been used for that. The concept of linking tube and railway lines will make it possible for the first time for people from outside London to travel in and have the advantage of being taken not just to Waterloo, but to several stations in inner London.

No other capital scheme could be started during this Parliament. Indeed, it could be completed early in the next if approval is given to the extensions later this year. At perhaps £150 million—my hon. Friend the Minister may be able to give us a better idea of the cost—it will be only one twentieth of the £3 billion that a new tube line would cost.

The third great advantage of the scheme is that it would put all London into quick contact with the regeneration areas in Docklands. It would also help many disadvantaged areas in inner London. The Thameslink line, which goes through central London, was opened for its true purpose only 10 or 15 years ago. It still has very few stations and those at Walworth and Camberwell, in the constituency of my right hon. Friend the Member for Camberwell and Peckham (Ms Harman), have been closed for a long time. That is probably the longest stretch of railway track in London with no station and it is in one of the most densely populated areas. Although they are close to the centre, those suburbs are inaccessible.

The orbital scheme has many advantages for regeneration, cost and time scale. I am glad that my right hon. Friend the Deputy Prime Minister introduced the concept of a joined-up London. Including the London orbital and other routes in the concept and joining them to the tube system will contribute enormously to the revival of inner London.

I congratulate the hon. Member for Poplar and Canning Town (Mr. Fitzpatrick) on securing this debate. I do not know whether he accelerated the timing of the Deputy Prime Minister's statement yesterday, or whether he was just very timely, unlike some of the trains that many of us rely on. I found his comments and those of the hon. Member for Battersea (Mr. Linton) interesting. We all agree that we must make the maximum creative use of the existing infrastructure. I benefited from the London orbital, such as it is, on Monday, when I travelled from Brighton to Oxford without changing, on the line via Kensington Olympia. I agree that the line is hardly used, but the potential is there.

The Thameslink service has allowed people from outside London to go through the city without having to change. The situation 10 years ago, when people had to get off at Victoria, take the tube and get another train somewhere else was simply ludicrous. People going about their business in London do not want loads of people traipsing on and off trains at different stations.

The idea of merging sub-surface lines with the tube is nothing new. I used to live at the end of the District line, at Upminster. Long before my time—pre-war, I think—that line was used for a combined London, Tilbury and Southend and underground service; one could get a train from Richmond to Southend via the tube network and overground lines. Such ideas were used in the past and it may be simply a matter of reactivating them. There used to be shared use of the Bakerloo line north of Harrow, with combined services running up to Watford Junction but that has now been cut back on the underground map.

I sympathise with the point about south London. I used to live in north London, and south London was a different world; it was pretty inaccessible, partly perhaps because of the nature of the underground map, which is representative rather than accurate in its portrayal of the distance between stations. For example, the escalator link between Monument and Bank is shown as about as long as the distance between Upminster and Barking on the District line. That would make it the longest escalator link in the world, I imagine.

Perhaps the Government could consider encouraging London Transport to devise a more creative map that shows more of the existing connections with—to use the shorthand—the British Rail network, of which many members of the public are not aware. Why are not the links to Clapham Junction and Olympia on the underground map?

I am surprised at the involvement of Railtrack and the Government's warm reception of it. The Government have been highly critical of Railtrack, with good reason, for giving a first-class service to its shareholders and a third-class service to some of its customers. We have heard about underinvestment and broken rails in the Severn tunnel and the Deputy Prime Minister has rightly been trying to force Railtrack to invest more in the network, but it seems that its reward for not doing so is to be given a share of the London underground network. We can only conclude that, had it failed even more abysmally, it would have been allowed to enter the two deep-tube public-private partnership competitions as well.

We must be careful before we hand over more of our rail infrastructure to Railtrack, given its poor performance so far. I hope that belt-and-braces contracts will be signed to ensure that it does not get another milch cow for its shareholders, leaving people in London, and the Government, wringing their hands and wondering what has gone wrong.

One of the technical questions that need to be answered is about the effect on overground suburban services. I am not sure whether it is intended that underground or overground rolling stock should be predominantly used. There is an acute shortage of rolling stock, and that which is used on the overground lines, which would presumably integrate with the underground network, is in many cases very old indeed. The Connex services from my part of the world use 1963 trains, and I think that 1954 trains run from Uckfield; certainly they were built before I was born, and they are still in daily use. What would the criteria for new rolling stock be?

All the underground system is third rail, as are many of the suburban services, but the north London services use overhead lines, so that complication needs to be sorted out. I am also slightly concerned about the capacity of the underground system to handle more trains. We can do a certain amount by increased signalling, but my understanding from talking to London Underground employees and my colleagues in London is that one of the problems is not signalling but station capacity. If we had more trains, the congestion on platforms, which is a real hazard, would only get worse. For example, London Bridge station is regularly blocked to prevent people from accessing the platform until one or two trains have gone.

Does the hon. Gentleman share my concern that there may be a danger that the Government will take this opportunity to reduce the urgency of the Crossrail proposal? The suggested link has always been the Treasury's answer to Crossrail; it is the cheap version, allowing the Heathrow express to run along the top of the Circle line and into Liverpool Street. Better integration is on offer, but no new capacity. We should be wary of an excuse to drop the urgency of the Crossrail project.

That is a helpful intervention. We need to do both: to use our existing infrastructure in the best way but also to have new schemes giving access to areas such as Hackney—which Crossrail would serve—that would not benefit from the orbital link.

I can understand the hon. Gentleman's regarding the intervention by the hon. Member for North Essex (Mr. Jenkin) as helpful, but it was less than helpful in its failure to point out that it was the previous Administration who shelved Crossrail.

That is equally true. I can agree with both Front-Bench representatives who have intervened on me.

There is a Treasury input in the public-private partnership proposal. The hidden hand of the Treasury is always there, trying to ensure that as little public money as possible is spent on the project and that as much of it as possible is shunted off to the private sector. We have heard that there are problems with the timetable and we do not know when deals will be concluded and contracts signed.

My hon. Friend the Member for Carshalton and Wallington (Mr. Brake) did not get an answer when he asked:

"If there is a further delay to the PPP plans, what allowance has he"—

the Deputy Prime Minister—

"made for the extra finance that will be required to ensure that maintenance and investment continue? At what point will he show that the public-private partnership is best value, and will he use the public sector comparator to do that? Are the Government holding discussions with other consortiums … about the possible integration between the national rail network and the sub-surface lines … or is only Railtrack in the running?"—[Official Report, 15 June 1999; Vol. 333, c. 161.]

Those questions, with respect, were not answered yesterday, so I am hoping that if I repeat them today my hon. Friend the Member for Carshalton and Wallington and I will be able to read the answer in the Official Report tomorrow.

Why are the Government so opposed to the idea of a public interest company, which could provide the investment that the underground system needs? Do not large older systems such as London's tube network require access to predictable long-term sources of capital, including the ability to borrow against their own revenues? Allowing London's new transport authority to borrow, free from the artificial public sector borrowing requirement constraints, would enable it to access a capital market at far less expense than any private sector borrower. Why have the Government ruled that out and taken a more uncertain route?

There are problems with station capacity. Railtrack has said that the new Canada Water station on the East London line is unable to take more than four-vehicle trains and that peak demand "may cause serious overcrowding." That does not sound like a world-class transport system.

Significant investment will be required in signalling, station capacity for passengers, platform capacity, rolling stock, new connections, dealing with the third rail overhead problem and ensuring that suburban overhead services do not suffer as a consequence. I welcome the idea of using infrastructure, but I put those points in a constructive manner to the Minister and ask her whether proper estimates have been made and, if so, who will pay.

If an agreement is finally concluded and signed with Railtrack, will it be under any obligation to extend the network, perhaps to take in Crossrail, or, perhaps, to consider new connections, or will it simply be there to make the most of the existing infrastructure? If we are to give Railtrack yet another helping hand—which I did not expect the Government to do—we should exact a high price for it, and I hope that the Government will do so.

I am delighted to join in the debate and I am pleased that my hon. Friend the Member for Poplar and Canning Town (Mr. Fitzpatrick) has raised it. I want to concentrate on the vital missing link in the London orbital, which in Hackney we describe as the east London tube line extension. As we have heard, there are two gaps, one in the southern area and one in the northern area. I want to concentrate on the urban regeneration consequences of filling in that vital missing link.

I have been arguing the case for the east London extension for about 10 years. I think that it was about eight years ago that I raised it in an Adjournment debate. I am glad to see that there is much more support for it now than there was then. In those 10 years, Ministers and shadow Ministers have come to Hackney and said that it is a super idea, but they have gone away and not much has happened. The only real thing that has happened is that, after a lengthy and cumbersome Public Works Acts inquiry, the Secretary of State has given permission for at least the northern missing link to be filled in.

But now we are told that we must await the arrival of the Mayor of London. To the putative front runners, whether it be Trevor Phillips for Labour, Jeffrey Archer for the Conservatives or—well, I will not mention my hon. Friend the Member for Brent, East (Mr. Livingstone) because my pager tells me that to do so would be off message—I would say that I could neither vote for any of them nor recommend that anyone else should vote for them unless they can give a copper-bottomed guarantee that this will be a top priority when a Labour Mayor of London is elected.

The scheme will have a huge number of regeneration consequences for the London borough of Hackney. Although £150 million is petty cash for the railways, this is not some small scheme for us. The regeneration consequences of the east London tube line extension are enormous. Hackney is the third most densely populated authority in Britain. More than a quarter of its population live in the corridor of the proposed east London tube line extension on the orbital route, and they are waiting for the benefits to flow from it. Unemployment in Hackney is double that for London and Britain, and is comparable only with the highest rates in the north west and the north east of England. In some wards in the east London tube line extension corridor, the rates are three times the London level.

In that corridor are 2,500 businesses, employing 30,000 people, so two-thirds of all Hackney's jobs are in this new line catchment area. We estimate that 14,000 jobs are waiting to be created if the missing link is put in, 8,000 of which will be directly attributable to the new line, and the others will be offshoots of the new line.

Not all those new jobs will be taken by Hackney people, but the unemployment rate in Hackney is expected to fall by 10 per cent., which is a massive fall, once the line is up and running. In addition, we calculate—this was referred to by my hon. Friend the Member for Battersea (Mr. Linton)—that the link with central London and docklands could provide another 2,500 jobs for Hackney residents and many jobs for residents from other parts of east and south London.

In addition to that, Hackney's age profile is such that during the next five years a huge surge of school leavers will come on to the job market, and unless the line is up and running, many of those school leavers will not have a job at all, even with the excellent work being done under the new deal.

Like Battersea and certain other areas in London, we do not have a tube at all, so two-thirds of Hackney's work force travel outside the borough. Some use private cars, although car ownership is also at almost the lowest level in London. Many use the buses, although they are becoming less and less reliable. Therefore, this is a critical reliable route for the people of Hackney. To make a quick comparison, neighbouring Islington has three tube lines. Its demography is almost the same as Hackney's, yet it has 50 per cent. more local jobs. I suspect that many of those are related to the transport in the area. Therefore, the orbital line is critical for Hackney.

I make one last political point. The supremo for the scheme is the Deputy Prime Minister. He has been to Hackney, as has my hon. Friend the Minister for Transport in London, to look at the scheme, and we were delighted to see them. We are concerned about the long hard struggle and the long wait that we have had. Some people in Hackney are asking whether the Deputy Prime Minister can cut the mustard on this one. We have always regarded him with affection. We see him as the Mike Tyson of politics. But we are beginning to wonder whether he is losing his ability to strike the knock-out punch, or, to put it more prosaically, where will the money come from and when will we get it?

Originally, we were told that London Transport would give us the money straight out. Then we were told that it would be part of a private finance imitative. Now we are told that it will be part of a public-private partnership. We do not blame the Department for the Environment, Transport and the Regions; we blame the Treasury, as ever. We are all fed up with these Treasury gyrations and gymnastics. I should like my hon. Friend the Minister to tell us that the money is coming shortly.

I, too, congratulate my hon. Friend the Member for Poplar and Canning Town (Mr. Fitzpatrick) on initiating this important debate in the House. I agree with everything that has been said by my hon. Friends, and, perhaps, even with the odd thing that has been said by Opposition Members.

Eight years ago, I was shadow Minister for Transport in London, and I produced a report then which stated:

"Through the election of a Greater London Authority, Labour will return to London the strategic planning it so desperately needs. We will link land use and transport planning to provide greater access at lower environmental costs. We will set higher standards for every aspect of public transport and maximise the integration of different modes to provide easier, more pleasant and more reliable travel."

I am delighted that old Labour's promises are being so forcefully fulfilled by new Labour today.

I also acknowledge that the process by which the proposals came to us through the Deputy Prime Minister yesterday was undoubtedly encouraged by the activities of my hon. Friend the Member for Battersea (Mr. Linton) and all the work that his group has done in trying to advance the case for transport integration in London.

I add my specific support to the extensions of the East London line. As others have said today, south London and, in the case of Hackney, north London, are ill served, or served not at all, by the underground system. Therefore, it is crucial to have the extension from New Cross Gate to Croydon.

My constituency will stand to gain a tremendous amount. We have made no job calculations, but we expect a real boost to the local economy and to providing access to jobs that exist elsewhere which are not easily accessed at the moment. Regeneration is at the heart of the economic progress that is being made in my constituency.

The partnership between a progressive Labour authority and the Government is producing a welcome and essential fall in unemployment and an improvement in the local economy and environment. However, we want more. Yesterday's report about the premature deaths suffered by people in this country from the effects of car-borne pollution should spur us all to access the railways. In my constituency, much of the car exhaust comes from vehicles passing through to other parts of London. We need to be able to reduce reliance on that form of transport, and the integration of London's railway services will be important to that end, however it is done.

The East London line extension group has argued that, although the necessary investment to build the two extensions to the line amounts to £150 million, the extension will boost the £1.5 billion investment provided through regeneration schemes in the affected areas. That will foster jobs in general but also, I hope, the growth of the creative and arts industries.

My hon. Friend the Member for Battersea mentioned that such industries are important for many people, but my area has many practising artists and creative institutions. We want to extend the links with their counterparts across the river, such as have already been established between Lewisham Art house and the Whitechapel gallery, for example. Such links create jobs and add to the richness of London life.

Yesterday, my right hon. Friend the Deputy Prime Minister set out his vision of a connected London and talked of new connections between all the major transport hubs. As the plans progress, I urge the Government to think carefully about the local integration of different modes of transport and the stations that they serve. Again, a local example could be the blueprint for much of what the Government want to achieve.

My hon. Friend the Member for Poplar and Canning Town, in opening this debate, referred to the criteria defining integration. I agree with everything that he said about what that means, and that it is more complex than merely providing a variety of services or linking hard rail, light rail and the underground.

In Lewisham, there are 28 passenger rail lines, which go into central London and out towards the south. There are 39 major bus routes, serving numerous destinations, and the docklands light railway will soon extend through my constituency and into Lewisham. However, it seems to me that most people learn to use—and keep on using—a single route. They have great difficulty in planning other routes to places that they visit occasionally or when they want to make a change. That is a critically important matter. We need better sign provision and maps, and must enable people to maximise their use of rail through improved connections. There is no doubt that that is the integration that we need for the 21st century.

The Lewisham challenge partnership is led by my local authority. It proposes that the locality needs a new type of integration. The Lewisham passenger transport interchange proposed by the partnership deserves the attention of my hon. Friend the Minister. It is the subject of a bid under the single regeneration budget and represents an important model. The bid document states that the aim of the bid is to

"improve the ease of use of interchange by reducing the time taken for transfer between services and make the service more attractive to commuters currently using private cars"

and to

"connect the stations more directly with the leisure, retail and business activity within the town centre and the wider community."

That is of crucial importance. As has happened in so many other boroughs, towns and other parts of London, our railway station has been cut off from the town centre by railway lines, two major roads and the extensions necessary to carry car-borne traffic. Reintegrating people, transport services and leisure and business activities gives rise to some very important issues.

The new interchange will also promote and exploit transport's potential to encourage business. Employers as well as employees are concerned about integration, which will help with employment links across the Thames and throughout the region. The improvement to the natural and man-made environment will make the interchange more attractive and pleasant to use.

I urge my hon. Friend the Minister to look carefully at what is happening in my area as an example of how to move forward, and to bear in mind the discomfort suffered by so many people when the East London line was out of action. We all want to see the new proposals go ahead, but due regard must be given to the travelling lives of passengers and customers when the new works are in hand.

I end by saying that, in 1836, the first urban railway in the world was opened, to great excitement, in my constituency. It ran between Greenwich and London bridge, and Deptford station is still being used to this day. Of course, I was not around at the time—

The hon. Lady is old Labour.

On the contrary, I am absolutely new Labour. However, I can imagine the enormous excitement that that innovation must have brought to south London. Since then, the railway has suffered from much neglect. Trains are so overcrowded, late and in such poor condition that many Londoners are completely disenchanted with the rail system. But I believe that we are now at the beginning of a new age of great excitement about the use and integration of rail and underground systems, from which all Londoners will benefit.

I also congratulate my hon. Friend the Member for Poplar and Canning Town (Mr. Fitzpatrick) on securing this debate, and wish to express my gratitude to my hon. Friend the Member for Battersea (Mr. Linton) for the leadership that he has shown in recent months in helping to build the case for the orbital network. They have set out a powerful and persuasive case for seizing and developing the opportunities presented by yesterday's statement.

Safe, affordable and reliable public transport is the key to tackling traffic congestion in our city. It will bring immeasurable benefits for London's economy and help to tackle social exclusion, as well as making London a cleaner and more pleasant place to live in. Like other Labour Members, I warmly welcomed yesterday's statement by my right hon. Friend the Deputy Prime Minister about the London link scheme that will link the national railway and the underground. Greater integration has to make sense in terms of making the best use of available capacity and improving the potential for passengers to make journeys through London and on the orbital route.

It makes sense for Railtrack to be a partner in the developments, although it will have to improve on its investment and management record. I speak with passion on that subject, as I depend on the Bakerloo line, to which the hon. Member for Lewes (Mr. Baker) referred earlier. That line goes as far as Harrow and has suffered continual disruption because of signal failures throughout the 1990s. The surface train and underground network extending from Watford, through Queen's Park station and into Baker street has been less effective than it could have been because of the signal failures that have plagued it. I look forward to the Government and the rail regulator being firm and tough in negotiations with Railtrack to ensure that the company delivers.

My purpose in contributing to the debate is to stress the need to fill the gaps that at present are left by the underground and surface rail services. The orbital network presents a great opportunity in that regard but, to fulfil our wider ambitions for public transport, we must make sure that swathes of the inner city are not excluded.

Surface train services that interconnect with the underground should be able to operate as regularly as most suburban bus services, giving passengers confidence about reliability and frequency. That is the only way to make sure that people use the underground as an alternative to their cars, particularly for getting to work, when punctuality is of the essence. In my corner of west London, a densely populated inner-city community is squeezed between two important rail lines—the West London line and the Paddington mainline and channel tunnel link. Properties on those estates need soundproofing to insulate them from the noise of the trains that pass virtually under their windows, but the people there have no access to either service.

Silverline plans to run trains on the West London line from Clapham to Barking, covering half the London orbital route through north London and offering numerous interchanges to the tube and other lines. Unless there is a station at North Pole road, however, thousands of people on the William Sutton Trust estate, the Peabody estates and the Hillfarm estate in north Kensington will have no means of accessing the service.

A proposal to reopen a station at North Pole road has been under consideration for decades. About three years ago, Railtrack concluded that only three additional stations should be provided on the West London line between Clapham and Willesden junction. There will be stations at West Brompton, which I was pleased to see open recently, at Shepherd's Bush and at either Chelsea harbour or North Pole road. I understand that capacity is not sufficient to win priority for North Pole road.

The exciting opportunity presented by the public-private partnership and the orbital network makes this the right time to seize the chance to reopen that station. If that means delivering extra capacity or re-routing freight traffic to enhanced alternative routes, so be it. Unless we resolve those problems, we will not create the comprehensive integrated network that we need.

Several hon. Members have mentioned the ways in which regeneration interacts with an integrated public transport system. In 1992, north Kensington city challenge identified the area's poor transport infrastructure, congestion and unreliable bus services as a major barrier to employment. Public transport links remain extremely poor, particularly to the south of the borough and the employment opportunities of west London.

In particular, links are poor to the Park Royal industrial estate, which has been assisted with European money, and which provides many employment opportunities. Although north Kensington is close to that estate as the crow flies across Wormwood Scrubs, the community has no means of reaching it by public transport. If there were a station at North Pole road, people would be able to change at Willesden junction to get to jobs on that estate.

The single regeneration budget scheme that is tackling unemployment in north Kensington has illustrated the fact that the physical isolation of the major estates affects the social exclusion of residents. It also contributes to the 13 per cent. unemployment in the St. Charles ward—40 per cent. more than the inner London average. Local surveys confirm that there is extreme dissatisfaction with public transport in north Kensington, not only for employment reasons but because of the isolation of young parents and young people's inability to get to entertainment venues in the evenings.

I believe that there is an overwhelming case for services that link us to the orbital network. Kensington and Chelsea council would welcome proposals to release capacity for local services and new stations, and so would I. North Kensington is not alone. Similar cases have been made for Hackney and south London. Labour Members share an enthusiasm for what the orbital network can deliver in the context of wider investment in the surface and underground networks. Will Railtrack help to deliver extra capacity to make the links work and to take us towards a 21st century network that will leave no socially excluded islands abandoned at its centre?

I congratulate the hon. Member for Poplar and Canning Town (Mr. Fitzpatrick) on obtaining today's debate and on its timing. His prescience must be valued by his constituents, as the debate comes just one day after the Government's major statement on the subject. I would not dream of suggesting that his success was due to anything other than heavenly inspiration.

I share the hon. Gentleman's enthusiasm for national bike week, and I was at the front of the queue with him at this morning's successful event. Some of those who attended are more regular bikers than others who turned up for the photo opportunity. I do not include the hon. Gentleman in that remark. I got there on my own bike and so did he, but one or two hon. Members were there just for today, and were looking forward to slipping back into their ministerial cars.

I enjoyed the hon. Gentleman's tour d'horizon around the integration projects that are expected to flow from the ideas currently in play. He was enthusiastic about spending the proceeds of new taxes that will be imposed on Londoners with cars and businesses that have car parks. That did not sound very new Labour. He dreamt of spending revenues before a single penny has been collected. We remain opposed to those taxes because it is unfair to withdraw Government grants from local authorities for public transport in London while making Londoners pay extra.

Is that another U-turn in Conservative policy? The hon. Gentleman knows that road charging and a workplace levy would be an empowerment for local authorities that chose to use them rather than a statutory requirement. During the Committee stage of the Greater London Authority Bill, the hon. Member for Croydon, South (Mr. Ottaway) said that the Conservative party supported congestion charging in principle and supported a private non-parking levy for everywhere in the United Kingdom except London.

Once again, the Minister has misunderstood Conservative policy, but we are not discussing that point this morning. The Government are fond of claiming that the taxes raised would be hypothecated, but hypothecation means nothing unless it provides additional money. If the Government are withdrawing grant and replacing the shortfall with the taxes—

We are not.

The Minister is doing that.

We have heard valuable speeches from the hon. Members for Lewes (Mr. Baker), for Battersea (Mr. Linton), for Hackney, South and Shoreditch (Mr. Sedgemore), for Lewisham, Deptford (Joan Ruddock) and for Regent's Park and Kensington, North (Ms Buck). We all want more investment in infrastructure, and we share the dream of integration. The previous Conservative Government did not have a bad record on either. We oversaw completion of the Victoria line, began the Jubilee line extension, and opened Thameslink and the docklands light railway. I sat on the Committee that dealt with the Croydon tramlink, another Conservative project. The much acclaimed Heathrow Express was opened by the Prime Minister with a great fanfare, and the Minister herself gave it a prize at the Railway Forum dinner earlier this year.

The Railway Forum gave the prize.

I saw the hon. Lady there, and I saw her present the prize.

The Railway Forum gave the prize.

If the hon. Lady is suggesting that she did not believe in the prize that she handed over, far be it from me to allow any unparliamentary expression to cross my lips.

Where will the money come from for the further integration that we all want?

The black cloud that looms over London Underground is the dreadful public-private partnership, with which the Government have replaced the investment plans that they inherited from the Conservatives. The Government cancelled those plans as soon as they came into office, in the name of a publicly owned and publicly accountable service. That has been followed by two years of absolute stalemate. The morale of the tube's staff and management has plummeted. It is a bit rich for the hon. Member for Deptford to say that old Labour's promises are being fulfilled, the day after the Government announced that the privatised Railtrack will provide the capital and investment for which the tube has been crying out.

According to the Labour party, Railtrack was public enemy No. 1 because it made profits and doubled annual investment in the railways. It has been transformed into the rescuer of the public-private partnership for the tube. We must welcome the fact that the Government are at last talking sense, but there are many questions to be answered about the PPP.

It is envisaged that three infrastructure companies will be involved in the PPP. Why is one of those companies, the sub-surface tube, being let to one bidder on a privileged basis, with no competition? How are we to know whether Railtrack is being forced to strike a good deal for the taxpayer? We shall never know, because there will be no competition. A deal has been sewn up between the Government and Railtrack.

There will be proper competition for the deep tube, and we welcome that. We understand why the Government made that decision; their original plans for the PPP were paralysed by the fact that Railtrack was by far the most credible bidder for all the tube, so it was difficult to get any competition in bids for any of the infrastructure companies. By giving Railtrack privileged access to the strategic part of the tube in which it is interested, the Government will ensure that there is better competition for the other parts of the tube.

That prompts the question of when the proposals will be implemented. The Government originally promised that the contracts would be tendered last autumn, but yesterday's statement was little more than a declaration of intent; there is no agreement between any of the parties and the Government say that only pre-qualification will be completed by this autumn.

The greatest irony is that we are expected to take the Government seriously when they have been complaining for two years that Railtrack is not investing enough, but they are now placing the future investment in the sub-surface tube in Railtrack's hands. How are we to have any confidence that Railtrack will invest enough if the Government do not have confidence that Railtrack has invested enough in its existing responsibilities? How will the Government ensure that Railtrack will invest in the tube? The lesson is that two years of paralysis, no decisions and no policy have left the Government in urgent need of taking the best available opportunity as the clock ticks on.

The Government need to learn that there is no point in briefing against Railtrack, damaging its credibility in the City and undermining its share price and its ability to raise the funds that the Minister wants it to invest. She needs to understand and explain to people that Railtrack profits are good for investment because they will strengthen its balance sheet and enable it to borrow and to finance the investment that the Government want it to make in the surface railway as well as in the tube.

What rates of return will Railtrack be allowed to earn? Will there be track access charges for tube trains running on Railtrack-maintained track or will there be a simple rate of return contract? What would be a fair rate of return? What profit will Railtrack make on this deal? Who will provide the ultimate financial guarantees? Will there be a repeat of the channel tunnel rail link financing, in which Railtrack rode to the rescue of the deal, backed by £3.5 billion of Treasury guarantees? Much to the satisfaction of the Minister and her colleagues, Railtrack's profits on the channel tunnel rail link will be made on the back of those Treasury guarantees. Is that what is meant by a public-private partnership? At least our privatisation proposals for the tube would have put the risk entirely on the private sector so that it earned its profits rather than having them backed by the Government and the taxpayer.

The fundamental problem is the financial illiteracy of the PPP. A report published by Professor Stephen Glaister and others said:

"The PPP threatens to impose burdensome long term pressures on Underground operating revenues, including the prospect of continually rising fairs, in order to pay back up front investment by private contractors."

In a public-private partnership, private sector investment does not come free; it has to be paid for. If one increases the capital in the business, one must increase the revenue to service the capital to provide the return. Where will that revenue come from? Will it come from higher fares, or from further subsidy to which the Treasury has yet to agree?

There are two underlying factors. First, the £7 billion that has been promised for investment in the tube does not compare favourably with the £7 billion invested in the tube during the last 10 years of Conservative Government. The proposals will not transform management attitudes or increase the efficiency of the operation of the tube, as privatisation is doing in the railways and other industries. The situation will stay the same, without a great bonanza of new finance.

The second factor is the deadline. In response to a parliamentary question on the comprehensive spending review, the Government made it clear that the Treasury will completely stop financing the tube in 2000–01. The deadline is therefore next April. The Minister and her colleagues say that they are not negotiating the PPP against a deadline, but I say to them, "Pull the other one." The Treasury is holding a gun to her head because the Government know that if they end up having to finance the tube out of her Department's expenditure, cuts will have to be made elsewhere to make up that shortfall, as the Government had to do as a result of cancelling our privatisation proposals.

I emphasise again that yesterday's statement was no more than a statement of intent, and there is no agreement. Ultimately, we must place our faith in Railtrack. It rescued the channel tunnel rail link and it will rescue part of the tube, but the Government need to promise themselves that they will have better relations with Railtrack than in the past to enable the company to raise the finance to do the job that the Government want it to do.

I join other hon. Members who have contributed to this debate in congratulating my hon. Friend the Member for Poplar and Canning Town (Mr. Fitzpatrick) on securing the debate. If timing is all, my hon. Friend has everything. It is entirely typical of the contributions of the hon. Member for North Essex (Mr. Jenkin) that in his opening remarks he impugned the impartiality of the Speaker's Office in the selection of Adjournment debates.

With the exception of the hon. Member for North Essex, the other speakers in the debate, including my hon. Friends the Members for Battersea (Mr. Linton) and for Hackney, South and Shoreditch (Mr. Sedgemore), the hon. Member for Lewes (Mr. Baker) and my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck), have all warmly welcomed the innovative proposals launched by my right hon. Friend the Deputy Prime Minister in his statement yesterday.

We propose to link up surface and underground rail to create, in a telling phrase, a joined-up London. Speaker after speaker referred to the benefits that those proposals will bring to their constituents and the importance of transport infrastructure for regeneration, job creation and tourism. My hon. Friend the Member for Lewisham, Deptford (Joan Ruddock), who has had no small hand in the groundwork for our innovative approach, spoke of the improvements to the environment that will result from the creation of a joined-up London.

While my hon. Friend is on the subject of joining up London, may I make a plea for Peckham to be joined up? A railway line, which shakes people's windows, runs past Camberwell Station road, but there is no station on that road, so can we please have a station there again? Also, could Peckham be put on the tube map, otherwise people will think that it is a place to which one never goes or leaves? We want to share in the regeneration through the underground coming to Peckham.

I shall certainly pass on my right hon. Friend's concerns about the absence of Peckham from the tube map.

Speaker after speaker has not simply settled for the proposals on a joined-up London and a London orbital rail link, but used them to trigger their powers of imagination, creation, energy and innovation. They see the enormous potential in taking such an approach.

The only person who has significantly failed to see the benefits of the proposals is the hon. Member for North Essex, who expressed concerns about them. At the moment, London Transport and Railtrack are only exploring the details of the proposed public-private partnership, yet the hon. Gentleman worried whether the taxpayer would be getting a good deal—that comes from a member of a party which, in government prior to 1997, was responsible for selling our railway infrastructure to Railtrack for a fraction of its worth. His party spent hundreds of millions of taxpayers' pounds on the privatisation of our railways. It proposed privatisation of the tube—with only a reduced network and the requirement for public funding for at least four years following privatisation. Had such a privatisation gone ahead, it would itself have taken more than four years to achieve. The contract for the channel tunnel rail link that his party signed collapsed almost a year after the ink had dried on it.

Railtrack indeed has had a major part to play in saving the channel tunnel rail link, as my right hon. Friend the Deputy Prime Minister said. Everything is on time and on budget, and central and essential to that is the deal that he cut. Not one additional penny of public money was put into that restructured deal, which has ensured that the rail link can be saved. That deal means that, in an infinitely shorter period than the previous Administration envisaged, the channel tunnel rail link will revert to the private sector. There is only a 99-year lease on the line, and not a 999-year one, which the previous Administration signed away.

We have made it abundantly clear that not only the proposals launched yesterday but the overarching PPP, which will attract to the underground money that the lamentable stewardship of the previous Administration significantly failed to secure, will be approved only when we are assured that they will truly produce the best cost benefit for the taxpayer and provide the kind of service that both London and Londoners need.

Others who welcomed yesterday's announcement included those in the private sector, which is extremely interested in submitting—I trust—competitive bids for the PPP. Indeed, one senior source from the relevant part of private sector which will be bidding was quoted in yesterday's Evening Standard as saying:

"This is good news … The private sector is confident it can provide dramatic improvements for the Tube."

In a somewhat schizophrenic approach to what has been proposed, the hon. Member for Lewes on one hand argued that there should be no restraint whatever on public spending, but on the other became much exercised over the costs of the PPP. We have made it abundantly clear that of course public sector comparators are part and parcel of ensuring that, once the decision is taken, it will be rooted in Government confidence that we have got the best possible value for the taxpayer, and that the service created will be the kind of 21st century public underground system that this capital city and the people who live in it so desperately need.

The proposals are part and parcel of an overarching approach to public transport in this great capital city and, as my right hon. Friend the Deputy Prime Minister said yesterday, of ensuring that this great city retains its competitiveness and becomes even greater globally. The proposals for the linking of surface and underground rail, which, as my hon. Friends have said, will also connect London's five airports to the channel tunnel rail link, are part of creating a truly global city for the people who live in it for the 21st century.

As all my hon. Friends have said, the proposals are to be greatly welcomed; they offer enormous benefits. Clearly, many details will have to be worked through. Labour Member after Labour Member has pointed to the importance of integrating not only the lines but other transport modes and timetabling, providing better and much more accessible information. My hon. Friend the Member for Poplar and Canning Town made a most telling point on accessible transport. The Government have made it clear that we believe that public transport must be accessible to all our citizens. Indeed, we are pleased that public transport providers are working towards that end.

Our proposals are aimed at righting the wrongs of the previous Administration's neglect and disinterest in funding London Underground by integrating public transport and providing the benefits of such transport over a range of areas. I have touched on some of them, as have all my hon. Friends. Regeneration, the potential for job creation and improvement in our environment are all part and parcel of improving the quality of life in this great city, ensuring that we leave for future generations a city not worse but infinitely better than that which we know.

Once again, I congratulate my hon. Friend the Member for Poplar and Canning Town and all my hon. Friends on their positive contributions and welcome of the proposals announced to the House yesterday by my right hon. Friend the Deputy Prime Minister.

Will the hon. Lady acknowledge that Railtrack is bailing the Government out on these projects and that it is therefore pointless for the Government to brief against it, because that would undermine its financial viability and credibility in the City, thus preventing it from raising the money required? Will she give an assurance that the Government's adversarial relationship with Railtrack is now at an end and that the questions between Railtrack and the regulator will be resolved as quickly as possible, so that confidence in Railtrack can be restored?

I realise that the hon. Gentleman is new to his elevated position, but I thought that even he would have been aware of the rail summit that was launched by my right hon. Friend the Prime Minister and convened by my right hon. Friend the Deputy Prime Minister. Every aspect of the railway industry was represented at it. The message from that summit, which was endorsed by all in the railway industry, was that the culture of blame is over and that the industry should work together.

It was a stunt.

Stunts are the only matter on which the hon. Gentleman could claim primacy over other hon. Members.

I am grateful to all my hon. Friends for endorsing the statement made by my right hon. Friend the Deputy Prime Minister; it is indeed a vision. Under the proposals, the future for London is infinitely brighter.

I am most grateful for the opportunity to initiate this debate. I am especially grateful to have support in the Chamber today from the chairman of the all-party children group, the hon. Member for Newcastle-under-Lyme (Mrs. Golding), who has so much knowledge on this issue and is greatly respected in the House; from the Chairman of the Public Accounts Committee, my right hon. Friend the Member for Haltemprice and Howden (Mr. Davis); and from the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd), who is a former family lawyer.

Children are in care because they have been abused or neglected by their family or, in some cases, have no family. They are the most deprived children in Britain, and we, the state, are responsible for them. We owe them a special interest. We are failing them miserably.

The many foster parents and care workers in children's homes work very hard to care for the children for whom they are responsible, but the results of our so-called care system are extremely bleak. On average—and typically—children are moved from place to place once a year. They are far more likely than their contemporaries to become involved in child prostitution or drug dealing. Incredibly, boys leaving care are 50 times as likely as their contemporaries to end up in an adult prison and—perhaps saddest of all—a quarter of the girls who go through care become pregnant under age during the process.

Yet there is a tried and tested solution, supported by evidence of studies undertaken in the United Kingdom and many other countries. There is a really effective way to deal with these damaged children—adoption by a loving family. Adoption is not only much more successful than leaving children in care but far more successful—especially in the case of children who have been in care for a year or more—than sending them back to their original home. Some are sent back prematurely and unsuccessfully to their home, to be neglected and to be abused again. There are extreme cases, such as that of little Ricki Neave, who was returned to be tortured to death by his mother.

For a decade now, successive Ministers responsible for social services have spoken out strongly in favour of adoption. My right hon. Friend the Member for South—West Surrey (Mrs. Bottomley) made it a personal crusade. John Bowis, a former Member of the House, felt especially strongly about it and issued an excellent guidance circular. The hon. Member for Brent, South (Mr. Boateng) made it a personal crusade, and issued another excellent guidance circular, backed by some very strong words. I especially welcome the Under—Secretary of State for Health, the hon. Member for Barrow and Furness (Mr. Hutton), who has kindly come into the Chamber to reply to the debate. He has shown how strongly he feels about the issue.

All these years on, there has been no progress. On a five-year figures basis, things are have actually got fractionally worse. A fortnight ago, figures were published showing that the number of children in care has just increased again, from 51,000 in April 1997 to 53,000 in April 1998. Nearly half those children have been in care for more than two years and, incredibly, almost a quarter have been in care for five years or more. Five years, moving from place to place; what sort of childhood is that? Yet the number of children adopted from care during that year was a miserable 2,000, barely covering the increase, and 4 per cent. of the total.

I have no doubt that those who want to defend the social services establishment will produce excuses. Some will say that there is a desperate shortage of adoptive parents—especially for older children—in some areas. Others will argue, as they did last year and the year before, that the figures are slightly out of date and that the trend has turned up just recently.

I apologise to my hon. Friend; I must leave the Chamber shortly. I have asked the Audit Commission whether it will investigate the issue that he has raised. It has told me that the social services inspectorate will examine the implementation of the circulars that he mentioned, and I shall meet representatives of the inspectorate shortly to ensure that the points that my hon. Friend has raised are treated properly in a new inspection this winter.

I am most grateful to my right hon. Friend for that firm pledge of support. I am very grateful that so many Members of the House, from all parties, have expressed support on this issue.

Among the many dire conclusions of a study completed as recently as last month at Cardiff university by Murch and Lowe is the following:

"some agencies rigidly opposed adoptions by foster carers even where the child was well-settled and had a good relationship with the carers."

Of course there are legal and administrative problems with adoption. I thank the director of social services in Durham for giving details of a case of which the Minister is aware, showing how, in certain cases, the Children Act 1989 can work against potential adoptive parents. None the less, the evidence points to the overriding need to break the anti-adoption culture among social workers in many local authorities, and the failure of elected members to supervise them.

The most striking evidence of negative attitudes emerges from studying variations between local authorities. Why do Hackney and Islington, both of which have a terrible record in some of their children's homes, score among the worst for adoptions of children in care? In a whole year, in each of those authorities, only 2 per cent. of children in care were adopted. That is barely a dozen children between them, of the hundreds that each of them have in care, yet nearby Camden and Greenwich are near the top of the league. Similarly, why does Bournemouth have quite a good rate—9 per cent.—when next-door Dorset has a miserable 3 per cent.? I receive many letters from adoptive parents, telling me that they were rejected for the flimsiest of reasons by one local authority, only to be accepted by a neighbouring one and carry out a successful adoption. We have a special duty to children in care, and we are failing to discharge it.

In spite of the excellent intention of Minister after Minister in the slot currently so well occupied by the hon. Member for Barrow and Furness, it is time for an end to exhortation and voluntary programmes. If the "Quality Protects" programme is to mean anything for these children, it must be given teeth. I should like to end with three short suggestions.

First, the current figures are voluntarily compiled, inconsistent and global. Instead, we need a central database of the name and outline details of every child in care. That would enable us to compile genuine league tables showing which local authorities—

Will the hon. Gentleman give way?

I am afraid that I will not, because other hon. Members have arranged to speak.

A database would show, much better than the current figures, which local authorities are obviously dragging their feet, and it would prevent children from falling through the cracks.

Secondly, post-adoption support for parents should become the norm in all parts of the country and, in the case of the most damaged children, they should also have post-adoption allowances. Those parents are taking an enormous financial and administrative burden off our shoulders—off the state's shoulders—and into their homes.

Finally, these arrangements require some stick. The Secretary of State should give himself the power, or Parliament should give the Secretary of State the power, to remove adoption decisions from the worst local authorities and give them to a neighbouring authority or, if one is not available, to a voluntary organisation. We owe that to our most deprived children. If we continue to fail them, they will fail us and themselves, and the consequences for the future of our country will be dreadful.

I congratulate the hon. Member for Canterbury (Mr. Brazier) on his success in the ballot. His interest in adoption and the welfare of children generally is well known and respected in the House.

The Government believe in adoption. It is an important way of ensuring a better future for vulnerable children. It gives them stable, caring, loving families. We are determined to transform services for children and outcomes for children. We are determined that there will be a radical improvement in adoption services. The House should be in no doubt about that.

We want to make sure that rigid or fixed ideologies, which often relegate adoption to the bottom of the list of options, are effectively challenged at every opportunity. I shall spell out how the Government will take forward this transformation in adoption services, but first we should be clear about the statistics.

The basic facts are these: at any given time, about 53,000 children are being looked after by local authorities in England; a total of about 78,000 children are looked after by those authorities in the course of a year; approximately 2,000 looked-after children are adopted each year. The hon. Member for Canterbury mentioned that figure.

In the great majority of cases, children being looked after by local authorities do not need new families. Most will return home after a short period in care. Those children, therefore, do not represent a potential harvest for prospective adopters. We need to be very clear about that point.

Work carried out recently within the Department revealed some interesting data concerning the statistical returns on adoption from local authorities. Again, the hon. Member for Canterbury referred to those. The study shows that although the number of children in care has fallen substantially over the past 20 years, the number adopted out of care has risen from about 2 per cent. to about 4 per cent.

Twenty years ago, there were about 90,000 children in care, and about 1,500 were adopted each year. Now there are just over 50,000 children in care at any time. About 2,000 children a year are adopted out of the care system. Last year saw the first rise for many years in the number of children in care being adopted. Although the rise was modest—about 100—it should be seen as a positive sign.

However, I am not complacent. I believe that some local authorities could and should be more proactive in their adoption work, and that can be achieved without its quality being compromised. Services should be better managed, and children should be adopted more quickly.

In this context the Department issued guidance to local authorities last August. The objective was to focus the attention of directors of social services and their senior managers on getting a better grip on planning for and monitoring the progress of children in their care. Since then, the Government's "Quality Protects" programme has been introduced.

The programme brings a new and challenging dimension to the overall improvement of children's services. To that end, the Government have made £375 million available to local authorities over three years in the form of a children's services special grant to assist them in implementing specific "Quality Protects" projects. The general aim of "Quality Protects" is the systematic transformation of the management of social services for children and the outcomes that they achieve.

Adoption is a key element of "Quality Protects". Its objectives include reducing the number of changes of main carers for children being looked after—the hon. Member for Canterbury referred to that chronic problem, which we are determined to address. Further objectives are to maximise the contribution that adoption can make to providing a permanent family for children in appropriate cases, and to reduce the period during which children are looked after before being placed for adoption or other suitable long-term care.

The "Quality Protects" programme was a key element in the Government's response to the children's safeguards review and will be the main focus for guiding and monitoring the improvements. It aims to maximise the use of adoption and to reduce delays while making the right decisions for individual children by bringing adoption back into the mainstream of options available for children.

Does my hon. Friend agree that the prime factor that must always be considered is the best interests of the child? For children who remain in long-term care, we need a continuum—a range of good-quality provision, including foster care, residential care and adoption.

Of course I agree with my hon. Friend, as everyone in the House probably would. Our concern is that there has been evidence in the past that adoption has not been given the priority that it should have been.

The aim of "Quality Protects" is to maximise adoption and to reduce delays. The performance of local authorities will be measured against performance indicators and targets, which include addressing the delay in placing children with new families. We will in future measure the performance of each local authority through indicators that will show the percentage of looked-after children being adopted each year, the average time that children are looked after before placed for adoption and the breakdown of adoption placements.

Can the Minister confirm that the indicators will be made public? Will they be independently monitored—for example, by the Audit Commission as part of its systems charter work?

The indicators certainly will be public information, and the Audit Commission will have an important role to play in the initiative.

I can announce today that targets will be set for the maximum time between entry into care and adoption. Those will be monitored by the social services inspectorate and the Audit Commission as part of the new performance assessment framework. Poor performance will not be tolerated.

The "Quality Protects" grant follows the production and evaluation of plans whose objectives include reducing delay and avoiding children drifting in the care system. Management action plans produced as part of the "Quality Protects" programme to deal with those issues are encouraging. Many authorities are making improvements to their management information systems, which will enable them to tackle more effectively the key indicators of delay and monitoring of children in care.

The development of placement choice is the largest single component attracting "Quality Protects" funding. With that money, local authorities intend to appoint specialist social work staff to recruit more adopters and foster carers, including families from ethnic minority communities, which will make available a wider choice of suitable placements. Other specialist staff will be appointed to progress children through the administrative and legal procedures to secure placements without undue delay.

I can tell the House today that under the "Quality Protects" initiative, £30 million will be spent this year on developing better placement choice, which will include adoption. We expect significant further additional expenditure in this area in the next two years.

Hon. Members will be aware that the Government's White Paper entitled "Modernising Social Services," which was published last November, included a proposal to establish commissions for care standards, which will have responsibility, for example, for regulating and inspecting foster care services and residential homes.

I am pleased to have this opportunity of announcing to the House that we intend that the new commissions should have responsibility for the inspection and regulation of all adoption services, including those operated by local authorities. In this way, adoption will be aligned with foster care services. It will also provide the basis for improving standards generally within the adoption service. We hope to introduce legislation to establish these new care commissions at the earliest possible opportunity.

In addition, through "Quality Protects", we will work with local authorities and the voluntary sector to improve the adoption service. We will monitor performance, improve statistics, promote new consortiums that can help to deal with the problem of inter-agency fees, improve planning, commission research and develop training. Through the social services inspectorate we shall examine closely the progress being made.

This summer, the social services inspectorate will launch a survey of every local authority, beginning in July, to establish progress in implementing the action recommended in the circular to which the hon. Member for Canterbury referred. That inspection will be followed by a supplementary data collection exercise and an inspection of some local authorities. The exercise will provide us with a general picture of the progress that local authorities are making in taking action on the circular and turning their "Quality Protects" action plans into reality.

I am grateful to the Minister. All the announcements that he has made are extremely welcome. As he will need legislation to introduce such a broad range of clear performance criteria, will he consider incorporating in that legislation a reserve power to enforce it in the case of recalcitrant local authorities that do not respond voluntarily?

The performance indicators that I described do not require primary legislation. We are already developing a performance assessment framework for social services. We are also developing the objectives of the "Quality Protects" programme as we go along. The hon. Gentleman's point about adoption services and a reserve power on the part of the Secretary of State will be addressed at some time in the future in legislation on the best value agenda. The best value programme will apply to local social services, and through that process there will be opportunities to explore issues such as those that the hon. Gentleman raises.

I am sure that the House will welcome the tremendous improvements that will become apparent in the quality of adoption services. However, can we look forward to greater openness about the criteria that are used to find the right adoptive parents for children and about how decisions are reached? Decisions must be made in the best interests of children, using the pool of would-be adoptive parents to the best advantage.

Yes, there should be openness at all stages of the process. None of the criteria that are currently used are hidden or obscured from vision. We want people who are willing to adopt children to come forward. We do not want the system to deter or inhibit good prospective adopters from offering their services to help better the interests of looked-after children.

This is a very important debate. Will my hon. Friend also look at the initial cost of applying and registering for adoption? It seems to vary from circumstance to circumstance, and I know that it deters people from putting themselves forward as adoptive parents even when there is a big cry for people to adopt.

I am grateful to my hon. Friend. I pay tribute to her role in all these matters. I am happy to look at the issue that she has raised, and if she or any other hon. Members have any specific proposals, I shall be happy to discuss them at any point in the future, either individually or with the all-party group on adoption.

The hon. Member for Canterbury also raised one important specific point: he called for work to be done to establish a national adoption register of children who might be available for adoption. I am not sure how the details would look, but I am happy to discuss the issue with the hon. Gentleman in more detail. We shall look forward to having that discussion with him.

I congratulate all hon. Members who have spoken in this debate today because it is clear that we all share a desire to see adoption brought back into the mainstream of children's services. That is certainly the Government's view. In that way, we can help to make sure that more children in the public care system than at present benefit from the security and protection that family life can bring.

I want to make it clear to the House that we shall continue the drive to improve access to adoption. I am sure that a lot remains to be done, but we have made a positive start in the right direction. We shall keep both the practice and the law under constant review, and shall not hesitate to take the necessary action in the future to ensure that looked-after children do not become the innocent victims of misplaced theory or ideology.

Adoption will often provide the best solution for a child being looked after by a local authority. We shall work with everyone of good will who shares our ambition to achieve better outcomes for those vulnerable children. Adoption can play a hugely beneficial role in that process, which is why we are absolutely determined to ensure that adoption practices are improved quickly throughout the country.

I hope that this debate will be welcomed in the context of the G7 summit, which will take place this weekend when the world leaders will meet. I am pleased that towards the top of their agenda will be a subject that should concern them greatly—the financial relationship between the richest and the poorest nations.

In previous years, that has been characterised in terms of aid—the rich giving to the poor. However, that is an inadequate picture of the interrelationship, because debt repayments or terms of trade have frequently been heavily skewed against the poorer countries. In the period from 1980 to 1994, the rich north paid Africa $278 billion less for its coffee, copper and other commodities than it would have paid had prices remained stable. In the same period, Africa's debt increased from $84 billion to $217 billion. Thus the rich north paid the poor south less and then lent it money to pay for those losses.

Also during that period, we saw a pattern of falling aid contributions—that certainly applied to this country—so that the United Nations target of 0.7 per cent. of gross domestic product became increasingly distant. We need to aim at what the Chancellor calls "the virtuous circle"—not just the reduction of debt, but increased aid flows and fairer trade policies.

It is gratifying to see that the British Government are now leading the way. Over the years, charities such as Oxfam have been critical of the British Government, and it gave me great joy recently to read in one of its publications that the best proposal on the table for relief of debt was from Britain. That is a change from the past.

The creation of the Department for International Development and the concerted action by the development and finance arms of the Government are making a real impact. Two Cabinet Ministers now work together on the issue and it is really making a difference. The work of the Select Committee on International Development in providing a focus on development issues in the House is also important. Our latest report is on the issue of debt. I commend it to the House and hope that it will influence the decisions that come out of the Cologne summit. I also hope that in future there will be a much greater concerted action between the Treasury, DFID and the Department of Trade and Industry to ensure that the debt, aid and trade aspects of government are linked.

I approve of much that has occurred. I applaud the proposal to sell off International Monetary Fund gold to finance debt cancellation. I applaud the proposals to review and improve the extremely inadequate HIPC—heavily indebted poor countries—scheme, which I shall discuss in more detail later. I applaud the Chancellor's drive to create $50 billion in debt relief and, as part of that commitment, to use unspent parts of the European development fund to finance debt relief. The Chancellor's proposal for a new millennium trust fund to finance additional aspects of HIPC are welcome. His drive to set up a millennium giving scheme so that the whole nation can be involved in debt relief is another good measure.

The growing movement by countries such as Canada and Norway to cancel debt bilaterally is welcome. Third-world debt as a political issue has grown in importance. I pay tribute to the Jubilee 2000 campaign, which is helping politicians throughout the developed world to raise the issue of third-world debt.

A few years ago, it would have been unthinkable to see an article such as that which appeared in The Guardian on Monday, written jointly by the President of the World Bank, James Wolfensohn, and the Archbishop of Canterbury—the world of mammon and God joining together in an unprecedented way.

The thought occurred to me that, as politicians, it is important that we get the message over that many of us are concerned about this issue on humanitarian rather than political grounds. Other groups with whom we try to work on this matter sometimes feel that politicians are there only for political gain. I simply wanted to mark that card. Many of us are genuinely concerned about the issue and feel that we should link with Churches and take the same approach.

I agree with the hon. Gentleman. We are human beings and this issue has captured our imagination. Several weeks ago, I went to St. Albans cathedral, which is not where I normally strut my stuff. Some 600 people had turned out to say that this issue brings together the political world and the world of the Churches in a way that allows them to play a shared role.

All those moves are welcome, but we are still in the foothills. A large number of poor countries are still being crippled by debt that they cannot possibly afford to pay back. The HIPC initiative, which was much heralded a few years ago, has been sadly inadequate. Only three countries have received help and even they were only marginally assisted. For example, Uganda's gains were wiped out by a collapse in coffee prices, which again rendered its debt unsustainable because the calculation of sustainable debt is based on the value of exports. I hope that that formula will at least be modified; calculating sustainable debt on the basis of export prices is a deeply flawed procedure and I hope that the G7 will look at that again.

It takes six years for debt relief to come through, which is hardly urgent action in the face of mass poverty, health services that do not exist and widespread illiteracy. Above all, the countries that have been through the HIPC process have gained little, because debt that was not being paid, and which could not have been paid anyway, has been cancelled. The people of those countries have received no tangible benefit from the relief of a purely notional debt.

The situation has been much worse since debt relief has had to be linked to IMF structural adjustment programmes. If one follows IMF programmes, one may receive debt relief; however, those programmes are geared not to immediate poverty relief, but to financial rectitude by bankers' standards. IMF programmes have been linked with mass unemployment as, for example, inefficient parastatals have been privatised.

The requirement for cuts in state spending on health and education has been particularly damaging, so IMF programmes have caused cuts in literacy programmes. According to the World Development Movement, the introduction of school-user fees in Ghana led to primary school drop-out rates of up to 40 per cent. How on earth does one increase prosperity by increasing illiteracy? In Mozambique, health charges introduced under structural adjustment have meant that patients visiting hospital have to pay user charges, which simply means that people do not go to hospital. That is scorched-earth economics, which creates the stability of the desert.

One of the aims of the IMF is to increase per capita earning in those poor countries, but how does one achieve that by withdrawing reproductive health facilities? How on earth can a country whose population is doubling every 25 years increase its per capita earnings when family planning services are being withdrawn? That is doomed to failure. Mercifully, there seems to be a realisation that debt relief does not help poor countries unless it is linked with joined-up policies to lessen poverty. James Wolfensohn of the World Bank is recognising the importance of investment in health and education, good governance, social institutions and a worldwide drive against corruption.

If we want those countries to thrive economically, human rights issues have to come first. We have set targets, as has the world community, such as the reduction by half by 2015 of the proportion of people living in extreme poverty. Other targets, such as universal primary education by 2015, the elimination of gender difference in education, access to reproductive health services and reductions in maternal mortality, have also been set. Those targets must be at the centre of our debt relief and aid programmes.

The way to achieve prosperity and reduction of poverty is through ensuring that health and education services are expanded. In particular, we cannot have debt relief policies that do not leave countries and Governments the freedom to spend at least 20 per cent. of their revenue on health and education.

The African countries that have grown quickest are those, such as Botswana, with a good record on democracy and a relative lack of corruption. The ones that have sunk like a stone are those such as Nigeria, which have corrupt military rule and where corruption is the byword. If hon. Members want to see total privatisation, market rule and capitalism unrestricted by regulation and taken to their ultimate, they should go to Nigeria and see misery and the ultimate failure of trickle-down economics.

By separating debt relief from our aid and economic policies that support the poor we have made our debt relief policies ineffective—they have been countermanded by IMF structural adjustment programmes—so let me ask my hon. Friend the Financial Secretary what the Government are hoping for as they go into the Cologne summit. Will there be, alongside debt relief measures, proposals that will ensure that investment in human capital is increased? We cannot have structural adjustment programmes that increase poverty in the name of financial rectitude. How can we justify a country such as Mozambique having to pay 25 per cent. of its budget on debt servicing?

What action will the Government and their partners be taking to shorten the period in which countries qualify for debt relief? Six years is a ludicrously long time for a country to wait when it is drowning. Will the G7 change the definition of debt sustainability, as the principle of basing it on export sales seems to be seriously flawed?

I should be most grateful if my hon. Friend would tell me what action the Government are taking in respect of the cancellation of bilateral debt. I applaud my right hon. Friend the Chancellor for seeking to achieve movement among the whole G7 towards concerted action. We can tackle this problem only on a worldwide basis, but some countries, for the best of reasons, are going their own way. Canada and Norway are saying that they will cancel all their bilateral debt. We have a policy of cancelling debt that has been accrued on concessionary terms, but it would be interesting to know whether the Government intend to make any change in that and whether we will follow the path taken by Norway and Canada. I suspect that other countries will do so.

What will happen to increase the number of countries that will qualify for debt relief? There are many countries which we would all recognise as poor that do not qualify for debt relief. It would be interesting to know some of the detail of what is happening to my right hon. Friend the Chancellor's proposals for selling off IMF gold. Have they been generally accepted in the IMF? There have been positive moves recently; the change in the position of the German Government, for example, is very welcome. Is there still an ambition to sell off IMF gold, and how much will be sold?

What response are we receiving to the proposal that unused European Development Fund money, which has not been spent and is clogged up in the morass that is development in Europe, could be used to achieve debt relief? What has happened in respect of the imaginative proposal of my right hon. Friend the Chancellor for a millennium fund to aid debt relief?

The world is looking for boldness from Cologne. The biggest issue facing the world has to be the abject poverty of many of its citizens. The cost of many of those proposals is nil in effective terms. Many debts will not be paid because they cannot credibly be paid. The EDF money is budgeted anyway and the sale of IMF gold would inconvenience no one. Many of the other costs would be spread over many years. The benefits that we would gain through the increased prosperity of the developing world would far outweigh any cost.

I know that Treasury Ministers met last weekend to work out their response on third-world debt. I applaud the lead taken by the Chancellor, but he may be dragged back by other G7 participants. I hope that this weekend the Prime Minister will exercise real leadership, and will make our G7 partners see that they can make history by taking this issue forward and by building on the momentum in the world for the relief of third-world debt.

I look forward to hearing what my hon. Friend the Minister has to say about our intentions and about what we have achieved as we are poised for the meeting of the Finance Ministers of the G7 countries and the leaders of the world in Cologne this weekend.

I congratulate my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) on securing this Adjournment debate, especially given the context in which he has made his remarks. It is well known that he has been interested in these matters for many years, and he has considerable expertise. I am delighted to respond to him.

It is particularly pertinent to discuss this issue in the lead up to the Cologne summit. My hon. Friend rightly mentioned the work of Jubilee 2000, which has involved many people, including the Churches and voluntary groups in our constituencies. Its campaigning work has highlighted this problem. I was pleased to be in Edinburgh on Saturday to participate in the well attended proceedings there.

The debate is timely because last Friday the Select Committee on International Development published a welcome and useful report on international debt. It strongly endorses the Government's action and proposals, and acknowledges that the United Kingdom is at the forefront of debt relief. As is normal practice, the Government will respond to the report in due course.

As I said, the debate is timely because of the discussions in Cologne. I shall address that issue in more detail, but first I want to dwell on the question of why debt is an issue. We all know why it is important to move forward on debt and poverty relief for the poorest countries of the world. We all know of countries that are weighed down by the burdens of being forced to spend more on their debt interest payments than they are able to invest in the young, the sick, the undernourished and the poor.

Debt relief is an economic issue, because a mountain of inherited and immovable debt stands in the way of economic development in Africa and elsewhere. That is why it is entirely appropriate for the Treasury and the Chancellor of Exchequer to be heavily involved in this issue, as they have been. Debt relief is also a moral issue, and I make no bones about it. The debt is a burden imposed from the past on the present. A third of the world's children go to bed hungry: 30,000 children die every day from preventable diseases and 1.3 billion people live in poverty.

What does the debt burden do? It deprives millions of people of their chance of a future. It prevents them from breaking out of the vicious circle of poverty, and it prevents investment in what really counts—health, education, and the advancement of economic opportunity. My hon. Friend was right to dwell on that.

I shall outline how the Government are constructively engaging and leading our international partners in the efforts to tackle this most important issue. I agree with my hon. Friend that the 1996 HIPC—heavily indebted poor countries—initiative is delivering too little, too late for the poorest countries. It is not helping the poorest countries to tackle their chronic poverty, and it is not helping them to invest in a foundation for sustainable long-term growth—in particular, investment in primary education and health care. That is why we have been campaigning for faster, deeper and wider debt relief.

In September 1997, we launched the Mauritius mandate, which is aimed at speeding up the process, so that three quarters of those countries should have reached firm decisions on the amounts and terms of debt relief by 2000.

At the annual meetings of the International Monetary Fund and the World Bank last October, we secured a fundamental review of the HIPC initiative. Equally important, we secured the recognition of the developed countries—in particular our G7 partners—that the current scheme required major changes to deliver its key objectives of debt sustainability and, more importantly, alleviation of poverty.

Last weekend, the Chancellor secured the agreement of his G7 Finance Minister colleagues to a package that will lead to the cancellation of $50 billion of debt by 2000. Subject to minor details, final agreement is expected at the summit this Cologne weekend.

We are committed to the agreed international target of halving the proportion of people living in abject poverty. On 3 March, my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for International Development set out a comprehensive four-point plan to deliver a new contract with the poorest countries.

The plan proposed, first, that by the end of 2000 we move from only a couple of billions of debt relief, achieved in the last few years, to a cut in the debt of $50 billion. Secondly, it proposed that we increase aid—in the form of grants, not loans—flowing from the developed world to the developing world to a total of $60 billion.

Thirdly, our plan proposed that we sell the gold—$1 billion to $2 billion of IMF gold—and establish a new millennium trust fund to pay for this enhanced initiative. Fourthly, we challenged the British public to join us and to double their charitable giving to $1 billion through millennium gift aid. We know how generous people in this country are, and that they are conscious of the problem. I am sure that all hon. Members will have received representations on this matter. There is a willingness among the British public to move forward on this issue.

Last week, my right hon. Friends the Chancellor and the Secretary of State for International Development set out our proposals to translate debt relief quickly into real financial improvements for the countries concerned, and to make debt relief an essential part of poverty alleviation. We also proposed last week to shorten the timetable to ensure that the countries that have been involved in the HIPC initiative feel the benefits of debt relief after three years rather than the current maximum of six years. My hon. Friend made that point well in his speech.

We need to make real headway in regard to the large amount of aid debt that is outstanding to HIPCs. We also need to increase the amount of aid given by developed countries to poor countries and to refocus future aid, providing it in the form of grants rather than loans.

We have taken the lead on the international stage in trying to unshackle the poorest countries from their unsustainable debt burdens. We have written off, unilaterally, $5 billion of Overseas Development Agency debt; we have increased the aid budget by 28 per cent. in real terms, which means £1.6 billion over the next three years; and we have guaranteed that all future aid will take the form of grants rather than loans.

It is clear that, over time, an enhanced HIPC initiative will cost more. It is impossible to estimate the size and timing of the costs precisely, but if an enhanced initiative is to become a reality, we need a credible and robust approach to tackling them. I have already mentioned our call for the sale of gold to meet the extra costs that fall to the fund.

Last month, my right hon. Friends the Chancellor of the Exchequer and the Secretary of State for International Development proposed the establishment of a millennium trust fund, which will finance the setting up of a more ambitious framework for faster, wider and deeper debt relief. The new fund will consist of the resources of the existing HIPC trust fund, to which Britain has already pledged $71 million. We have called on the world's richest countries to increase their contribution. It is within their power to provide a better deal for poor countries, and for the world's poorest people.

Last week, in a further demonstration of our commitment, my right hon. Friends pledged another $100 million to the millennium trust fund. That took our total pledge to $171 million, which is more than any other country has committed. We now encourage our international colleagues, and possibly the private sector here, to make their donations. We have called on the European Commission to contribute resources from the European Development Fund to the millennium trust fund, and we have called for the EDF to contribute 1 billion euro, over time, to the costs of debt relief. In the coming weeks, we will press our partners in Europe to support that call.

We are convinced that such resources could make a major contribution to debt relief, and therefore to the alleviation of poverty in the poorest countries, enabling them to tackle the greatest problem of our generation: the lack of primary education and health care for the poorest and most deprived to which my hon. Friend referred. Those resources can provide the key that will unlock the door to escape from chronic poverty.

The Government have a very good record on both debt reduction and the alleviation of poverty, but will my hon. Friend assure us that their determination to tackle those problems will not cease until millions of children no longer die unnecessarily every year because their countries have no basic health or education services?

Yesterday I hosted a very successful meeting with Christian Aid. There was a huge response from Members of Parliament, all of whom were very concerned about the Cologne summit. They were keen to back the Government—to urge them to go to Cologne and ensure that achievements were made, and the determination maintained, until real improvements were brought about for the benefit of the millions of people throughout the world who depend on the attaining of the goals outlined by my hon. Friend.

I thank my hon. Friend for making that point; I know that she takes a great interest in these matters.

We want to establish a new dialogue between debtors and institutions. Our commitment is essential. The IMF programmes clearly protect spending on health and education, and my hon. Friend need not doubt that we shall use our best endeavours in this regard.

Our actions have had a galvanising effect. Over the past few months, many developed countries—and all the G7 countries—have set their own proposals for reform of the HIPC arrangements. Although the emphases are different, the initiatives have a common theme: the need for a more ambitious framework that will provide faster, wider, deeper debt relief, remove unsustainable debt burdens and allow resources to be reallocated to programmes that reduce poverty.

In achieving those aims, we must work together. The days of unilateral action are gone. The best way forward is now through collective international effort, which means new co-operation and partnerships between donors and recipient countries. Working together, we can achieve much more than we can when working alone.

We also want debtor countries themselves to be involved in the debate on debt relief. That brings me back to a point that I made to my hon. Friend the Member for Clydebank and Milngavie. The HIPC capacity building programme that we are helping to finance is working with 21 countries to improve their debt management, so that they can understand their debt position, take control of it, and adopt the right policies on new borrowing. It is important for poor countries to take the opportunities open to them to press their own agendas.

Although debt relief is important, it is not an end in itself. The United Kingdom's bilateral aid programme for HIPCs is eight times as large as the receipts of interest payments. Debt reduction must be accompanied by appropriate aid programmes and economic management. The billions saved in debt-servicing payments must not be wasted on weapons or lost to corruption; they must be invested in health, education and economic development.

The international community is placing more emphasis on the assessment of the impact of policies and programmes on the poor. Greater efforts are being made to attend to their priorities, and to build consensus by means of consultation with civil society. However, much remains to be done. That applies to all development programmes, not just those that are funded through debt relief.

May I take up a point made by the hon. Member for Clydebank and Milngavie (Mr. Worthington)? Is it not important to ensure that, after the provision of debt relief, democracy is delivered and Governments use the money wisely?

That is a good point. We are certainly committed to achieving that end.

Will the Minister give way?

Yes, very briefly. I have only a couple of minutes.

rose—

Order. This is a half-hour Adjournment debate, and Opposition Front Benchers do not normally participate in such debates.

With your permission, Mr. Deputy Speaker, I will give way briefly.

I thank the Minister. I merely wish to express the Opposition's support, to congratulate the hon. Member for Clydebank and Milngavie (Mr. Worthington) on raising such an important matter, and to ask the Minister to undertake to place in the Library, immediately after the summit, a report relating specifically to this part of the negotiations at Cologne.

We make sure that all our reports are disseminated in the normal way after a summit.

I am very pleased to have been able to reply to the debate. We must ensure that this item is placed at the top of our agenda, and that is what the Government are doing.

It is often dangerous to draw too many conclusions from statistics, but I start the debate by drawing to the House's attention a few alarming statistics. In the past 10 years in this country, the number of children with asthma has doubled. In the United Kingdom, 1.5 million children now have asthma. What is deeply concerning is that that is one of the worst rates in Europe. More troubling than that is the fact that the trend appears to be rising.

Those are harsh facts. I want to look in a little more detail at some of the reasons behind the increase in asthma and to give the Minister a chance to set out the Government's response to those alarming figures.

Earlier this year, I carried out a survey of schools and general practitioner practices in the Winchester constituency to try to establish whether what individuals were saying to me in surgery and in writing was true. There was clearly a perception in Winchester that the number of children seeing GPs about asthma had increased.

I would not for a minute try to claim that my constituency office, with all its volunteers, is anything like MORI, the opinion survey organisation, or Government scientific advisers, although these days one is never quite sure, but we carried out a survey of schools and doctor practices in the constituency. Thirty-three schools and seven GP practices responded. Two thirds of the practices stated that, in just the past couple of years, there had been an increase in the number of children with asthma coming to their practice. Similar results came from schools. Over half the teachers involved claimed that there was a much bigger increase in children coming to school with asthmatic problems.

As I say, the findings in Winchester are certainly not scientific, but they appear to be backed by national research work, particularly by the National Asthma Campaign. I am sure that hon. Members on both sides of the House will know that, last week, the campaign revealed the results of its most recent audit; it audits asthma trends annually. It announced that a study in Leicester had found that asthma and wheezing in children under five had doubled in that location in less than a decade. In 1990, only 12 per cent. of children had been diagnosed with asthma. By 1998, the figure had risen to 21 per cent. Wheezing attacks within a 12-month period had doubled from 12 per cent. in 1990 to 23 per cent. in 1998.

The National Asthma Campaign concludes that approximately one in seven children aged between two and 15 have asthma symptoms that require treatment; that is where we draw the figure of 1.5 million children from. Although I want to concentrate purely on the effects of asthma on children, we should not forget that more than 1.9 million adults—those over 16—suffer from asthma.

All those figures and findings suggest that we have a major problem with asthma among children. I conclude that it will be in danger of getting seriously out of control if the trend goes upwards.

As well as the obvious distress and suffering that asthma causes children and their parents, the increases have other severe implications, not least the cost and burden to the national health service. The total cost of asthma to the health service is estimated to be about £709 million, at today's figures. In addition, we should consider the cost involved in providing inhalers and asthma prescriptions, which is estimated to be about £500 million.

The National Asthma Campaign says that, if we go beyond child asthma and take into consideration the number of days lost and the burden on society that asthma brings, the figures increase dramatically and society has a major problem in relation to the costs involved in the health service. That, in itself, should be an argument for some urgent action to tackle the problem.

There are other hidden costs, particularly the cost to a child's education. The rising number of children with asthma means a rising number are off sick, missing school days. Having asthma is one of the most common reasons for children missing school or pre-school nursery.

In 1995, "Blue Peter" carried out an asthma survey. More than 10,000 children responded. Eight per cent. said that they had missed at least a month of school as a result of problems with asthma. A recent large study of school children aged between 12 and 14 found that a substantial proportion of adolescents had asthma symptoms that interfered with their schooling and day-to-day lives. Another concern was that many of them were not receiving treatment for that asthma. One third of the children who took part in the survey and had experienced asthma symptoms said that they were not receiving some form of medical support to back them up. That under-diagnosis of asthma and the consequential missed school days cannot be good for the children's education, or their social relationships

The most worrying factor is that we do not really know, or we do not appear to know, why all that is taking place. After we carried out the survey in Winchester, I was surprised at the findings and asked to see a Dr. Roberts, who is the asthma specialist at the Royal Hampshire county hospital in Winchester. Politicians always seek a simple answer. I just asked, "Why is it happening? What are the reasons? There must be a simple explanation."

In addition, we were involved in a battle to try to persuade the public that it would be sensible to build a park-and-ride facility in Winchester. I wanted to be able to use the asthma results to support the case for the park-and-ride facility to keep cars out of the city centre, but clearly it is not as simple as that.

The doctor explained—and my research since explains—that there are endless theories as to the cause of the big increase in asthma. Pollution and traffic are obviously the simplest arguments that people can advance, but one of the most compelling arguments that I have heard is that living in a cleaner society has an impact. In the past 10 or 15 years, facilities in homes have meant that they are cleaner. Whereas before, in a dirtier house, children had a chance to build resistance to viruses, in a cleaner society, individuals and children do not build up resistance and then are more vulnerable and susceptible to asthma.

Other theories have been put forward. Only yesterday, the World Health Organisation announced details of a study that it had undertaken in Europe, which led it to claim in the press:

"Car fumes kill more than crashes."

Again, it had clear evidence that there was a link between pollution from cars and increased cases of asthma.

I have heard the other argument—particularly in a rural constituency such as Winchester—that changing farming patterns are one of the causes. Of course, the most obvious link that people are making at the moment is with genetically modified crops. They are asking whether those crops will have an impact. Letters from constituencies following publicity about the survey suggested that oil-seed rape was an increasing concern.

We know that, recently, farmers have turned much more to growing oil-seed rape. Indeed, one of ways in which to decrease transport pollution is to have transport run on oil-seed rape, but by growing more of the crop we could create asthmatic problems. An organisation representing hyperactive children, which has concerns about food additives, has raised concerns to the effect that changing diets, and the things that we are adding to food and giving to children, may be a cause.

The only conclusion that I can draw from all that information is that the only thing individuals agree on is that no one really knows what the causes of the increases in asthma are. That needs to be the starting point for Government action. We need to be able to have more research to establish what exactly the cause is.

I am aware that the Government are active on the issue. I make it clear that I did not secure the debate to criticise the Government for any inaction. Rather, I should like to press the Minister for some more information about the research that is taking place.

In a written answer to me last Friday, the Minister was helpful in explaining what the Government were doing in relation to research. He said that they were supporting a major initiative on the relationship between air pollution and respiratory diseases. Will the Minister use the debate to confirm when that report and the conclusions will be made available, and if they will be made available publicly? Will he go further and explain why the link is being made between air pollution and respiratory diseases? Are the Government planning any research to look at the connection between respiratory problems such as asthma and other issues apart from air pollution, some of which I have touched on; or is it the Government's conclusion that air pollution must be the main reason—which is why they are putting energy into research in that particular area?

I should be grateful if the Minister let me know whether the Government had plans specifically to examine the number of children who have asthma. I have quoted some data and a figure, but judging by a written reply that the Minister gave me, which looked at the number of children going into accident and emergency departments and having in-patient care in hospitals, it appeared—unless I misread the data—that there had been a decline in the number of children going into hospital with asthmatic problems. There seems to be a contradiction between research done by campaign groups and some of the Government's data. Is it perhaps worth while investing additional resources in detailed research to discover whether the increases that I have described are indeed occurring?

The Government commission an annual health survey for England. According to the 1997 survey, 29 per cent. of boys and 18 per cent. of girls aged between two and 15 have been diagnosed with asthma at some time. I should be fascinated to know—perhaps the Minister will write to me on it—why boys feature so much higher than girls in those figures, and how those figures compare with previous studies done by the Government on the matter.

We should certainly be reassured that the Government are taking the issue seriously, and that their programme to address it includes much research. For me, however, the critical issue is whether the scope of the research is sufficiently wide. If it is not, the research will raise more questions than it provides answers.

I should like also to consider ways in which the Government might assist those working in the public health field, and particularly in education, in dealing with some of the consequences of childhood asthma. Currently, the response of various local education authorities to the growing problems of asthma in schools is very mixed. A recent study examined specifically how LEAs were tackling the problem, by sending, in late 1998, a questionnaire to more than 200 LEAs. Although only preliminary research has been done, and the results of the study have not yet been made public, those results are a matter of concern.

One third of LEAs said that they do not have a policy on how to deal with asthma in schools, and less than half of LEAs and schools said that they had in place a protocol on what to do if a child has an asthma attack in school. To my surprise and horror, almost half the LEAs said that they did not have a commitment to a no-smoking policy in school—which is surely one of the causes of asthma attacks.

I hope that, when the study is complete, the organisation involved will send the findings to the Government for consideration. Today, however, I should like to press the Minister to have a word with his colleagues in the Department for Education and Employment, to ascertain what advice the Government are giving to LEAs. Perhaps he will also use his reply to clarify who is responsible and accountable for securing health in schools. Although I know that there have recently been Government announcements on that issue, it would be tremendously helpful if he could say who has responsibility as the lead organisation in addressing it.

I hope too that the Government, when they are considering good health in schools, will consider also the issue of asthma, and good practice across England. Some local authorities have been working with local asthma groups to establish very good practice.

Something is wrong—and it is always very troubling when one does not know the cause of a problem. Moreover, recent trends seem to be going in entirely the wrong direction. The problem has to be tackled, not only because of the uncomfortable and unpleasant nature of asthma both for children and for parents seeing their children suffering from asthma attacks, but because it is becoming an increasing burden on the health service. The problem has to be tackled also because it is affecting children's ability to have an enjoyable childhood and to play their full part in the education system.

I hope that the Government are taking the issue seriously, and that, in a few moments, the Minister will be able to assure us that the research being done is sufficiently broad to ensure that, perhaps in a year's time, we shall better understand the problem, so that we are able to reassure parents who have children with asthma. Once we have a greater understanding, perhaps the Government will be able to implement policies to tackle the causes of that growing problem.

I congratulate the hon. Member for Winchester (Mr. Oaten) on his good fortune in the ballot, and particularly on dealing with this subject today. He has done the House a good service in drawing attention to some of the concerns that he has expressed. I am also delighted that he found my parliamentary answers helpful. It is the first time that anyone has said that to me, and I am deeply grateful to him for doing so. Perhaps we shall have to go back to the Department and re-examine how we answer questions, but I am grateful to him for those comments.

The hon. Gentleman raised some specific issues on research and on the direction of the Government's research programme, and I shall try to address them later in the debate. He also raised some technical issues, on which he said that he would be happy for me to write to him. I shall certainly take him up on that, and am sure that we shall correspond on some of those technical issues.

I reassure the hon. Gentleman, and the House, that the Government share the widespread concern that he has articulated so well today on the burden resulting from asthma, particularly among children. Asthma is the most common chronic disease in the United Kingdom. It is also the most frequently reported cause of longstanding illness among children.

Children are much more likely than adults to be treated as hospital in-patients for asthma: children under 15 currently account for almost one half of the ordinary admissions and day cases for asthma. Only 2 per cent. of the approximately 1,300 asthma deaths a year in England are among children. Although each of those deaths is a tragedy, research suggests that many of them could have been prevented by better adherence to treatment.

Asthma has a considerable financial cost—to which the hon. Gentleman referred—in addition to its human cost. The national health service spends about £600 million annually in treating asthma, including £466 million on general practitioner prescriptions in the most recent year for which data are available. We should also not forget the indirect costs of asthma, including, for children, days off from school. The hon. Gentleman was quite right to mention those other costs in his speech.

The hon. Gentleman was correct also to say that there are no comprehensive data on the number of people, of any age, with asthma. However, on the basis of all the available information, it has been estimated that

"the prevalence of asthma sufficiently severe to require regular medical supervision"—

in hospital or other settings—

"is from 4 to 6 per cent. in children."

That estimate was quoted in "Asthma: An Epidemiological Overview", which was produced, in 1995, by the Department of Health's central health monitoring unit.

According to the health survey for England 1997, 23 per cent. of boys and 18 per cent. of girls aged two to 15 had been diagnosed at some time in the past as suffering from asthma. Similarly, in the international study of asthma and allergies in childhood which was published last year in the British Medical Journal, 20 per cent. of surveyed children aged between 12 and 14 had had a diagnosis of asthma at some time.

The prevalence of asthma was, therefore, apparently rising for three decades, up to the late 1980s or early 1990s. Since then, hospital admissions, GP consultations and mortality rates have all been levelling off, perhaps reflecting more effective treatment and higher quality medical care. However, local studies—such as the one conducted in Leicester, to which both the hon. Gentleman and the National Asthma Campaign, in its "National Asthma Audit 1999/2000", referred—suggest that, in children at least, the prevalence of asthma may still be on the increase.

We do not know for certain what causes asthma, but it is likely that an interplay between genetic and environmental factors is an important factor. It is a commonly held belief that the rise in the prevalence of asthma must be the result of air pollution, particularly from motor vehicles. However, increasing levels of asthma have been recorded in countries such as Sweden, Fiji and New Zealand, which do not suffer from high levels of air pollutants.

The Department of Health's committee on the medical effects of air pollutants, in its 1995 report on "Asthma and Outdoor Air Pollution", concluded:

"with regard to the initiation of asthma (that is, causing the disease in the first place), most of the available evidence does not support a causative role for outdoor air pollution".

Therefore, although exposure to air pollutants can produce a worsening of symptoms in those suffering from asthma, factors other than air pollution—allergens and the role of infections, for example—are likely to have had more of an impact on the number of people suffering from asthma.

Nevertheless, air pollution is associated with asthma attacks and with other diseases of the lung and heart. We remain concerned to investigate those issues further, and also to improve air quality in the United Kingdom. In 1997, the Government published a national air quality strategy, which provides health-based standards and objectives for eight of the main air pollutants that can affect human health, including carbon monoxide, lead, nitrogen dioxide, ozone, sulphur dioxide and other chemicals. The strategy brought together existing systems for controlling pollution and introduced a new system of local air-quality management.

We have reviewed the national air quality strategy to examine how further improvements in air quality could be made more effectively and more rapidly. In January 1999, we issued the report of the review for consultation. The consultation period closed in April, and the outcome will be published later in the year.

Advice to the general public about air quality is available through Teletext and Ceefax and through the air quality helpline. The Department of Health and the Department of the Environment, Transport and the Regions work together to determine how simple messages about the health effects of air pollutants can best be communicated to the public. A leaflet, "Air pollution—what it means for your health", was published last year.

The hon. Gentleman repeatedly raised the question of research. The Government continue to sponsor research on both asthma in general and possible links between outdoor and indoor air pollution and asthma. A major £3 million research programme on outdoor air, jointly funded by the Department of Health, the Department of the Environment, Transport and the Regions and the Medical Research Council, has recently come to an end, and it will be fully evaluated toward the end of this year. The Department of Health intends to issue a further call for research proposals shortly, predominantly on the health effects of outdoor air pollution. A joint Department of Health/Department of the Environment, Transport and the Regions £1 million three-year research programme on indoor air is currently under way, and a number of studies are examining the effects of air pollutants on people with asthma.

The Medical Research Council spends about £2 million a year on research into prevention and treatment of asthma and related matters. The National Asthma Campaign is managing, on behalf of the NHS Executive, the NHS national research and development programme on asthma management. We welcome the participation of, and the close relations we have with, the National Asthma Campaign. The hon. Gentleman expressed concern about the future direction of asthma research, but perhaps he will draw comfort from the fact that the NAC plays a leading role in determining the course and conduct of the research effort. He also asked about the publication and review of research data: we always publish that information.

In the NHS, management of asthma, in children as in adults, mainly takes place in primary care. The Department of Health has provided a national framework for the provision of general medical services for asthma in the chronic disease management programme. In that programme, GPs set up and oversee organised programmes of care, with clearly understood arrangements for any care shared with the secondary sector; 94 per cent. of GPs now participate in the CDMP for asthma.

We recognise that proper management of asthma during school hours is a very real issue for children, their parents and their teachers, and the hon. Gentleman is right to draw attention to that problem. That is why we have ensured that information about asthma has been provided on the "Wired for Health" website, which was launched in March as part of the national grid for learning and which provides teachers with health information on a range of conditions. "Wired for Health" is the Government's main communication tool for our healthy schools initiative, which is jointly funded by Department of Health and the Department for Education and Employment and is a key part of our strategy for "Our Healthier Nation".

The "Our Healthier Nation" Green Paper set out the Government's philosophy on improving health in England. We proposed that our health strategy should have twin overarching aims: to improve the health of everyone, and to reduce health inequality—to narrow the gap between those with the best health and those with the worst. We proposed to achieve those aims by introducing the concept of a contract for health, whereby Government, local organisations and individuals all recognise and act on their share of responsibility for improving health.

At Government level, we recognise that we have a responsibility to tackle the underlying causes of ill health: poverty, poor housing, unemployment and pollution. Government must take the action which only they can so that local organisations can play their part and individuals can make the decisions that allow them to take control of improving their own health. The "Our Healthier Nation" White Paper, which is due shortly, will set out the detail of how we envisage that happening and developing.

Returning to the subject of the "Wired for Health" website, I believe that it demonstrates the commitment to partnership which is a fundamental part of the Government's approach to health issues. It gives access to the National Asthma Campaign's own material on asthma. In respect of asthma in school, the website builds on work previously undertaken with the National Asthma Campaign on the guidance entitled "Supporting pupils with medical needs", which was issued jointly by the Department for Education and Employment and the Department of Health under the previous Administration, in 1996.

The NHS is making increasing use of the internet and NHSnet for posting reference material. Over the next couple of years, a number of developments should help to improve both access to and the quality of information available to the public on health and health services. For example, work is taking place to develop a national electronic library for health, to provide patients, public and clinicians with access to accredited health and health care information. The national electronic library for health will include information on healthy life styles, medical conditions, diseases and treatments, and about the effectiveness of different treatments; it will also provide a reference guide to who does what in the NHS. The library project is working in conjunction with a range of other related initiatives, including NHS Direct, which has an important contribution to make in this respect and which will be available in all parts of England by the end of next year.

I have referred several times to the National Asthma Campaign. In recent years, the Department of Health has been able to give that organisation a project grant to create a childhood asthma education officer post, as well as grants towards the costs of its asthma helpline. We also assisted the introduction of a new personal asthma card—the "Control your asthma" card—to help sufferers to manage their condition. I should like to take this opportunity to pay tribute to the sterling work that the National Asthma Campaign does to provide support and information for children and all people with asthma and their carers. We greatly value the good working relationship that we have with the National Asthma Campaign.

Let me assure the hon. Gentleman that the Government take asthma, not least as it affects children, very seriously indeed. We shall continue to do all we can to improve knowledge of the causes of asthma and to make life as normal as possible for all those who suffer from it—perhaps I should have declared an interest earlier, for I too am an asthmatic. The Government will continue to work with medical and other health professionals, the National Asthma Campaign and all those with an interest in the field, so as to ensure that our commitment to and ambition for a first-class NHS for all the people of our country applies as much to those who suffer from asthma as to those who suffer from any other condition.