This is the first time that I have had the opportunity to speak in the new surroundings of Westminster Hall. I welcome the fact that I can lay papers in front of me and take a drink during a speech. I hope that holding the debate in this Chamber will not detract from the argument of those suffering at the hands and sharp practices of some permanent health insurers.

My purpose is to highlight the problems of some people who have contracted chronic illnesses and subsequently found that their insurance policies, which should have covered them for loss of income, have not been honoured. According to the 1996 Office of Fair Trading report, permanent health insurance is an insurance policy to replace people's income should they become unable to do the job for which they are insured. Policies usually cover up to 75 per cent. of an individual's salary until the time that the individual loses employment, but payments are less any state benefits to which he or she is entitled. They do not cover any payments for disability.

When people are unable to continue work due to chronic illness, the problems can be more complex than first imagined. People who have permanent health insurance through their employers feel safe in the knowledge that such an eventuality, hitherto considered unlikely, is covered. However, I have discovered that the illness can often be the least of an individual's worries.

The 1996 OFT report was set up because

"the various health insurance products appeared to be complex, with sales often made to vulnerable consumers, and there appeared to be substantial scope for misunderstanding and misselling".

The report dealt mainly with permanent health insurance taken out by individuals, who have recourse to the services of an ombudsman. It did not deal with the group insurance policies taken out by employers. The difference between the policies is that one has access to arbitration.

In the report, the OFT states that

"it should be borne in mind that some 60 per cent. of those who are covered are protected by group policies—and the most vociferous of disappointed claimants fall almost exclusively in this category."

The problems that it highlighted are: difficulty in making claims, probably due to ill health; difficulty obtaining redress; and inadequate knowledge of the terms and conditions of the policy. There is an apparent lack of regulation in that part of the insurance industry that leaves a small but significant number of people vulnerable to sharp practices by unscrupulous insurance companies. In many instances, those people suffer the pain and anxiety of having recently been diagnosed as suffering from chronic illnesses that have forced them to give up employment.

I became aware of the issue through the case of my constituent, Mrs. Doreen Buckland. She is insured with the largest insurance company in the United Kingdom, UNUM, which mainly practises in the group permanent health insurance field. Only 10 per cent. of its clients are individual private health insurance customers. In the booklet that UNUM gives to its claimants regarding its disability counsellors, it describes itself as follows:

"Over the years UNUM has firmly established a position throughout the United Kingdom as market leader in Group Long Term Disability Insurance.

Its parent company, UNUM Corporation, an American specialist insurance company was established in 1848 and now has assets of $15.5 billion.

The combined strength of the two major transatlantic forces in this field enables UNUM to provide clients with products and services of the highest standard and confirms UNUM as the world leader in disability insurance."

Mrs. Buckland suffers from lupus disease, which has 30,000 sufferers in this country, 90 per cent. of whom are women. Unlike other illnesses such as myalgic encephalomyelitis, which also relates to this subject and to which I think other hon. Members will refer, it is a certified disease that can be identified and clearly diagnosed. She had been ill for seven to eight years and was finally diagnosed as suffering from lupus disease in 1997. That was confirmed in a letter from a consultant rheumatologist at Queen Mary's hospital, Sidcup, on 3 December 1997. The company that employed her submitted a claim to UNUM in February 1998. Under the terms of the policy, she should have received payment from UNUM in the following March, but instead she was visited by a UNUM counsellor who, in her words,

"was not interested in my problems but was merely looking for reasons for UNUM to reject my claim".

In April 1998, a letter to UNUM from Dr. Timothy Godfrey, a consultant rheumatologist at Guy's hopsital, set out the condition from which Mrs. Buckland was suffering and confirmed it as systemic lupus erythematosus. In May 1998, Mrs. Buckland was granted disability living allowance. Later that month, UNUM sent a letter declining her benefit and any liability under the terms of the contract.

On 29 May 1998, immediately after receiving the letter, Mrs. Buckland's employer wrote to UNUM outlining its concerns about the decision and the disregard for her medical condition. The employer then appointed an independent professional insurance marketing services company to prepare an appeal. A visit was made to UNUM, which was dealt with by two of its representatives. Mr. Williams, an agent of the consultants appointed by Mrs. Buckland's employers, said:

"We had hoped that discussion of the claim and the effects of Mrs. Buckland's illness would result in reconsideration, but it was obvious that UNUM's claims manager had no authority. It was also clear that"

the two representatives—I shall not name them—knew little about lupus disease. Mr. Williams continued:

"We were advised that Mrs. Buckland would have to return to work and become ill again before the claim could be considered. That apparently UNUM do not think she is ill enough already."

I am sure that hon. Members will recognise such practices.

The appeal was supported again by Dr. Godfrey, who quoted from "Understanding Lupus", a book by a leading authority on the subject, his colleague Dr. Hughes. The appeal was also supported by a certified counsellor from Lupus UK, the consultant at Queen Mary's hospital, Sidcup, Dr. Bamji, and by a letter from Mrs. Buckland's general practitioner regarding her mental and physical fatigue. In the letter from the consultants contracted by Mrs. Buckland's employers to deal with the appeal, Mr. Williams quotes Sir Richard Baylis, an eminent endocrinologist with experience of cases involving the claims of lupus sufferers, many of whom have also been denied benefits by insurance companies. Sir Richard Baylis offered his assistance and suggested that Dr. Graham Hughes, who wrote the book "Understanding Lupus", would provide evidence.

Subsequently, in August 1998, UNUM requested that Dr. Godfrey prepare a report on the effects of stress on lupus sufferers. Dr. Godfrey responded by saying that he would want payment to undertake such major research and that significant scientific evidence already confirmed such effects. In September 1998, the Department of Social Security wrote to Mrs. Buckland, apparently satisfied with her condition, and confirmed that she no longer needed to provide medical certificates to receive incapacity benefit. That showed the difference between the treatment of Mrs. Buckland by the state and her treatment by the company, which was trying to use every possible tactic to deny her benefit.

On 9 September 1998, UNUM rejected Mrs. Buckland's appeal because her lupus was in remission. That was despite the medical opinion that returning to work would make Mrs. Buckland's lupus worse and despite the fact that stopping work had halted the deterioration in her condition. Under the conditions of the contract with her employer, Mrs. Buckland should have been receiving benefit. In October 1998, UNUM sent Mrs. Buckland to a consultant psychiatrist, Mr. George Reseck of Harley street, who started the interview by asking her whether she was happy. He then asked her what books she read and concluded by sympathising with her in her "battle" with UNUM.

In January 1999, UNUM rejected Mrs. Buckland's appeal and again gave remission as the reason for that rejection. It agreed to make a payment, and required Mrs. Buckland to undergo the psychiatrist's recommended treatment. Later that month, Mrs. Buckland visited her GP who had received a letter from UNUM recommending that she be sent for therapy and given anti-depressant medication. Mrs. Buckland's GP rejected the need for anti-depressants and stressed that she had extreme reactions to any medication due to her lupus.

I asked my constituent to describe the effects of her condition. She replied that her symptoms could change from hour to hour and from day to day. She said that it could result in aching joints, sudden seizures and loss of the use of her hands, chronic fatigue which could last for several weeks, numerous severe headaches each week, pain when walking up slight inclines and the constant feeling of suffering. She described the pains as those that one experiences when suffering a severe dose of flu. Mrs. Buckland said:

"I did not expect to become too ill to work but I felt secure by the insurance protection my employer gave its employees. My life has been completely changed by my illness and everything I have worked so hard for will now be lost because of the unbelievable treatment I have received from UNUM."

So extreme are the practices of that company that a UNUM support group has been set up for people in a similar situation to that of Mrs. Buckland. It has 250 members and estimates that 4,000 people are in similar situations throughout the country. It is not only people in the United Kingdom who are suffering such problems. There is documented evidence from throughout the United States, where UNUM is the largest company that provides such insurance cover. There is evidence of such cases from Australia and Canada, and I have no doubt that people in other countries also suffer as a result of the sharp practices of UNUM and similar companies.

Mrs. Buckland has said that she is likely to lose everything that she has built her life around and I can quote details of a similar situation experienced by a person in America. He said:

"Next month, my wife, my daughter and I will likely see our home sold on the courthouse steps."

That quote from someone across the Atlantic almost mirrors exactly the words used by Mrs. Buckland when describing her condition. It is time that we took action to close such a loophole. I appreciate that Adjournment debates cannot be used to call for legislation, but clearly such a problem, albeit for a small, but not insignificant, number of people, must be addressed. Evidence shows that companies are actively exploiting the loophole. Contracts that are held with them, not the individuals, leave it to the company to take action to ensure that the individual is paid benefit. If the company does not take action on behalf of its employee, the only course of action left is to risk financial ruin by fighting expensive court cases against companies that sit back and say, "Sue us, if you dare."

It is our duty to deal with the issue and not leave individuals who are at their most vulnerable to the mercies of unscrupulous companies. There is evidence of sharp practice and the constant moving of goal posts. Each time a medical report was producted to support Mrs. Buckland's case, for example, the slightest opportunity for the company to claim that there was no definite proof that her illness prevented her from returning to work was used in the face of overwhelming medical opinion. When faced with a court case, such companies often settle it before it is brought before a judge. Medical opinion of experts from whom the companies claim to have obtained evidence would be subject to cross-examination and companies could face exposure of fraudulent activities. All claimants are sent to a psychiatrist, whose diagnosis is subject to questionable decisions. One of the side effects of Mrs. Buckland's disease is that she cannot use medication. The fact that she is not taking medication is used by UNUM as evidence that she cannot be suffering. It has moved the goal posts yet again.

The Government must take action. Perhaps the Financial Services and Markets Bill will offer them the opportunity to do so. I conclude my remarks by referring to Mrs. Buckland's description of the dreadful stress that has been placed on her by UNUM at a time when she is at her lowest and has lost all feeling of self-worth. She considers that she has been accused of trying to get something for nothing and feels that every aspect of her life is under investigation. It is time that the issue was brought to an end.

I congratulate the hon. Member for Eltham (Mr. Efford) on securing a debate on this issue and on explaining the case of his constituent, Mrs. Buckland, so well. He finished on the point that it is an individual who is being affected by the policy and the way in which it is handled, and we should remember that. At a time when people are at their lowest, they have to confront the added hurdle of the safety net that they thought that they had turning into a nightmare of legal action.

I was asked by a constituent to take part in this debate when he heard that it was happening. He took the company, which used to be called Nel Permanent Health Insurance, to court. His policy is now with UNUM. The case was not settled on the court steps; the court had to deal with it. Mr. Porter was a diver in the North sea when he developed angina. The insurance company said that it should not continue to pay him because he had failed to mitigate his illness by not having a heart bypass operation. Even with the operation, he would still be unable to dive, and, as was pointed out by the sheriff, a person has to decide whether to subject himself to the risk of major heart surgery, and is entitled to do that for himself.

The insurance company lost on that argument. The company also claimed that the claimant was able to do clerical work and had been offered a clerical job, but could produce no evidence of that fact. It failed in the court on both grounds. I understand from Mr. Porter that his case is now used by others to highlight the fact that the purpose of such a policy is to protect someone against being unable to carry out the employment for which he is trained and that he is capable of doing. Mr. Porter found it an extremely stressful experience, and I hope that others will not have to go through such court procedure.

Another constituent has the more general problem of having a policy that is a group policy in the name of a past employer, with subscriptions having been paid as a deduction from earnings. There is a problem about the legal relationship with the insurance company and how to claim benefit for a back problem, which has put my constituent out of work as a health carer in a nursing home. Both constituents paid towards their insurance policies, believing that they had a security net, but when they needed the safety net, it was far more difficult to make use of it than they had been led to believe.

The Minister needs to consider carefully how to regulate the industry to maintain confidence. Many people are insured with insurance companies, but they have limited professional experience. They take out contracts with a large company, which obviously has great experience of claims. Individuals, hopefully, go through life without having, or rarely having, to make a claim, so they cannot be treated as having the same legal training or professional expertise as the company with which they have entered into a contract.

There is a duty on the insured to be honest and forthright with the insurer, but, in many ways, the insurer should have a duty to consider the needs of the insured and to treat him fairly. That balance seems to be wrong at present. The insurer knows that the insured is at his weakest when making a claim. There is always a problem for claimants, but it is worse for those claiming from their permanent health insurance policies. Their physical well-being is not what it should be; that is why they are out of work and have lost their employment. They are not at their fittest to tackle making a claim.

Those of us who believe in markets and the freedom of the individual cannot remove the problem completely, but we can try to ensure that there is an effective system of regulation and a level playing field. People must have access to the ombudsman and the ability to sort out disputes on policies. The wording of such policies should be unambiguous, so that people know what they are taking on and what risks are covered. Clearly, if a low premium is paid, not much future risk will be covered. That must be made clear to people. They need to know the level of risk that is being covered and they must understand the contract that they are entering into.

Confidence is important to all those involved in the market. Those who want to provide good and effective policies need to know that the market is well regulated and fair, so that the product is not undermined by the experiences of others. If people do not have confidence in permanent health insurance, the whole market suffers. If we want people to make financial provision for their future, we must ensure that the markets are properly regulated. Permanent health insurance must be understandable and seen to be fair, so that people will have the confidence to take out policies.

I urge the Minister to approach these issues carefully and with an open mind, to see what she can do to ensure that, in future, people do not have to go through a court case to settle problems. They need safe and effective access to permanent health insurance.

I congratulate my hon. Friend the Member for Eltham (Mr. Efford) on securing this important debate, and I am sure that note will be taken of it, even though it is taking place in Westminster Hall rather than on the Floor of the House.

Like other hon. Members, I heard of the antics of UNUM from a constituent—Audrey Gregory, whose husband Keith left work because of ill health in 1993. Keith Gregory worked for Scapa, a company dealing with industrial filters. Sadly, he has been unable to work for six years because he suffers from angina, asthma, diabetes, high blood pressure and osteoporosis. Dr. Eardley, my constituent's well-respected GP, concluded that Mr. Gregory would never be well enough to work again, but would have to rely on benefits. UNUM disputed the diagnosis. Although Mr. Gregory was accepted as being sufficiently disabled to claim disability living allowance, UNUM would not accept his level of disablement. The company did not examine him; it even refused to meet him when he requested it to do so.

Permanent health insurance cover, through UNUM, was part of Keith Gregory's employment contract, but he was never issued with details of the scheme. In fact, Mr. Gregory discovered that he was not even the claimant; he was simply a third party. The company— Scapa—was responsible for making claims. On seeing a letter by accident, Mr. and Mrs. Gregory discovered that the company was busily doing a deal with UNUM behind their backs—agreeing to pay a fellow worker, but not to pay out to Mr. Gregory. He was to be left in the lurch. Mr. Gregory will hear today whether the company has done the right thing at last, and agreed to pay out—six and a half years after he was forced to give up work. It is an appalling story, but, as we have heard today, it is by no means unique.

Although UNUM is the United Kingdom's largest disability insurer, it has been involved in a series of claims disputes in Britain. It has just lost its court case against Rachel Wadsworth. In another UNUM case, Alison Whitby was declared unfit for work, as she was suffering from chronic fatigue syndrome. That was in March 1996. In February 1999, the bank for which she worked—Warburg Dillon Read—sent her forms to complete, in relation to a claim under UNUM's permanent health insurance. Despite overwhelming medical evidence, which showed that she was seriously ill, matters dragged on for Alison. UNUM even employed a private investigator to follow her.

In April 1998, Alison was informed that not only had UNUM turned down her claim under its permanent health insurance scheme, but the bank was terminating her employment. It was only through her union, which was not even recognised by the bank for negotiating purposes, that she found a satisfactory outcome. Her case was lodged with the employment tribunal, alleging unfair dismissal and breaches of the Disability Discrimination Act 1995 and the Sex Discrimination Act 1975. Eventually—surprise, surprise—the bank settled out of court.

UNUM is not the only culprit. Many companies have been handling claims in ways that have resulted in more people being denied payouts when, on all other criteria, they would assume that they had good grounds for success. Those companies expanded their operations on the back of the November 1993 Budget, when it became clear that invalidity benefit would be replaced by incapacity benefit. It was obvious that the amount of money going to the sick and disabled would be much reduced.

The clear message was that people would have to fend for themselves. That message did not go unheeded by the insurance companies. Lurid advertisements with graphic tables were designed to shock people into protecting themselves with long-term disability policies—individually and, increasingly, through employers. The then Secretary of State for Social Security, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), invited UNUM's vice-president, Dr. John le Cascio, to help with the extensive training of doctors needed for the new all-work test. Those tough new tests were fundamental to the savings that the right hon Gentleman hoped to achieve. Dr. le Cascio was therefore helping to validate a scheme that was being exploited by UNUM to drum up business in the United Kingdom.

Those insurance policies are now being claimed against, and it is up to UNUM and the other companies to deliver on their promises. They must be made to honour their responsibilities as insurers. The lives of many people depend on it.

I congratulate my hon. Friend the Member for Eltham (Mr. Efford) on securing this important debate. In my role as chairman of the all-party parliamentary group on myalgic encephalomyelitis, it has often been drawn to my attention that many people with chronic illnesses face problems in securing their right to the health insurance payments for which they have paid contributions. Indeed, the group intends to investigate the matter more thoroughly at its next meeting.

ME is a debilitating condition, the cause of which is still not known. As it is difficult to diagnose the illness, people suffering from it face prejudice from some corners of the medical profession. For many, that has a knock-on effect when it comes to claiming benefits and insurance payouts.

One of the most respected and renowned doctors in the field of ME is Dr. Betty Dowsett. She has advised a number of people with ME who have had difficulty in claiming sickness insurance. Dr. Dowsett ran a clinic for infectious diseases in south Essex; occasionally, during the first 20 years, she was asked by insurance companies to provide comprehensive medical reports on patients with ME, for which they usually offered a standard fee. However, from 1994 the procedure began to change. The comprehensive assessment was replaced with a pro forma offering two choices. The first was a good prognosis, indicating that the patient had been offered psychiatric assessment and recommended treatment, including cognitive behaviour therapy, graded exercise, and suitable drugs. The second choice was a poor prognosis, indicating that the patient believed that the illness had an organic basis and had not co-operated in psychiatric assessment or treatment. Patients were expected to fill out the pro forma themselves, although some of them asked Dr. Dowsett's advice.

I have seen a copy of that pro forma. It shows that insurance companies are prejudging the causes of and the treatments for ME before consensus has been reached in the medical profession. That is unfair to people with ME; they are often forced into undergoing therapy that is not proved to help, and that may even set them back. If they have been treated by an ME specialist who favours another method of diagnosis and treatment, they may find that their disability insurance payments cease.

According to Dr. Dowsett, it became increasingly common from 1997 for insurance schemes to refuse to pay retirement or sickness pay from company insurance schemes. She advised 17 patients between January 1997 and April 1998, of whom only three were fully successful in their claims. Several patients were forced to attend named psychiatric clinics and to receive cognitive therapy, graded exercise and psychoactive drugs. They were told that if they did not they would lose their pension rights.

To show the scale of the problem, I shall cite two cases that have been brought to the attention of the all-party parliamentary group on ME. The first is that of David Little, who, from 1984, worked as a financial adviser with Allied Dunbar. In 1986, he took the precaution of protecting his income against the possibility of sickness or disability; he took out an insurance policy with Allied Dunbar that was underwritten without any exclusions. He became ill and eventually, in October 1996, he was diagnosed as having ME. He had already begun to manage his illness by taking plenty of rest, and in April 1997 he was able to return to work with the support of his colleagues. Disability payments were agreed on a proportionate basis while he was rehabilitating.

In December 1997, Mr. Little suffered a further relapse, and he has not been able to work at all since January 1998. At first, Allied Dunbar made full payments under Mr. Little's insurance. However, in July 1998, he was asked to attend an independent medical. The independent consultant concluded that Mr. Little was unlikely to be able to return to work full-time, but that he should be able to manage part-time work. The Benefits Agency subsequently asked Mr. Little to attend an all-work test, and the consultant confirmed that Mr. Little was not fit to do any work.

Meanwhile, Allied Dunbar disqualified Mr. Little's disability claim. The firm offered him a further six months' rehabilitation, which is thought to be fair and justifiable. Mr. Little duly complained to the Personal Investment Authority ombudsman, who requested a full report. The ombudsman recently turned down Mr. Little's appeal on the ground that ME might not exist as an illness and that, if it did exist, it was of a psychological nature and Mr. Little was therefore in need of psychotherapy.

However, that judgment ignored the in-depth assessment of Mr. Little's illness by Dr. Andrew Wright. Dr. Wright is renowned for his work on ME. He is a member of the chief medical officers' working group that is looking into the illness. Mr. Little was recently referred to a psychiatrist by his general practitioner in order to prove that he was not in need of psychiatric help. Anyone who campaigns on behalf of people with ME would, to say the least, be disappointed that such an unenlightened view of ME was still being applied by an organisation meant to provide an impartial hearing for appellants.

The small print of Mr. Little's insurance policy states that, in the case of full disability, payments will be made until the age of 60. Mr. Little is now 53, but he has received no payment for a year and a half. The policy also states that, if there is any doubt about the medical diagnosis of the disability, the insurance company will always fall on the side of the client. However, despite the conflicting medical evidence in Mr. Little's case, Allied Dunbar has failed to side with the client. Since the loss of his insurance benefits, Mr. Little has separated from his wife and family as a result of financial pressures, and he is on the verge of losing his home and the other material possessions for which he has worked. That is despite the fact that he took the precaution of insuring against such an eventuality as long ago as 1986.

The second case that I wish to highlight is that of Miss P. Kidd. Miss Kidd wrote to me a month ago, outlining a similar story. She was a partner in a firm of solicitors when she became ill with ME in 1991. She was eventually forced to give up work in September 1992. Her insurers, Swiss Life, paid her under the terms of a private health insurance policy from April 1993. She has been to a wide range of medics and complementary medical practitioners in a bid to cure her condition, but none has been able to help her. Indeed, Swiss Life's own medics have confirmed her condition.

Miss Kidd has continued to battle against her illness, which leaves her bedridden for much of the time. This year, however, Swiss Life has changed its attitude. It forced her to see a psychiatrist with known views on the causation of ME by threatening to stop her payments; but she has been refused sight of the psychiatrist's report. She was then subjected to a month's surveillance; it naturally caused her great fear to realise that she was being followed.

Swiss Life, which operates a group policy for the firm, refuses to communicate directly with Miss Kidd, although she remains a partner. The insurance company told her firm that it had evidence that her claim was false and requested a meeting with a representative at which Miss Kidd was not to be present. Miss Kidd believes that video evidence taken when she was under surveillance may be the basis of Swiss Life's case. Like many ME sufferers, Miss Kidd's condition fluctuates: when she feels well enough, she tries hard to be independent and take care of herself. She is afraid that the video may, on the surface, show her to be fit and able. However, anyone familiar with ME knows that a day's exertion may mean a week's relapse.

Miss Kidd is most troubled by the fact that she will be unable to represent herself when Swiss Life makes its claim to her firm. Should it withdraw Miss Kidd's benefits, she will be forced to fight the insurance company through the courts. That is a terrible prospect for someone suffering from ME, as the stress and exertion involved will undoubtedly lead to a deterioration.

What troubles me most about the cases that I have mentioned is not the fact that insurance companies question the legitimacy of the claims—that is their right and is no different from the Government's investigation of benefit claimants—but the manner in which they undertake those investigations. I have been contacted by Monica Dale, who runs Campaign Advice Support and Help—CASH—which helps people with ME facing problems with their private health insurers. She has told me that insurance companies take extreme measures when undertaking surveillance, such as camping outside people's houses.

Mrs. Dale believes that most insurance companies regard ME as a psychiatric illness and think that people suffering from it should undergo cognitive behavioural therapy. She believes that that treatment may help people with ME to manage their illness better, but that it is not a cure. The waiting list for the treatment is up to a year and only a few cognitive behaviour therapy treatment centres are aware of ME. Worst of all, many insurance companies cut off benefits while people are awaiting treatment, creating financial hardship for ME sufferers and their families.

The cases that have come to the attention of the all-party parliamentary group on ME in the past few months are only the tip of the iceberg. When faced with action by an insurance company, many people with ME may be too ill to fight and may just accept such treatment. I know that to be the case for many who have been denied disability benefits. Insurance companies that take unilateral decisions on the diagnosis and care of people suffering from ME—about the aetiology and treatment of which there is controversy—are, to say the very least, not following good practice. Insurance companies are not prepared to accept ME as a permanent illness. Unfortunately, however, for many people that is the reality. The fact that some are fortunate enough to recover and lead a normal life does not mean that that is possible for every ME patient.

For someone with ME, the most damaging feature is that stress may severely disrupt recovery; indeed, it may exacerbate the condition and cause regression. All those who contacted me about problems with their insurance companies have undergone terrible stress and their health has suffered accordingly. I urge insurance companies to look long and hard at their policies as well as their treatment of people with ME and other chronic illnesses. My hon. Friend the Member for Eltham will continue his campaign, and his efforts will have the support of the all-party parliamentary group on ME.

I congatulate the hon. Member for Eltham (Mr. Efford) on securing an important debate in which I have an interest. I am grateful to the Minister for attending our debate; she will have plenty of time to respond.

Mention has been made of my constituent, Rachel Wadsworth, who successfully brought a case against UNUM. However, we should not concentrate purely on UNUM, although it seems to be especially accident-prone. The problem is that insurance companies are keen to make contracts to cover people, but fail to pay out. There is a slight difference between insuring a washing machine for on-going effectiveness and insuring people. A company that insures washing machines knows how reliable different makes are. There is probably little doubt about a machine that does not work and people have some idea how to mend it.

With humans, that is harder, as it is often difficult to know an individual's baseline. How fit is someone? What pre-existing maladies does he or she have? Some of those maladies may be known to the patient, but others may not. Insurance forms for washing machines set out a clear contract and one knows exactly what one is getting for one's money. However, some glossies—especially for group permanent medical insurance cover—do not make clear the benefits that people may get or under what circumstances. The signatories, however, clearly commit themselves or their firm to a weekly payment.

I am alarmed to hear from hon. Members that insurance companies can insist on a treatment set out by their medical assessors, who are doctors employed by them.

I agree with the hon. Gentleman. In the case of my constituent, Mrs. Buckland, one of UNUM's decisions was based on a medical report by someone who had never met her.

That illustrates what a nonsense all this is. People have a right to choose medical advisers and those who treat their illness. They also have a right to accept advice and treatment, as my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir R. Smith) explained. They cannot be forced to accept a certain treatment, whether cardiac surgery or cognitive psychotherapy. If people are ill, they are ill. Clearly, an insurance company has the right to seek medical advice about the validity of a diagnosis. It may be kind and offer help by suggesting a certain treatment. It cannot, however, insist on that treatment being carried out by its own clinicians or others. That obviously leads to undesirable muddying of responsibilities.

I was interested to learn that UNUM has advised the Benefits Agency's medical division. That explains some of the unimpressive decisions made by doctors on behalf of the Benefits Agency. However, the most important point to bear in mind is that people are encouraged to take out cover. I support that as a former self-employed person, it would be irresponsible not to have cover. However, the contract that is signed must be transparent. We would like the Government to introduce some form of regulation so that insurance contractual arrangements are clear and open from the outset.

I get upset when people fill in forms committing them to a large on-going financial outlay without seeking medical advice. They do that to buy peace of mind. Insurance companies take on that risk without seeking medical reports. However, as soon as there is a hint of a claim, they contact any doctor they can find to discover whether there is an undisclosed previous condition which may allow them not to pay out. That clearly means that the playing field is not level.

We have heard about the extraordinary lengths to which insurance companies will go to find information. Companies' resources are not matched by those of the insured, especially when ill. A valid point was made about people with myalgic encephalomyelitis. Stress is probably as big a contributory factor to a relapse as the conditon itself.

I hope to hear something positive from the Minister about contracts. We need an arbitration service that is accessible to all, irrespective of whether the individual has a contract through a company scheme. If the company is an agent of the insurance company, the company can be got at, or it should act for its employee; at present that relationship is not clear. However, if the company acts as a go-between between an individual and the insurance company, the individual should not lose the right to go directly to any arbitration scheme that covers that set of insurance.

I look forward to hearing the Minister's answer to this important debate. It is interesting that a Treasury Minister is to respond, given that an Opposition health team has—I was going to say "attacked", but that is not the right word—tried to find a solution to a problem that we have all recognised for some time.

I, too, congratulate the hon. Member for Eltham (Mr. Efford) on raising an important subject. To me, it is desirable that as many people as possible should have permanent health insurance. The House of Commons pensions arrangements were recently examined to see what scope there was for improvement: Members of Parliament do not have PHI, and I suggested that it might be wise to ensure that we do. We live in a stressful society. People have road accidents, strokes and all sorts of other ghastly things that render them unable to work for the rest of their lives, yet the total number of people to whom such things occur is small.

Insurance, in principle, is the correct way of dealing with the problem and it is sensible to have employer insurance arrangements: they bulk up the risk and save on the administration. Despite all that on the plus side, it is no good if a scheme does not work—not just because it fails to deliver what it ought to deliver, but because there is no practical way for people to resolve disputes. In the United States, success fee lawyers will work on almost any case, usually free of charge if the case is a good one; but in this country such arrangements operate to only a modest extent.

Two thoughts occur to me. First, this area of insurance should be covered by the Financial Services and Markets Bill. Paragraph 20 of schedule 2 to that Bill refers to:

"Rights under a contract of insurance, including rights under contracts falling within head C of Schedule 2 to the Friendly Societies Act 1992."

Will PHI be covered by the Bill, as that seems to imply? Secondly, ombudsman facilities should be available so that people can get inexpensive justice. If the ombudsman finds against a person, it may be tragic, but at least he will have had fair justice. Part XV deals with the financial services ombudsman: under clause 201, the Financial Services Authority can apparently determine that such territory is covered by compulsory jurisdiction, but the wording is obscure, so I ask the Minister to confirm my interpretation.

One of the things that I learned when I went to see the new ombudsman at the FSA was that the whole of the ombudsman arrangements were born within the insurance industry, which was endeavouring to earn itself brownie points by dealing with disputes in a way that would make its clients happy and was not carried out internally. I can understand that to pay an income for life requires a large sum and that the industry must be careful with its resources, but what is sauce for the goose is sauce for the gander.

Given that the whole ombudsman scheme is modelled on the insurance ombudsman scheme that was set up by the industry, I would be disappointed if the FSA could not determine that the ombudsman should be able to resolve such cases. There is a slight technical issue in that a person may have his own PHI, or it may be part of a company's cover and the company may be the client of the insurance company. Clause 201 certainly provides that someone using the scheme does not have to be an individual and so could be a body corporate, but the individual beneficiary of the corporate membership should clearly be able to use the corporate membership's right to seek to obtain a judgment by the ombudsman.

Amusingly, there is an imbalance within the ombudsman scheme. One would have thought that both sides would be bound by his findings, but that is not the case. The company is bound by the ombudsman, but the individual has the right to go to law. That was volunteered by insurance companies when setting up ombudsman arrangements. Although it is somewhat difficult to argue, the logic went that no one would go to the expense of using the courts after having gone to an ombudsman and lost, as it would not be sensible or affordable to do so. That is the problem here. Unless he can use an ombudsman scheme, no one who is thrown out of work by a permanent disability can afford to use the courts to fight his case. Therefore, I conclude by asking the Minister whether the relevant clauses of the Bill cover that territory and whether the FSA intends, under the designation for the ombudsman scheme, to cover the ombudsman scheme dealing with this type of dispute.

I join other hon. Members in congratulating my hon. Friend the Member for Eltham (Mr. Efford) on securing this debate on such an historic day. It is the last parliamentary day of the century and, indeed, the millennium. The subject matter measures up to the importance of the occasion. Health insurance, its development and wider availability, might come to be seen as one of the great success stories of social policy in this century. Health insurance is crucial to every living and breathing person in this country. It provides a safety net. It helps to protect those who are unable to work because of illness and who might otherwise fall into financial hardship and poverty. It can speed up the availability of treatment bringing unwell individuals back into the healthy work force that much more quickly.

There has been a huge change in peoples' lives and what they can expect out of those lives over the past hundred years. In 1900, there was no national health service. Poor people could not often afford to go to a doctor. Despite traditions of mutuality, few could have afforded to take out insurance in the event that they became incapacitated and unable to work, even if such insurance had been available. Today, there is a thriving and popular national health service, which is complemented by the private health insurance market.

There are four main types of private health insurance. Private medical insurance arrangements are offered to individuals or employers, enabling prompt treatment of a range of illnesses, in both public and private sector hospitals. Secondly, long-term care insurance is offered to meet the costs of medical care in old age, if such costs are incurred. Critical illness insurance offers cash benefits payable in full, once the existence of a named disease such as breast cancer is proven. Permanent health insurance—the subject of this debate—is a form of private insurance that offers limited income replacement, usually from a time shortly after a permanent inability to carry on one's chosen trade or profession has been established: this lasts until normal retirement age.

Permanent health insurance shares characteristics of other long term or life insurance products. The contract, once agreed, is generally irrevocable by the insurer, provided that the insured continues to pay premiums in full and on time. If the insured becomes unwell or suffers a debilitating illness, the insurer cannot choose to opt out of the contract or to increase the premiums. Like

other insurances, which are essentially contracts made between one party and another, both sides have rights and obligations arising from the contract.

The permanent health insurance market is quite large. In 1998, 1.4 million income protection insurance policies were in force, as well as 1.5 million group policies. Premiums received by insurance companies amounted to nearly £750 million, although £638 million was paid out in benefits to United Kingdom policyholders. With premium income being taken well before benefits may become payable, and considering that over the lifetime of a 25 or 30-year contract the money paid by an individual is considerable, it is clearly important to put in place a regulatory framework to protect the customer—the policyholder. Protection must guard against market failure in terms of the insurer's financial solvency, and its ability to meet its liabilities to its policyholders.

The regulatory framework in the UK is, for the most part, contained in the Insurance Companies Act 1982 and regulations made under that Act. The Act also implements requirements of EU law. The framework for EU law on insurance business—essentially, single market measures—reflects the different regulatory concerns as between life and non-life business. There are three life, and three non-life directives, whose purpose is to promote open markets, but markets in which it is safe to do business.

Of the four types of private health insurance, private medical insurance is usually sold with characteristics of general insurance, as opposed to life and long-term insurance. From the policyholders' point of view, much general business is free from certain risks associated with long-term financial products: the contract is renewable each year; there is limited risk of financial loss if a policy is surrendered or lapsed; and there is not the uncertainty that attaches to investment return, as with some life insurance products. With many personal lines of insurance such as private medical, buildings and contents and motor insurance, the individual consumer can shop around and take advantage of changes in rates and in the extent of cover. That means that the consumer has more control and more responsibility.

Permanent health insurance is different. A customer who has signed one contract has some scope for cancelling and seeking a new provider; but premiums are often higher for those who take out policies later in life. Once a permanent health insurance policy is agreed, it tends to stay in place for some years—often until retirement, and sometimes until the customer decides that his needs have changed and the insurance is no longer necessary.

There is a difference between the regulation of permanent health insurance and some other long-term insurances. Permanent health insurance is not subject to the regulation imposed on investment-linked insurances, such as unit trust savings contracts with some life cover offered as part of a package. That does not mean that the selling of permanent health insurance is unregulated—far from it. The non-statutory Association of British Insurers code of practice governs the sale of such policies, so the regulatory framework bears on the insurers in terms of monitoring their ability to meet their liabilities, and their selling practices.

If something goes wrong, most insurance companies now have internal complaints handling systems, complemented by an independent redress system. Members of the ABI belong to the insurance ombudsman scheme, the Personal Insurance Arbitration Service or the Personal Investment Authority Ombudsman Bureau. Of course, when the Financial Services and Markets Bill is enacted, all will come under the financial services ombudsman scheme, and the ABI code may be replaced by the rule book of the General Insurance Standards Council in the next year or so. Therefore we are at a point of great change.

These complaints handling systems covers areas such as claims made by customers against insurers within the terms of the insurance policies. The non-statutory code of practice is subject to a monitoring committee. Drawing on experience, the code is updated from time to time.

Let me turn in more detail to the ways in which the code will work and to some of the issues raised in the debate. The ABI has never managed to persuade its members that a code of practice or statement on claims handling would be desirable. I believe that it tried to do this a year or so ago, but that it could not convince them that a code would not intrude on the ability of companies to maintain their competitiveness. They were also concerned that it would be too general to be useful.

The Financial Services Authority's role focuses on its prudential financial supervision, but I hope and expect that the single ombudsman scheme, linked to the FSA's consumer panel—a new body within the FSA—and to supervisors, will ensure that persistent poor performers are spotted easily. Early identification of poor performers, and drawing them to consumers' attention, was one of the issues that ABI members raised.

Will my hon. Friend confirm that the FSA will have more scope than existing complaints or arbitration systems? Currently, individuals covered by group policies do not have access to that service.

I shall return to that point later. Access to the single ombudsman scheme is at present by third parties, but the FSA does not favour this. We take note of the comments of the hon. Member for Arundel and South Downs (Mr. Flight).

Hon. Members have set out well what happens when a customer claims to be unable to work, for example, because of an injury to his back. My hon. Friend the Member for Eltham set out what happens to people who try to seek redress and assert their rights through the system, and gave as an example the case of Mrs. Buckland. Individual cases bring home to us the difficulties that some people experience with the current arrangements, and the cases that have been mentioned have been well set out. My hon. Friend the Member for Staffordshire, Moorlands (Charlotte Atkins) focused on the difficulty that two individuals have had in resolving their claims. My hon. Friend the Member for Great Yarmouth (Mr. D. Wright) made clear his knowledge of the difficulties that those who suffer from ME face when they pursue their claims through the relevant systems. I am grateful for that strong focus on what things are like for individuals.

A customer might claim for example, that he is unable to work because of ME or an injury to his back, or for the other reasons that hon. Members have given; medical evidence might support that claim. All things being equal, the company should pay that claimant, unless it has good reasons to do otherwise. If it receives evidence that the customer with ME, a bad back or another complaint, has subsequently taken up high-board diving, it might want to review the case. However, we have clear evidence in the cases that hon. Members have mentioned that high-board diving would be out of the question for their constituents.

Disputed claims will always be a difficult issue. Insurers have obligations to all other policyholders not to pay out on fraudulent claims. Indeed, if premiums overall increase because claims are paid out too readily and without proper scrutiny, the costs involved will mean that potential customers are denied insurance. Obviously, we do not, in general, support such a development. However, the situation is clearly different in the cases before us.

Our objective is to protect policyholders. Insurance companies should be run by fit and proper management. Any evidence of systemic bad conduct should, in the first place, be taken up with the chief executives of the companies for internal review.

Will the Minister focus on what she means by "policyholder"? Does she mean the employee who seeks to benefit from the insurance policy, or the company, which is the policyholder in the case of group policies?

It would be for the group policyholder—the company—to decide whether to take matters up across the piece. It is for the company to be concerned about individual instances within their policy. However, I was primarily thinking about individuals who are concerned about the treatment that they receive at the hands of the insurance company. It is not in the long-term interests of insurance companies to promote poor-quality products or to cater badly for consumers. I hope that representatives of insurance companies are listening to the debate, because they will need to take that into consideration.

We have not made a commitment on naming and shaming. The FSA must decide how best to use its powers and carry out its consumer protection remit. The question about the financial services ombudsman scheme relates to third-party access. It is a matter for the FSA, which I hope will not ignore the sentiments that hon. Members have expressed when it considers how to construct its responses to the present situation.

It might be of interest to hon. Members to know that about 3 million people are covered by the relevant policies. There have been about 360 complaints to the various ombudsmen—or ombudspeople.

I welcome the attention that my hon. Friends and other hon. Members have drawn to the problems that their constituents have experienced. It is unwelcome that there is evidence of persistent procrastination and prevarication, but welcome that those who have spoken have drawn that evidence to the attention of many people through this debate. I hope that the matter will be taken up with insurance companies, and I am certainly prepared to take it up with the industry on behalf of those involved.

Does my hon. Friend agree that the number of claimants covered by a group policy who go to the ombudsman is insignificant because there is no ombudsman? One of the difficulties is that it is hard to get statistics because there is no means by which people can complain. Individuals are left with the choice of going to the courts, giving up because they are too ill to fight the company, or taking their case to Europe, which involves putting themselves at enormous financial risk when they are at their lowest ebb.

I note my hon. Friend's remarks. I am not sure that there can be no redress through the ombudsman. The ABI says that individuals in group policies have access to him.

I am following the Minister's remarks carefully because we are getting slightly conflicting views on the matter. I believe that individuals can go directly to the ombudsman, if they are supported by the policyholder—the company. However, the Minister is living in an unreal world if she believes that all companies love all their employees and ex-employees. Often, the disabled person involved might both have fallen out with the company that employs him and be making a claim against the insurance company.

The company is formally the policyholder in those wider cases, as has been intimated. My understanding of the case that my hon. Friend the Member for Eltham described is that the company backed the individual against its insurer; perhaps my hon. Friend will clarify the position.

I can certainly confirm that the employer acted in an exemplary fashion and pursued the case on behalf of its employee. However, it could complain only to the insurance company; there was no independent arbitration body to which it could go to pursue its case. It could go only to the courts.

I draw my hon. Friend's attention to the case of Mr. Villella, who was employed by MFI Furniture Centres Ltd. He went to court because his employer terminated his contract following UNUM's decision to refuse him any benefits under the terms of the insurance policy. He was forced to go to court. Eventually, he won his case against his employer, not against the insurance company. Does my hon. Friend agree that that has serious consequences for employers who take out insurance policies on behalf of their employees? If the insurance companies refuse benefits, firms might be challenged by their employees and become liable to court action. If that happens, employers will be wary of taking out insurance policies on behalf of their employees, because of their vulnerability in the courts.

Order. Interventions are welcome, but I caution hon. Members that they must be brief. I have been tolerant in this case and I hope that no one else will take advantage of my tolerance.

I am grateful to my hon. Friend the Member for Eltham for making that point. The existing ombudsman schemes will consider complaints from companies and individuals in group schemes. Although I accept that the company may also be burdened, insurance companies and those taking out group

policies should jointly consider the issue when the policies are drawn up. As for the point made by the hon. Member for Isle of Wight (Dr. Brand), there are subtleties involved. I shall write to the hon. Gentleman to clarify the matter, and copy the letter to other hon. Members who have participated in the debate.

I should now like to deal with the issue in relation to the Financial Services and Markets Bill. It is important to recognise that making permanent health insurance subject to a conduct of business-type regulation—covering selling, marketing and point-of-sale issues—would not help in cases of poor or dubious claims handling, to which other hon. Members have drawn attention. Therefore, it is important that the industry should tackle that problem, although the Government and the authorities clearly have a role to play.

As the hon. Member for Arundel and South Downs knows, general insurance is not covered by the Bill. I am therefore reasonably confident that health insurance is not covered either. Such matters will be dealt with in the scope order—a form of secondary legislation—which will not be made until the Bill has received Royal Assent, so I cannot be precise about what might be covered at that time.

UNUM is regulated by the FSA, but its practices are regulated by the ABI code. Practice in relation to customers can lead to references to the ombudsman and the courts. It is important to recognise that the contract of insurance is between the insurance company and the insured and is subject to the same contract law provisions as any other contract. That is one of the main focuses. However, I am concerned about the cases outlined by hon. Members, and I intend to bring them to the attention of the industry. Regulation will not necessarily deal with poor or dubious handling of individual claims—

Why not?

Because it will deal only with selling, marketing and point-of-sale regulation, not with bad handling of an individual, which will be subject to the normal process of redress through the ombudsman and so forth. Furthermore, given the evidence cited against some companies—especially UNUM, which has been mentioned in despatches too often in this debate—the FSA might want to discuss with the companies the issues raised today. That might resolve the question of whether such a method of handling consumer matters and cases is always the most appropriate.

The subject is important and I am grateful to hon. Members for their contributions to the debate. Although the Financial Services and Markets Bill will not be able to tackle the problems directly, a number of avenues are available for the raising of such issues. I shall do what I can—which is not without limitations—to ensure that the issues raised by hon. Members are taken up with the industry and that progress is made.

I am grateful for the opportunity to raise this subject today. As a traditionalist, I should have preferred to discuss it on the Floor of the House of Commons, but times change, even if I do not change with them. The issue concerns the west country as a whole, and transcends divisions of town and country, and of party. It is sufficiently grave to have prompted the Western Morning News, a newspaper which normally uses modern terminology, to use phrases such as

"Rural area cannot take another blow".

I first raised this issue in the Chamber on 8 December and, several days later, I raised it again through another device. It may surprise some of those who have followed my career, such as it has been, to discover that I do not intend to attack the Government today. I attacked them in my previous speech, and I shall doubtless do so in my next, but today I do not intend to berate them. I am satisfied that the problem, which has resulted from a decision taken by the Intervention Board, is not directly of the Government's making, although only the Minister can solve it. If the decision is allowed to stand, from 4 January next year, Devon, a large county with one of the densest cow populations in the country, will have no abattoir at which cattle can be slaughtered under the over-30-months scheme. Cows in west Cornwall will be slaughtered at Madron Meat, but animals east of that point will have to be transported through Cornwall and Devon to one of three slaughterhouses in Somerset or Bristol.

We are not talking about placing one fit animal in its prime on a 125 express and delivering it quickly; animals will have to travel as much as 160 miles and endure a journey of more than three hours. In the main, such animals will be elderly, worn-out milking cows that are not in their first flush of youth and have never before left the farm on which they were born. For the first time in their lives—and, indeed, the last time—they will be carted and taken away. For such animals, any journey would be an imposition, but the current proposal is simply unaccepatable.

At the moment, the farmer transports a cow to the nearest slaughterhouse in a trailer. It is put on board by someone that it has known since it was born, and is delivered to the abattoir relatively quickly. I shall not discuss details with which the Minister is familiar, but animal transport regulations currently prevent the transportation of animals across great distances. However, in future, animals will be loaded on to a lorry with which they are unfamiliar by someone they have never seen before, and taken to a collection point, where they will be unloaded and then loaded again. They will then be taken on a last, long journey to abattoirs in Langport, Bridgwater or perhaps Bristol. I make no criticism of those slaughterhouses, but on arriving, the layerage will inevitably be limited, and animals that were collected early in the morning may well remain in lorries overnight. They will need to be milked. The consequences—the Minister and others will be familiar with the details—do not bear thinking about. As I have said, we are not dealing with beef animals in their prime, but tired, worn-out, elderly animals that may be lame or have damaged udders. For such animals, such a journey is unthinkable.

An urban audience is sometimes surprised to discover that farmers feel passionately about animal welfare, but this is the issue that will unite me and the Minister, whose track record on the matter is well known. We will not always reach the same conclusions on fox hunting or mink farming, but we share the belief that the welfare of animals is paramount. I know of no farmer who, the day that his cattle go for slaughter, is anything other than miserable. Slaughter is a necessary part of the life cycle, but farmers always greet that day in sombre mood. They will have known their animals—I use the word deliberately—intimately. They will have milked them twice a day for perhaps the past seven years. If animals are condemned to a final journey of the type that I have described, farmers will be genuinely distressed. Some 30 farmers are here today in the Public Gallery, not because of the extra burdens that will be placed on agriculture, but because they are concerned about animal welfare.

I agree with everything that my hon. Friend has said, but the issue is not restricted to the west country. East Anglia, which no longer has a slaughterhouse, will face the same problems. Is my hon. Friend aware that more than 1,000 farmers—not members of the public—in East Anglia have signed a petition protesting at the removal of our slaughterhouse? Is he also aware that the Intervention Board appears not to have recognised those abattoirs that have made the necessary adaptations, and that, during this round, contracts have been awarded to companies that do not have operating abattoirs?

My hon. Friend is absolutely right. A Minister told me last week that representations have been received from other parts of the country. Those who deal with such matters at the sharp end cannot comprehend the figures involved. It is not my usual style to attack civil servants, but the statement issued by the Intervention Board is unreal. It states that

"40 companies submitted tenders and these were evaluated against … criteria"

that included "location". It continues:

"The IB has ensured that the abattoirs are geographically well located, with an emphasis on the main production areas, so that travelling times for animals going to slaughter will not increase substantially."

I am not blaming the Minister yet, but I find that statement—which is advanced not as an argument but as fact—extraordinary. Anyone who knows the west country, the abattoirs and West Devon Meat, could not believe that the arrangements will ensure that abattoirs are

"geographically well located, with an emphasis on the main production areas, so that travelling times for animals going to slaughter will not increase substantially."

It is not only farmers and me who are concerned, but the Royal Society for the Prevention of Cruelty to Animals. I shall quote the salient parts of a letter from John Avizienius, the RSPCA's senior scientific officer, to the Intervention Board. He says:

"The implications for poor animal welfare scenarios due to the extended journey times are extremely worrying, particularly at this time of year, when there will be inevitable waiting lists.

Also, we must be aware that many of the animals which are booked to go onto the scheme are at the older end of the age spectrum, and these in particular must not be subjected to these extra journey times.

Also, we must be aware that the Intervention Board has failed to consider this aspect of animal welfare when the decision was taken to close certain abattoirs."

This is an understatement, which would not necessarily be apparent to a politician. He concludes:

"The RSPCA would urge you to reconsider this decision in order to avoid imposing even more unnecessary stress onto the industry, which, as noted above, has the potential to compromise the welfare of both animals and farmers alike."

I make that point in the way in which it was made to me. If it proceeds, the decision will indeed impose extra burdens on an industry that is already reeling, but that is another speech for another time; the concern of those by whom I have been briefed today is animal welfare.

What is to be done? It cannot be claimed that the Intervention Board has fulfilled the remit with which it is charged. It is simply not sufficient to produce figures, and to add to them the formulaic expression that location has been properly considered. At Madron Meat, animal welfare can cost £30 a beast. At Southern Counties and Fresh Foods Ltd., a slaughterhouse in Somerset, the figure is £17.50. West Devon Meat is not so far above that, at about £22. However, the point about those figures is that this process has been carried out like a blind auction. The Intervention Board, once it realised where those slaughterhouses would have to be, should have told the slaughterhouses concerned what the target price might have been. Such an approach might conceivably have achieved something.

I believe that the solution is twofold. First, a temporary solution is that the decision should not be allowed to be implemented on 4 January. Secondly, the Minister should look at those figures as a matter of urgency and ask the Intervention Board to re-examine the representations made by me and by hundreds of people in the west country. Even if the Minister were minded to do that, it would not be sufficient unless coupled with action to ensure that this decision is not implemented on 4 January.

I probably shocked the Minister by saying that I would suspend the usual hostilities on this occasion. I urge her with whatever power I can command to look at the matter again. In terms of animal welfare, this decision cannot be allowed to stand. Whatever may disunite us in the House, whatever disunity may exist between urban and rural communities, and whatever our disagreements may be on agricultural matters, the one issue that unites virtually every hon. Member is a concern for animal welfare. This is pre-eminently an animal welfare decision and it cannot be allowed to stand.

I am grateful to the hon. Member for Teignbridge (Mr. Nicholls). I am also grateful to the Minister for finding time in her busy schedule this morning to speak to me and my hon. Friend the Member for South-East Cornwall (Mr. Breed) on this matter. I want to raise one or two points a propos that meeting, in connection with today's debate.

The Minister has kindly agreed to have the average tender figures re-examined, and I am grateful for that. I hope that due weight will be given in those figures to the fact that West Devon Meat is a most efficient organisation, and its costs for meat inspection are significantly lower than those in many other abattoirs. The disparity is about £6 a bullock.

I also draw the House's attention to the fact that, as the hon. Member for Teignbridge said, the allocation requirement for cull quota is higher in Devon than in any other county—virtually 1,000 beasts a week. The allocation for Cornwall is over 500 beasts a week, making a total of 1,500 beasts. All the cull quota given is effectively 300 beasts a week, as far south-west as one can get: Madron Meat in Penzance. That abattoir is about 190 miles from the nearest abattoir at Bridgwater.

This decision—which I hope will be reconsidered— will give rise to many problems, especially for the farming industry, which has been on its back in a depression for four consecutive years. In terms of cash flow, farmers will have to wait longer for their money. They will have to feed the animals, especially in winter, which will cost money. The decision will impose an additional cost of £20 a beast. Farmers receive only about £300 under the over-30-months scheme. Additional transport charges will cost an extra £10, as will collection point charges.

The hon. Member for Teignbridge has said—and, as one who has farmed for nearly 25 years, I agree—that farmers love their cattle, their sheep and their pigs. They are devoted to their animals. The majority of the animals in question will be suckler cows, and dairy cows. I cannot bear to think of the state in which those cows will be, if they have not been milked or sucked out for 24 hours. It is absolute cruelty to submit them to that.

Finally, I want to say a few words about the impact on Hatherleigh, which has for many years been my home town. Hatherleigh depends on this abattoir and on the market, which are interdependent, and it has had a terrible time over the past four or five years, as it depends so much on agriculture. I hope that the Minister will either reconsider this decision or endeavour to insist that the Intervention Board reconsiders it. Will she instruct the Intervention Board to allow transitional cull quota for West Devon Meat until the matter has been fully debated and resolved?

I congratulate the hon. Member for Teignbridge (Mr. Nicholls) on securing a debate on this issue. He said that, as a traditionalist, he was not keen on this forum. However, given that other proceedings are taking place in the main Chamber at present, this forum has provided an opportunity for this important matter to be debated before the Christmas recess and before the operation date of 4 January, to which he and other hon. Members referred.

This debate gives us the opportunity to address the concerns raised by livestock farmers in the constituency of the hon. member for Teignbridge, in the south-west generally and around the country. I accept the point made in an intervention by the hon. Member for Brentwood and Ongar (Mr. Pickles) that the subject is also of enormous interest to people in other parts of the country. I say that with a certain amount of feeling, because one of the unsuccessful tenderers was in my constitutency and in the north-east, my own part of the country, there has been concern about the practical implications of the changes. The right hon. Member for Skipton and Ripon (Mr. Curry) also raised with me the concerns of farmers in his part of the country.

I am conscious of all those concerns, and of the number of hon. Members raising those issues on behalf of their constituents and their regions. However, as a result of their representations, I have examined the situation closely. Hon. Members have urged me to have meetings with the Intervention Board: I have already done so. As the hon. Member for Torridge and West Devon (Mr. Burnett) said, I met him and the hon. Member for South-East Cornwall (Mr. Breed) this morning. I shall hold meetings with representatives of the National Farmers Union tomorrow.

There is a willingness to engage in this issue, but the hon. Member for Teignbridge is right to say that the Intervention Board is the department responsible for the administration of the over-30-months scheme throughout the United Kingdom. Therefore, in pursuing representations that have been made to me, I have consulted the board and received from it a full account of how the process evolved and the various conditions and procedures that have been gone through in order to reach the present stage.

What weight would the Minister give to oral representations made by the Intervention Board to tenderers during the tendering process?

The Intervention Board has conducted this process according to the rules laid down for a public procurement exercise, and for the exercise of a tender process. That certainly involved a stage of bid clarification, in which the competitive pressures and the factors that would influence the final outcome were explained to the tenderers. That bid clarification process offered an opportunity for explanation, particularly to West Devon Meat, which was involved in the process. I am satisfied that, at that stage, the Intervention Board explained the competitive pressures and the price competition that West Devon Meat was facing.

The previous tendering exercise for over-30-months scheme slaughtering services was debated in the House on 26 November 1997. The hon. Member for Hereford (Mr. Keetch) was worried about the reduction in the number of scheme abattoirs that followed the Intervention Board's previous tender. I mention that at the outset to make the point that, although I understand hon. Members' anxieties, we have been through a similar process in the past, during which anxieties were expressed, and the outcome of that previous round was satisfactory. The process is rather ironic for the southwest, because at that time it involved Somerset farmers, worried mainly about transporting animals west, rather than Devon farmers worried about transporting animals east. Some of the anxieties expressed at that time were examined closely by the then Ministers in the Ministry of Agriculture, Fisheries and Food.

I should explain some of the background to the events under discussion. Since July 1997, 28 abattoirs in the United Kingdom have been slaughtering OTMS cattle. As hon. Members will know, effective implementation of the OTM rule and scheme is one of the central pillars of the Florence agreement to tackle the bovine spongiform encephalopathy crisis and its aftermath so as to build up consumer and European confidence and secure a normal operation of the European market, into which, as hon. Members from all parties know, we have put a huge effort.

The Government's negotiation of a partial lifting of the beef export ban suggests that the service that the plants provide has been found satisfactory by the majority of our European partners and, significantly, by the European Commission and the authorities in Brussels. It is clear that the scheme is now operating to the satisfaction of the majority of farmers, much more so than two or three years ago.

Between them, abattoirs slaughter about 750,000 OTMS cattle a year, at a cost of about £22 million, which is borne by the UK taxpayer. We also pay about £230 million a year to farmers in compensation under the scheme, of which about £160 million is reimbursed by Brussels. The 1997 tender, under which the current 29 contracts were awarded, reduced the cost of the service by about £12 million a year in comparison with the rates that had applied since 1996. As hon. Members will know, the Public Accounts Committee criticised the high rates paid to abattoirs when the OTMS was first introduced. Both the 1997 and the 1999 tender exercises have secured a better deal for the taxpayer.

Will the Minister give way?

Yes, but it must be the last time, or I shall not be able to make the points that I want to make.

The Minister mentioned cost, but the Intervention Board mentioned seven other criteria, ranging from past track record to location. How did the Intervention Board decide against people who made a bid but did not operate an abattoir?

I am grateful to the hon. Gentleman for that intervention. He is right to flag up the fact that a range of criteria were involved. Especially in view of the emphasis that the hon. Member for Teignbridge understandably placed on animal welfare requirements, I should emphasise that price is not the only factor in the equation. However, price is important because of pressures from the National Audit Office and, not least, from the Public Accounts Committee, which has been vigorous in examining the cost of BSE measures. Although I realise that hon. Members are worried about agriculture in their own constituencies in particular, pressures operate in the House in respect of the scheme's financial consequences, and it is only fair for me to point that out.

The hon. Member for Brentwood and Ongar mentioned location, which is also a factor. Indeed, the Intervention Board has produced a map showing the location of not only abattoirs but the number of animals involved. In his constituency, the number of animals entering the system is much lower than elsewhere. Such factors must be considered in offsetting the overall arrangements and evaluating the criteria.

Will the Minister give way?

I shall give way, but the hon. Gentleman does himself a disservice in terms of time.

We shall know very soon.

Is the Minister seriously suggesting that a trip of 130 miles is appropriate for this class of animal? She will remember that I did not emphasise strongly the cost to farming. I based my argument almost entirely on welfare, and 130 miles is not acceptable.

I did not claim that the hon. Gentleman emphasised the cost to farmers. I am not sure how he gained that impression. I have asked the Intervention Board about the 130-mile figure—the figure of 160 miles was cited in one press release. I do not believe that a journey of 130 miles will be involved. The fact that Madron Meat in Cornwall was allowed to continue is a prime example of how location can tilt the balance—leven though the company quoted a lower price, given its average kill, than West Devon Meat. For Bridgwater, the most efficient and value-for-money tender in the country, the ratio was three to one in favour. The Intervention Board must consider both geographical spread and value for money. It would be irresponsible if it did not.

I reassure hon. Members that the new arrangements will not flout the maximum travelling times allowed for animals under our animal welfare rules. I appreciate the hon. Gentleman's point about our overall commitment to animal welfare, and the fact that the matter is a cross-party concern that does not divide parties. Animal welfare considerations are extremely important. West Devon Meat uses animals from outside Devon: 25 per cent. of its current throughput relates to animals from outside the county. In Devon, 50 per cent. of farmers already use the market system. Presumably, many will continue to do so, so that they do not transport their animals themselves.

I am perfectly willing to examine animal welfare considerations that hon. Members draw to my attention once the scheme has come into operation, and if the fears of the hon. Member for Teignbridge are realised.

I am glad, Mr. Deputy Speaker, to have an opportunity to place on the record the case of my constituent, Dr. Nicholas Priestley—[Interruption].

Order. Will members of the public who want to leave this Chamber please do so quickly and quietly?

Dr. Priestley is a consultant neuropsychologist who works for a national health service trust. He is a chartered psychologist, he has a doctorate in clinical psychology, he is an associate fellow of the British Psychological Society and he is acknowledged to be a national expert in the treatment of head injuries. For several years, he has been a national expert witness; he is approved by the Law Society to work with cases involving head injury litigation.

In May 1995, Dr. Priestley was appointed lead consultant neuropsychologist for Highbank Healthcare Ltd., which is now a subsidiary of Westminster Health Care. It operates a head injury rehabilitation unit, which is in my constituency. In June 1996, Dr. Priestley was promoted to regional clinical director of the northern division of Highbank Healthcare. Two years later, in June 1998, he resigned his post after two years of systematic harassment by other senior members of staff, most of whom are no longer employed by Highbank Healthcare.

Before I go into greater detail, I must stress that I cannot comment on any of the professional clinical issues that are involved in the dispute, and I do not want to make a general criticism of the personnel policies of Highbank Healthcare or of Westminster Health Care. I want to focus on my constituent's case, which raises important legal and procedural issues, and to highlight the unacceptable harassment that Dr. Priestley had to endure for two years.

Dr. Priestley's harassment took many forms. He was harassed by the manager of the unit, by a director of the company and by other members of the clinical staff. I hasten to add that he was not harassed by nursing or care staff. He was, essentially, isolated as a result of management restructuring, which did away with important parts of his role. His secretarial staff was taken away, which made it impossible for him to carry out his professional responsibilities, and he was excluded from social events to which all other members of staff were invited, including, most notably, the Christmas meal. He was excluded from staff training, he was told that his personality had to change and his suitability to deal with patients was challenged. I remind hon. Members that he already had an established reputation as a leading expert in his field. After Dr. Priestley returned from sickness in late 1997 and early 1998, one of the directors of the company told Dr. Priestley that he wished that he had not recovered or returned and that he wished that he had died.

As a result of this continuous pressure, Dr Priestley collapsed from a cardiac arrest in late 1997. During that period, he submitted almost 30 written and verbal complaints to his management and to the company's personnel department. Those complaints document his concern and his sense of grievance and describe what he thought were professional misjudgment malpractices involving some colleagues. He also requested a copy of the company's equal opportunities policy, which needless to say, was not provided.

It may be asked why this case is different from many thousands of others that take place year in and year out across the country in different forms of employment. Two factors distinguish it from the routine cases of professional jealousy and minor harassment at work. The first involves the scale of harassment. I have with me a 30-page dossier that Dr. Priestley submitted to a tribunal. It details behaviour that goes far beyond what one would accept as reasonable. I have already referred to the fact that Dr. Priestley collapsed as a result of cardiac arrest. He was on the floor in a room to the rear of the unit. A manager in the unit, who was also a trained nurse, refused to call an ambulance. It was clear that Dr. Priestley's collapse was the result of chest pains. In view of the seriousness of the situation, it was obvious that the manager, who was acting on behalf of the company, was not prepared to do the basic, decent, human thing, which was to call an ambulance.

The second distinguishing factor involves the nature of the harassment that Dr. Priestley endured. It consisted, quite simply, of intense homophobia. Dr. Priestley is a gay man, and he does not seek to hide that fact. He did not consider that his sexuality would interfere in any way with his professional competence.

In order to convey the homophobic culture in the unit at which Dr. Priestley worked, I shall quote from one of the statements that he made to me at an earlier stage in our discussions:

"There was an established culture at Highbank of discrimination and abuse directed at some minority groups and my complaints about this were consistently ignored. In September 1997, I was taken ill at Highbank following an acute cardiac event. Although this occurred whilst I was with a manager (who was also a trained nurse) I was left alone in a back room and no ambulance was called. When I returned to work after a period of convalescence, I was told by a senior figure at Highbank that he wished I had not recovered. I was also informed that another member of Highbank staff expressed disappointment that I had not died …

A member of staff proposed there should be a formal risk assessment made of gay and lesbian employees because they were identified as a perceived 'threat' to patients at Highbank. I am aware that other employees at Highbank suffered similar distress to myself. Untrue allegations were generated that one staff member had AIDS. His formal complaints were not formally investigated. In June 1998, I reluctantly formed the view that my own position was no longer tenable because of the levels of discrimination, and I resigned."

It might be suggested that that is the view of a man who sees himself as a victim. If so. I shall quote from supporting evidence that was provided by another employee at the head injury rehabilitation unit. That employee stated:

"Before Nick started to work at Highbank, there was an established culture of homophobia and gay discrimination regarding any person whose lifestyle was viewed differently to the very 'traditional' and heterosexual culture that existed. I must stress that gay clients were also exposed to this judgmental and damaging conduct.

I witnessed staff members regularly making numerous debasing and sterotypical comments about gay and lesbian lifestyles. Nick was frequently treated in a most degrading manner, ranging from crude comments to outright abrasive treatment. Strategies of exclusion from social events and conversations were ongoing, and actively promoted as a cultural norm. Attempts made to right these were dismissed and no concern offered regarding the damaging effects that were clearly apparent. This ethos was rife throughout the hierarchy of the organisation. Clinicians and management would perpetuate and maintain the treatment of gay people as unimportant and indeed abhorrent …

Towards the end of my employment at Highbank, two health care workers expressed their distress and fear, describing experiences of discrimination within Highbank. They were desperate to reduce the shameful discrimination that occurred. As Nick supported them, commenting upon his own similar experiences, many members of the team became extremely hostile. …

I am further aware of how Nick Priestley's health and safety was gravely compromised by a nurse/manager at Highbank who did not call for help but walked away when he collapsed with left-sided chest pains whilst at work."

Towards the end of the time that Dr. Priestley worked at Highbank Healthcare, he decided that he had to take out a case of sex discrimination and victimisation. He took that to the Manchester employment tribunal in January 1998. The case was subsequently adjourned pending the outcome of another test case on a similar issue. In June 1998, he resigned his post, having found his position untenable, and took a further case to the tribunal for constructive unfair dismissal. That case was heard in March 1999.

The second stage of this extremely serious and distressing saga is the way in which Dr. Priestley was treated by the tribunal. His statement to the tribunal about his grievance states:

"Despite paying lip service to 'equal opportunities', I believe my employers have acted in a high handed and oppressive manner towards me. Despite both verbal and written requests, they have persistently failed to provide me with a copy of their Equal Opportunities Policy. They have failed in their duty of trust and confidence towards me in refusing to investigate my legitimate concerns in any proper or meaningful manner. They have also failed to provide me with a safe and proper system of working, and as a consequence of their acts and admissions, my health has suffered."

I should point out that his health continues to suffer.

Dr. Priestley's description of the events at the tribunal in March 1999 is intensely disturbing. I quote from this letter:

"From the first day of the hearing, the Chairman was either unwilling or unable to control the proceedings. At the outset, serious concerns were raised by my Counsel Ms Laura Cox QC regarding the integrity of a number of the Respondents statements which remained unsigned and in some cases, reportedly unsupported by the alleged authors. The Chairman remained unconcerned by this. Despite a 74 page statement in which I described in detail the abuse to which I had been subjected, the Chairman had no questions to ask me about my allegations, preferring instead to engage in friendly banter with the Respondents Counsel.

I was subjected to a cross-examination of the most intrusive kind for almost 2 days.… My perceptions of criminality with regards to my sexual orientation were considered and most distressingly, the parenting skills of my mother and father were ridiculed.… The Chairman made no atempt to moderate this approach… appeared uncertain about a number of legal points and relied upon the Respondent's Counsel for guidance. Each day of the hearing, the Respondents produced a large crowd of employees who had been given paid leave to attend, and whose sniggers and stage whispers became increasingly intimidatory both for myself and for those persons acting as witnesses for myself. The Chairman was either unwilling or unable to moderate this. More importantly, his behaviour was causal in permitting an atmosphere of mockery and ridicule to develop. … The atmosphere became so intolerable that one gay witness attempted suicide."

Rather than relying solely on Dr. Priestley's statement, I shall bring to bear another witness's description of the events at the tribunal, who stated:

"The witnesses for the respondents … turned up en masse on a daily basis. Their presence was enormously menacing and they seemed all but equipped with baseball bats to ensure that they could inflict as much damage as possible. Nick's witnesses expressed feelings of being intimidated by antagonistic and undermining utterances made by the respondents' side, with the legal forum offering no solace. … The Chairman seemingly colluded with the respondents, and I must say that as the hearing continued it became increasingly difficult to distinguish between his role and that of the Barrister for the respondents.

Whilst there is no clear law to protect people from discrimination relating to their sexual orientation, such disgraceful and unashamed treatment of lesbians and gay men will continue to be permitted."

Two issues relating to this sad story require attention. The first concerns the employer's responsibilities. There is currently no legal protection for gay or lesbian employees against discrimination on the ground of their sexuality. If Dr. Priestley had been a woman, had had a disability of some kind or had been a member of an ethnic minority, he would have had recourse to the law earlier.

Although many public employers now have policies on equality of opportunity that refer to sexuality, most private employers do not. For the record, I pay tribute to a small number of private employers who have taken the lead on the issue of discrimination on the ground of sexual orientation. They include Abbey National, Barclays bank, Boots, British Airways, British Gas, British Telecom, Cadbury Schweppes, Glaxo Wellcome, Granada Media Group, Halifax plc, Littlewoods, Lloyds, Marks and Spencer, Midland bank, Northern Foods, Rank Xerox, Rover Group, Sainsbury's supermarkets, Shell, SmithKline Beecham, Unilever and W. H. Smith. There are about 20 such employers. They are all large and, in most cases, multinational, and obviously represent only a tiny minority of the country's employers. There is clearly a case for building discrimination on the ground of sexuality into anti-discrimination legislation.

The second issue is procedure at tribunals. I hope that I have given a flavour of a particularly horrific and shambolic tribunal. Its outcome was that Dr. Priestley's QC—after challenging the chairman's objectivity on several points and finding herself unable to win those arguments—advised Dr. Priestley to withdraw from the tribunal because she did not believe that he would get a fair hearing. That raises the question of the procedure for selecting employment tribunal chairs, the rights of appellants to veto chairs, the training of chairs—especially in equal opportunities policies—and the monitoring of chairs' performance.

Will my hon. Friend the Minister tell us when the Government will be able to build protection for people on the ground of their sexuality into anti-discrimination legislation? Until that happens, what other steps can be taken to prevent such incidents from occurring again?

I know that employment tribunals are the responsibility of the Lord Chancellor rather than my hon. Friend the Minister, but what will happen as a result of the Lord Chancellor's investigation into the conduct of this tribunal and its chairman? I know that that investigation is taking place, because I have written directly to the Lord Chancellor, as have Dr. Priestley and other people.

I thank the Minister for listening patiently to the case that I have outlined, and look forward to her reply.

This is a very sad and difficult case. One must have sympathy for anyone who is harassed at work. Harassment or bullying, whether on the basis of race, gender, disability, age or sexual orientation, is pernicious. It can put the emotional well-being and health of the worker at risk. Bullying can lead to disaffection or illness, as this case indicates, and can blight a worker's career or entire life. It should have no place in any workplace.

The Advisory, Conciliation and Arbitration Service recently published a welcome and helpful leaflet, which describes bullying as offensive, intimidating and malicious, and states that its intention is to

"undermine, humiliate, denigrate or injure the recipient."

The leaflet defines harassment as

"unwanted conduct affecting the dignity of men and women in the workplace. It may be related to age, sex, race, disability, religion, nationality or any personal characteristic of the individual, and may be persistent or an isolated incident. The key is that the actions or comments are viewed as demeaning and unacceptable to the recipient."

Such behaviour is contemptible and unacceptable. There is no excuse for harassing, insulting or isolating any person on the ground of their sexual orientation. Sexual orientation should not be an issue in a modern society. Sadly, however, it remains so in the workplace, the media and more widely in society.

As my hon. Friend the Member for Bury, North (Mr. Chaytor) said, a growing number of employers are adopting the code of practice on harassment as part of their equal opportunities policies. In those workplaces, harassment on the ground of sexual orientation would be forbidden.

Sexual harassment is not named in the Sex Discrimination Act 1975, but it was long ago found in case law to be a detriment experienced on grounds of sex. Even in the current framework, someone who feels that they have been bullied or harassed has recourse to both civil and criminal redress. The Employment Rights Act 1996 gives someone the right not to be unfairly dismissed and harassment can be grounds for a claim of constructive or unfair dismissal. Civil action can also be taken under the Health and Safety at Work, etc. Act 1974 when it can be shown that harassment presents a risk to a worker's health. Criminal proceedings can be taken under the Criminal Justice and Public Order Act 1994, which created the criminal offence of intentional harassment, whether in the workplace or elsewhere, and under the Protection from Harassment Act 1997, which created another criminal offence of harassment as well as giving a right to damages. Thus, where harassment causes extreme distress to the individual involved, redress is possible in the current framework.

Dr. Priestley, who exercised his rights under the Employment Rights Act 1996, is one of many who has used the tribunal system to exercise their individual rights and, by doing so, influence future employment practices. Last year, some 105,000 cases were completed through the tribunal system. Although that might sound like an indictment of Britain's industrial relations, I prefer to see it as evidence of the right of individuals to ensure fair treatment at work and to seek redress where appropriate. I am well aware of the importance of the publicity that tribunals often receive in the media. It is a helpful incentive and reminder to employers of the need to keep within the law and provide decent working conditions for their employees.

I hope that my hon. Friend the Member for Bury, North will understand that I cannot comment on an individual case. It is a dispute between two litigants to which the Government are not party and it is not right for us to give a view or to appear to judge for or against any party in a private dispute. As my hon. Friend recognises, the way in which tribunals and the courts operate is a matter for the Lord Chancellor's Department and the Department of Trade and Industry, but not for the Department for Education and Employment. However, I can say that the Government fully expect every court user to be treated fairly and with courtesy.

I can also confirm that the Lord Chancellor himself, together with his officials, has gone into Dr. Priestley's case thoroughly. I understand that a reply is imminent, although I can give no indication of what it will say. The Lord Chancellor has the power to investigate the personal conduct of tribunal chairmen, but not even he can require chairmen to justify their actions during hearings or intervene in the decisions that they reach.

My hon. Friend the Member for Bury, North and other hon. Members have shown an interest in the appointment of employment tribunal members. Employment tribunals are independent judicial bodies. The chairmen are legally qualified and appointed by the Lord Chancellor, while lay members are appointed by the Secretary of State for Trade and Industry. The Government regard it as extremely important to ensure that the appointments procedure is free from discrimination, overt or otherwise. As with all public appointments, the Government insist that the selection of tribunal members is based on merit.

While recruiting new lay members recently, my right hon. Friend the Secretary of State for Trade and Industry took the opportunity to undertake the first nationwide recruitment competition open to members of the public. He consulted widely with the Equal Opportunities Commission, the Commission for Racial Equality and the Royal Association for Disability and Rehabilitation to ensure that the selection criteria were fair and unbiased. The competition has been a tremendous success. I am pleased to say that, in addition to the high quality of the recruits, 54 per cent. are women, 18 per cent. come from ethnic minorities and 18 per cent. have some form of disability.

The Lord Chancellor appoints new, legally qualified, part-time chairmen, again following an open advertisement, application and interview. Successful candidates are required to show that they have integrity, fairness, an understanding of people and society, maturity, sound temperament, courtesy and humanity.

Prejudice or overt bias of any kind would generally mark a candidate as unsuitable and anything of that nature is rigorously followed up by the interviewing panel. Full-time employment tribunal chairmen are usually appointed from those who have served on a part-time basis. Again, vacancies are filled after application and competitive interview.

Chairmen receive extensive training on appointment and then at regular intervals, including training in discrimination issues. Training is overseen by a panel chaired by the President of Employment Tribunals. The conduct of tribunal chairmen and women and the way in which judicial decisions are made are a matter for the President of Employment Tribunals.

We are taking action across government to tackle the discrimination faced by gay and lesbian people in our society. My hon. Friend the Member for Bury, North will know that my right hon. Friend the Home Secretary intends to reintroduce legislation to equalise the age of consent. The Home Office is also conducting a comprehensive review of sex offences and penalties. One of its terms of reference is that all new offences must be compatible with the European convention on human rights—as enacted by the Human Rights Act 1998—to ensure that they are fair and non-discriminatory.

The Department of the Environment, Transport and the Regions is taking forward the repeal of section 28 of the Local Government Act 1988.

My hon. Friend will also know of the ruling of the European Court of Human Rights which found that the policy of the Ministry of Defence—that homosexuality is not compatible with service life—was unsustainable. The Chief of the Defence Staff has commissioned an urgent review of the policy on homosexuality, the aim of which is to sustain operational effectiveness within the law.

The Equal Opportunities Commission has been commissioned by the Department for Education and Employment to work with us and a steering group of stakeholders to produce a non-statutory code of practice preventing discrimination on the ground of sexual orientation. It will be similar to the non-statutory code of practice on age diversity that we have also brought in.

The new code of practice will also cover a wide range of other behaviour that makes life unequal and uncomfortable for gay men and lesbians, including inadvertently hurtful, as well as deliberate, behaviour. I know that the Equal Opportunities Commission will fully consult all stakeholders and community groups to ensure that the code addresses issues with a negative impact on gay men and lesbians in the workplace. We want to ensure that employers understand that discrimination on the ground of sexual orientation is not acceptable and that they are clear about the steps that they can take to avoid it. We believe that the new code can have a significant impact after the good work of the EOC in introducing it. The EOC has a long and proud record of helping individuals and advising employers. The effect of the code will of course be assessed and the Government will then review the need for legislation in the light of code's evaluation and developments in other areas.

There are two reasons why my hon. Friend the Member for Bury, North wanted this debate. First he was concerned that anyone should suffer harassment and distress because of prejudice at work. I share that concern and regret that it should ever happen. It is unacceptable for any employer to allow staff to behave in that way.

My hon. Friend's other reason was to express his concern at the handling of the dispute by the authorities. As I said, that is a much more difficult issue for me to address. I hope, however, that I have reassured him that the Government take seriously the need to ensure fairness and equal treatment in our tribunals. It is clear that existing legislation allows individuals who have been harassed on grounds of their sexual orientation to bring claims for constructive dismissal. Sexual orientation is not one of the categories of dismissal that the Employment Rights Act 1996 regards as fair.

rose—

Hear, hear.

I am grateful to my hon. Friends for their support, especially my hon. Friends the Members for New Forest, West (Mr. Swayne), for Tewkesbury (Mr. Robertson) and for Witney—I am sorry, I mean my hon. Friend the Member for Wycombe (Sir R. Whitney). Hon. Members will appreciate that relevant but subliminal reference.

This debate is about the Stasi archive, not the Mitrokhin-KGB archive. It is about Berlin files, not about Moscow files. It is about original documents, not about handwritten notes. Some might think it a coincidence that, only 24 hours earlier, the Government thought it necessary to rush out by means of a planted written question the news that those who have been exposed by the Mitrokhin archive and the Berlin Stasi files will not be prosecuted, but I do not think so. Whether or not that is a coincidence, it enables me to speak more openly about individual cases than I might have been able to do if a trial had been pending.

I shall not say much about Melita Norwood, because she was discovered in the Mitrokhin archive. However, it is amusing to observe that that lady, who gave away to Soviet tyranny secrets of the British atomic bomb, is often pictured wearing a Campaign for Nuclear Disarmament badge—showing her desire that, although the Soviet Union should have had the bomb, this country and its democracy should have given it up unilaterally.

On 21 October 1999, in his statement on the Mitrokhin archive, the Home Secretary referred to the handwritten notes taken by Mr. Mitrokhin that the Secret Intelligence Service smuggled out of Russia. Because those notes were handwritten, they were, as he said,

"of no direct evidential value".

My first concern is that he conflated those notes with the original archive that has identified other would-be and actual spies—the archive in Berlin. There is no doubt that the material held in Berlin is of evidential value. It is original material and includes the reports given by agents themselves and by their handlers directly.

The Home Secretary said that it "would be wholly improper" to denounce "people against whom allegations had been made, without evidence being put before a court of law,"—[Official Report, 21 October 1999; Vol. 336, c. 587-90.]

He said that it would be improper to denounce such people if they had not been convicted. However, the question at the heart of this debate is whether it is a criminal offence to co-operate in times of peace with hostile intelligence agencies belonging to a democracy's potential enemies.

There is no doubt that it is a criminal offence to give aid and comfort to the enemy in time of war. However, I hope that the Minister will tell us whether the Government accept that it is a criminal offence for someone actively to co-operate with the hostile intelligence service of a potential enemy, or whether they say that that is not something for which someone can be prosecuted. If the former is the answer, those people certainly should be prosecuted, and it is a disgrace that they are not being prosecuted. If it is the latter, the Government cannot have it both ways. If such an action is not a crime, it is clearly wrong to say that the activities of those people should not be exposed to public opprobrium unless and until they have been convicted in a court of law.

The Berlin Stasi archive is housed near the Alexanderplatz. It is called the Archive for the Files of the State Security Service of the German Democratic Republic. The Stasi headquarters had previously been in Normannenstrasse. So far as I have been able to find out, there are only two records of visits by British officials. In 1990, two British intelligence officers visited the Stasi headquarters and took the time to photograph each other sitting on the toilet of Erich Mielke, but they did not bother to look at the documents. A few years later, a bus load of British officials visited the former Stasi headquarters for a Christmas outing.

It appears that the only real work that has been done on the files was by a journalist, Jamie Dettmer, in the early 1990s, and by the academic, Dr. Anthony Glees, in conjunction with the BBC earlier this year. That work contributed to four BBC 2 programmes that were broadcast between 19 September and 10 October this year, which brought to public attention the activities of, among others, Dr. Robin Pearson, Miss Fiona Houlding and Professor Vic Allen. It is interesting to note that although we were told that five cases were being considered for prosecution, the Government have not revealed whom two of the five cases concern. Is Miss Houlding or Professor Allen involved? We know that one case involves Dr. Pearson.

I first raised the fact that no one from the Security Service, the Crown Prosecution Service or the police had been in contact with Dr. Glees—the man who discovered the original material—with the Leader of the House on 28 October and then with the Home Secretary on 6 December. I confirm, yet again, that no one in authority has consulted the man who discovered the primary evidence of Dr. Pearson's activities. That is cause for concern.

However, on 6 December, the Home Secretary said:

"I can tell the hon. Gentleman that the records have revealed many leads in cases involving the investigation of more than 100 individuals."—[Official Report, 6 December 1999; Vol. 340, c. 555.]

I am puzzled by that statement. Unless the Home Secretary was again conflating the Mitrokhin archive, with its huge number of leads, with the Berlin Stasi archive, which does not appear to have been properly visited by members of the British security services, it is hard to understand how such an extensive investigation could be under way.

It is true that, as a result of Operation Rosewood in the United States, a copy of those KGB editions of Stasi files that were sent to Moscow exists. The American Central Intelligence Agency purchased those files from the Russians at the end of the cold war. However, there is no reason to suppose that the material in them covers anything like all the material in Berlin, so what has been going on? How can a proper investigation be occurring if the Berlin archive has yet to be trawled properly?

I shall spend a few moments on the material that has been found in the Berlin archive to give an idea of what we are contending with. I shall quote some extracts from the file on Dr. Robin Pearson. There is a note on 25 August 1978 stating that Armin—the code name for Dr. Pearson—was given

"DM500 on his departure as expenses for his work in Edinburgh for the security office".

As a result of a meeting held on 28 to 30 March 1980 with Dr. Pearson in Budapest, there is a note stating that he

"is to be given … secret ink for handwriting." The notes continues:

"He is to be asked whether he possesses the necessary technical skills for one-way radio transmission to which he will be introduced later. He is to be given DM500."

That is additional to the money mentioned in the first note that I quoted. On 22 September 1980, there is a note on the file which reports the results of Dr. Pearson's spying on others—he is a university lecturer. It states:

"YYY has finished studies and stay in Leipzig; meant to get a post at MoD or NATO, but failed security check. Her teachers and father were questioned. Questions too about alcohol and the nature of her relationship with her boyfriend. YYY was one of the students at Leipzig at the same time as A"—

A, of course, is Dr. Pearson—

"Her boyfriend had been at Leipzig wih A and had developed a relationship with a Russian girl who was now keen to move to the UK. A passes on two surnames of fellow students; one had been vetted for six months. A says there is a crisis in the relationship between the two. … A has given information about students of whom one is an intermediary with the British Embassy Berlin, one an MoD translator, one at the MoD vetted for six months and on Chinese studies at Leeds."

As a result of a meeting in the German Democratic Republic with his controller from 9 to 17 August 1982, it is noted on Dr. Pearson's file that the transmission of radio signals should begin that year or, if necessary, in January 1983. As a result of a meeting in Paris with his controller from 12 to 13 March 1981, the note on his file states:

"The most effective goal would be an operation against NATO headquarters predicated upon a post in Brussels, for example the EEC, or in Paris or the Federal Republic. The minimum goal is work in London against the Ministry of Defence."

Finally, as a result of a meeting as late as 23 to 29 August 1987, there is a note of a meeting on those dates which states:

"A declared himself ready to look for students at York university who were operationally interesting and might be won over for us. We have his agreement to use his flat, his address and his telephone to support our Kundschafters."—

Kundschafters are deep penetration agents—

"A is ready if we need him to serve as the representative of a British flag."—

That is when someone pretends to be the representative of a friendly intelligence service to get information that can then be passed on to a hostile intelligence service. The note continues:

"It has been agreed to retain contact with him via Gerd who as instructor will come into the operation."

There is much more of that kind, but time does not permit me to go into it.

I conclude by asking some questions, of which I would like to have given the Minister advance notice. When I heard that I had secured the debate, I asked my office to ring the Minister's office to ask whether he would like

time to receive notice of my questions. I did not have the courtesy of a response; I renewed the invitation today, but that invitation has similarly not been responded to. That is a pity; it means that the Minister will read a prepared speech, but in so far as he has flexibility and information at his disposal, I hope that he will respond to the following points.

First, is it a crime to collaborate with a hostile intelligence agency in peacetime; to try to recruit agents among students who could then go on to be in sensitive positions; to be a deep penetration agent oneself—it is clear from the files that both Fiona Houlding and Robin Pearson actively agreed to do that—and to spy on one's colleagues, especially those who might then be travelling at that time to central and eastern Europe and thus to put them in harm's way, which the files bring out clearly in the case of Dr. Pearson? Is that a crime? If it is a crime, why are those people not being prosecuted? If it is not a crime, why are they not being denounced? The excuse of having to wait for them to be convicted in a court clearly would not apply.

Secondly, who are the other two who have now been let off in time for Christmas? Thirdly, why has there been no contact with Dr. Glees, the man who is best able to brief the security services about the material that he found and for whom they should have looked much earlier? Fourthly, why does there appear to have been no proper visit to the Berlin archive by the appropriate authorities to investigate what material is available?

Fifthly, how could a prominent Stalinist such as Professor Vic Allen get away with meeting a succession of Stasi controllers in London, when everyone knew that he was a prime candidate to engage in such activity? I take little pride in pointing out that I drew attention to Professor Allen's record and proclivities in a letter published in The Times in mid-1985. He had a record as long as your arm for subversive affiliations and activities, both in this country and previously in Nigeria.

Finally, what about the 100 leads from the Berlin archive who are supposedly still being investigated? Are they still being investigated—or have 105 people been amnestised for Christmas, rather than just five?

In conclusion, if the Home Secretary and his team spent a little less time posing in pubs with Conservative defectors and a little more time tracking traitors and uncovering them, this country could have more confidence that those who seek to betray it will be shamed, exposed and, if appropriate, prosecuted.

The hon. Member for New Forest, East (Dr. Lewis) chastises us for posing in pubs with too many Conservative defectors. If there had not been so many of them in recent years, we would not have had to spend so much time doing that. We give them a friendly welcome; many others will no doubt wish to join us in due course.

The subject of the debate is most important. I welcome the opportunity provided by the hon. Member for New Forest, East to consider these issues. It allows me to focus on some of the events of the cold war period and to highlight action that our security services have taken to counter the threat from certain foreign intelligence organisations during and after the cold war.

The hon. Gentleman referred to his telephone calls to my office. I am not sure what time he contacted the Home Secretary's office, but I became aware of his call to my office at 4.15 pm today; I was reading papers at the time and it was not possible or convenient for me to contact him. I am perfectly happy, therefore, to consider the points that he made to me and, in due course, to reply to him in writing. I hope that that is helpful.

That is very helpful. The Minister is right to say that my telephone call was a last-minute, second attempt at a response, but the original approach to the Home Secretary's office was made last Friday, when there was plenty of time.

When I received the message, I was looking at the briefing papers for the debate. However, I am sure that we will be able to deal with the point made by the hon. Gentleman.

It is clearly an offence to commit acts of espionage that damage Britain's economic and security interests. Quite what behaviour will fulfil the conditions necessary—the mens rea and actus reus of an offence of that sort?—will be a matter of law, which will need to be considered by the prosecuting authority. If the hon. Gentleman wishes, I can set out for him what the requirements are, but it is necessary to consider the facts of an individual case and reach a conclusion based on them.

The hon. Gentleman referred to the announcement made yesterday. He rightly drew a distinction between the Mitrokhin archives—they were, as he said, secondhand but important information, and perhaps of different evidential value—and other information that may be available from the Stasi or other sources. The Government accept that distinction. Of the individuals mentioned by the hon. Gentleman, at least one was named as a result of information from the Mitrokhin archive and at least one other—and perhaps more—from the Stasi archive.

The Solictior-General has stated that the prosecuting authorities have reached a conclusion on the five cases. He has decided not to refer any of them to the police for further investigation, mainly because what is known is already enough to make it clear that any prosecution would fail. That view was reached by the Crown Prosecution Service initially and then confirmed by the Law Officers. It is right to say that publicly.

The House will know that the Solicitor-General's step was unusual. Generally speaking, the prosecuting authorities do not make announcements about consideration of individual cases or name people publicly as a result of an investigation of someone's background. If a decision is taken to prosecute, the law takes its course and it is normally wrong to draw attention to individuals when decions have been taken not to prosecute. However, in this particular case, there is a legitimate public interest in security matters and the allegations have been given wide publicity. We therefore decided to end speculation about whether the case against them will continue to be considered. A decision has been reached, as I said, and we have explained why we took it.

The hon. Member for New Forest, East mentioned that more than 100 people could be investigated and asked whether we were going to conflate the Stasi material and the Mitrokhin material. We cannot comment on the steps taken by the intelligence and security services in pursuit of their inquiries. I can tell him that various steps have been taken and that we are satisfied that the security services are investigating what it is proper for them to investigate.

The publication of the Mitrokhin archive and the East German Stasi records has led to pressure to reveal the names of those against whom allegations of spying for, or assisting, the KGB or the Stasi have been made. It would be wrong to compromise the effectiveness of the security and intelligence services by revealing the cases that they may be working on. Above and beyond that, as my right hon. Friend the Home Secretary said in a statement to the House on 21 October,

"it is a long established rule of law that people are innocent until convicted in a court of law."—{Official Report, 21 October 1999; Vol. 336, c. 589.]

It is wrong to slide into trial by denunciation by feeding or encouraging rumour or speculation.

We have now heard that statement when I quoted it and again when the Minister quoted it. If it is not a criminal offence to do the things that those people did, does the Minister accept that the public has the right to know when they did them, when they are clearly guilty of having done them—even though it may not be a criminal offence? That is the nub of the issue.

Whether it is a criminal offence depends not just on law but on evidence and hence whether the evidential rules will allow the submission of certain types of information in a trial. Making allegations about what might, if there were sufficient evidence, be criminal offences could amount to denouncing a person as guilty of committing a criminal offence. The suggestion is that the person is guilty, but is not convicted because of a lack of evidence.

We tread a fine line here and we must be careful. It is wrong to criticise, as some unfortunately have, the Crown Prosecution Service for reaching a feeble decision. It was not. The Law Officers reviewed and confirmed it, so that allegation is a cheap approach to politics. I do not accuse the hon. Member for New Forest, East because he did not say that during his speech, but others have. It is wrong for politicians to second-guess the decisions of senior prosecutors and the Law Officers. I do not believe in taking political decisions to prosecute. We are in the business, as were those who sacrificed their careers and sometimes their lives, such as Mitrokhin, of ensuring proper democratic and legal safeguards and the promotion of human rights. That does not mean engaging in denunciations, making political judgments or Star Chamber prosecutions just because it would look good in tomorrow's headlines. It is wrong for politicians to accuse someone of a criminal offence. The Government prefer a more careful and proper approach to such matters and support the proper judicial authorities in taking legitimate decisions.

I am not going to say more about individual cases, but I can say that the Security Service investigates matters of national security, including allegations and suspicions of spying. It does so under a statutory duty placed on them by the Security Services Act 1989. The Security Service concentrates on investigations of any link that might identify spies who are providing other countries with information that might be damaging to Britain's national security or economic well-being. The Security Service also seeks to frustrate the activities of any foreign intelligence agents who might try to recruit people in this country who could provide access to British secrets.

The hon. Member for New Forest, East claims that the records of the East German intelligence services have not been properly investigated and asked what action the Government had taken regarding former Stasi agents revealed in those records. As I have said, it would be wrong to go into detail about how the security services go about their business. To do so would damage their effectiveness in a vital area of Britain's national interest. It has been the policy of successive Administrations not to comment on such matters. The Government intend the Security Service to do its business in a professional and dedicated manner. We have no reason to believe that it has not done so in these cases.

As the Home Secretary said to the House on 6 December in replying to one of the hon. Gentleman's questions, the East German records reveal many leads, which may have to be followed up. The fact that a name appears in East German intelligence records is not, of itself, proof of any wrongdoing—far from it. The East Germans took a keen interest in many people who firmly opposed their regime, as well as those who might have assisted it. They even took an interest in innocent citizens whom they may perchance have encountered.

We should remember the background to the creation of the records. The East German regime oppressed its own citizens and its intelligence services were part of the process of repression. The intelligence services kept records on large numbers of citizens and their contacts. They also kept records on the contacts of those who were interested in their country, on foreigners visiting East Germany, on names reported by their agents as visiting or having contacts abroad. The resulting collection of records was massive and many people named in them are completely innocent. Individuals may have been completely unaware that they had been named. That is why such careful examinations and investigations are necessary.

As I said, the hon. Member for New Forest, East should approach these matters with great care. He mentioned Dr. Glees. If he has relevant evidence, he should urgently contact the Director-General of the Security Service so that the material can be examined. Some countries still seek to gain advantage in economics, politics, and military affairs by the use of covert activity against the United Kingdom. The Security Service remains vigilant to counter any such activity.