I am delighted finally to have managed to obtain this debate through the ballot procedure. Success today has crowned six months of effort. However, the debate may be more apposite today than it would have been six months ago, as there has been a hint that in the next few months—or even weeks—there will be a ministerial statement on the Tote. I hope that the Minister will be able to elaborate on that.

I should welcome such a statement, as the one made by the Home Secretary on 1 May last year was, to put it delicately, opaque when it came to the ownership of the Tote and even murkier on its future. However, I am a helpful sort of person so I can tell the Minister that I quite understand his position. The Government may be leaky, but if they are to make a statement in the next few weeks or months, I accept that it is unlikely that he will give us all the details this morning. Therefore, I should understand if he were to employ a cricket bat 3 ft wide and 4 ft tall and stonewall furiously this morning. We have all been down that path, and we all understand the need for such defence.

I have two points for the Minister to take on board. The first is straightforward, and this debate underlines its importance. We need a Minister with responsibility for horses, a person in Government to argue the case for racing. That Minister could argue the case for the Tote turning into a trust, the proceeds from which could then be devoted exclusively to racing. We need a Minister for the horse, as exists in France and Ireland, although I fully accept that the Home Office should retain responsibility for betting and gaming.

I believe that my views broadly reflect those held by the vast majority of the racing fraternity in the United Kingdom, and that this debate is not just Richard Page firing off ideas without any support. However, it would do no harm for me to make clear the value of racing for this country—an aspect of the argument that is often pushed to one side.

Secondly, the racing industry employs about 60,000 people, with the betting industry employing another 40,000. One does not have to be brilliant at maths to realise that that works out to 100,000 people. All hon. Members know the ripple effect on other industries in a constituency when one activity weakens, so the total number of people supportive of and supported by racing is even greater than that 100,000.

The income generated by racing and breeding exceeds £300 million a year, generating £150 million a year in tax revenue and another £300 million a year in betting duty. As an aside, the Government must get their act together with regard to internet and overseas betting or those figures will go into a decline. However, that is a debate for another day.

There are more than 3,000 thoroughbred breeders in Britain. Some are very small, but some run quite sizeable operations. That sector achieves exports of more than £1 million a year. Last year, more than 5 million people went to watch racing involving the 13,000 horses that are in training. From that audience, the betting levy generated about £52 million. At the same time, the Tote contributed a record £12.3 million to racing. The previous record was £9.3 million, so it is evident that a substantial amount of money came back into racing.

We must bear it in mind that only 1.1 per cent. of horse racing betting turnover goes back into the sport in this country, compared with 4.4 per cent. in Australia, or the mammoth 15 per cent. in Germany. It is clear that Britain is very much the poor relation in terms of the volumes of money involved.

Our parsimonious approach is evident in the returns to British racehorse owners. Prize money receipts average 22 per cent., and in that respect I should declare an interest. Although I should be only too delighted if my prize money receipts climbed to 22 per cent., I have to say that my receipts are in the bottom half of the scale that keeps the average where it is. The costs of keeping a horse in training in this country compare with the 43 per cent. return in Australia. In the United States the return is 47 per cent., in France, 54 per cent., and in Japan, a stunning 87 per cent.

We are clearly at the bottom end of the Richter scale of support. The Tote's income stream is a vital contributor to racing's finances. It is inextricably entwined with, and an integral part of, racing in this country.

What is the future of the Tote? I am tempted to quote in detail from the debate on 26 July 1998 in the House of Lords. However, I want to emphasise two points that emerged from that debate, as I believe that it would do no harm to repeat them again and again.

The Tote was established by private Act of Parliament in 1928. It is worth underlining that the relevant Act began as a private Member's Bill, not a Government Bill. The Tote was not and has never been financed by Government money. It was financed by loans from racing. The Government do not stand behind or guarantee the Tote in any way; nor do they own any shares in it. The Government are therefore fairly remote from the Tote set-up.

Like any other bookmaker, the Tote has contributed to the Revenue for many years, with the money coming in through off-course starting prices and Tote odds. It returns to racing more than £2 million in sponsorship every year, and it also pays £6 million to race courses for the facilities that it uses. That money is vital, as the standard of some of our courses is disappointing and way below par. Those courses need to improve their image and raise their profile to make racing even more attractive to punters.

Successive Governments have benefited from the operation of the Tote, even though they contributed nothing to its creation and continued existence over the years. It is hard to comprehend how the Exchequer has a right to demand a payment for transferring the Tote into some other existence. Although there will be much legal toing and froing, I am given to understand that, to fulfil their plans for the Tote, the Government will first have to nationalise it, then privatise it.

This Government have made much of the windfall gains enjoyed by companies that have taken advantage of privatisation. I find it difficult to understand how the Exchequer can allow an operation to be nationalised—meaning that a fair sum of taxpayers' money will have to be paid into it—and then be privatised. If more money is needed, the Government will be guilty of going in for those windfall gains of which they have been so critical in the past. That is an interesting legal concept that will no doubt develop as time goes by.

I make these points to question the legal right of the Treasury to take its cut. I see no moral right for the Government to take a single penny. The Tote should pay the transfer costs; it would be wrong for them to fall on the taxpayer. The cost of changing its status into a trust is a legitimate cost for the Tote.

Elements of the racing world have come together in an unparalleled fashion. They are not used to working together in sweetness, harmony and unity, but they have called for the Tote to be operated at arm's length by an operating board, not directly controlled by the British Horseracing Board or racing's sectional interest as a charitable trust. The relationship between the Tote and its owners should be that of a listed company and its shareholders.

I envisage the racing trust comprising a chairman and a number of board members. Nominations for the board—perhaps seven, eight or nine—would come from interested bodies, such as the BHB, the Jockey Club, the Racecourse Owners Association and the Industry Committee (Horseracing) Ltd. A number of organisations go to make up that committee. To show the unity that exists, I should like to read into the record the organisations involved—the Amateur Jockeys Association, the British Equine Veterinary Association, the Federation of Bloodstock Agents, the Horseracing Sponsors Association, the Jockeys Association of Great Britain, the Masters of Foxhounds Association, the National Joint Council for Stable Staff, the National Trainers Federation, the Permit Trainers Association, the Point-to-Point Owners and Riders Association, the Point-to-Point Secretaries Association, the Racegoers Club, the Racehorse Transporters Association, Thoroughbred Auctioneers (UK) and, indeed, the Transport and General Workers Union. I hope that the inclusion of that last organisation will sway the Minister.

I also believe that the punters should be represented. Although I can see how all the bodies that I have mentioned would nominate someone, I cannot yet see a mechanism for nominating a punter representative. The one who loses the most money may not be the most satisfactory basis on which to choose a representative. The Tote's employees should also be represented. That would result in a representative on the board from every area of racing.

We need to set the Tote free to get support for the racing industry. I have already mentioned the problems arising from internet and overseas betting. The Tote needs to do its own thing to help racing in a positive way.

Although I hope that the Minister will give detailed responses to all my points, I quite understand if he cannot. But I should like him to accept that there is a strong feeling that any charge by the Exchequer would be regarded as unfair. If any charge were to be made, and if it was more than a nominal amount, it would cripple the Tote's ability to help racing. Not enough funds go back into racing for us to allow the Tote to suffer in that way.

The racing fraternity—in which I include those Members of Parliament who are interested—does not want this issue to be tied up with any of the consequences that might flow from an election. I should like to leave the Minister with three points. We need a Minister for the horse, we need a racing trust for the Tote, and we need them now.

I favour a trust as well, but I disagree strongly with the hon. Member for South-West Hertfordshire (Mr. Page) about many of the issues being a debate for another day. I do not think that they are. The future of the racing industry must be considered as a whole, and if we are to have a trust, other matters must be considered.

I find the politics of racing fascinating: it makes the politics of this place look gentle, sweet and kind. It is the most interesting part of racing for me. I speak as a very poor owner of horses in the past, but hopeful ever of being a very profitable owner in the future. However, it may be a vain hope.

The problem is the amount of power that could go to the British Horseracing Board if there were a racing trust. The BHB already has control over the fixture list, which causes many problems, as people interested in racing will know. It has three members on the Horserace Betting Levy Board, and discussions are taking place on whether to abolish the levy board. That would mean another ball game altogether.

I understand that the BHB is sending threatening letters to internet betting companies, demanding copyright fees for pre-race meetings lists. I am aware that it already has an agreement with Victor Chandler in Gibraltar, who pays towards the betting list. As he was going to give money to the levy in any case—that was part of the deal that he was organising—is he now taking money from the levy and giving it instead to the BHB? That question needs to be asked. It has set the hare running on who owns the copyright of the racing list. We have not debated that, but it will affect the future of any racing company, whatever happens to the Tote.

There already seems to be a cosy agreement about who will sit on the racing trust. The hon. Gentleman gave a list; agreement has been reached, I understand, between the BHB and the Tote on who will sit on the trust. It is not in the interests of racing for something to be cut and dried before anything has been decided. It is all very well to have proposals, but to go round saying that something is definite when the proposal has not yet been agreed makes it seem like someone wanting to be king of the racing industry without proper consultation. I am concerned about what is happening, and extremely concerned that, if racing is to appeal to a wider audience, we should think carefully before a small group of people is given such wide power.

We are talking about the future of racing. Many matters are involved—including getting more people to go to racing. There must be proper debate; merely to decide to set up a trust is not good enough. I doubt whether the Minister will tell us that a racing trust will be set up to replace the Tote. I would advise him not to do so. Before such a measure, many more talks must be held—with the whole industry, not just a cosy group who want to carve it up for themselves.

I hope that the Minister will acknowledge my comments, and that he will understand that not only one group is interested in the future of racing; there is a wide audience out there. The problems are great, and he should consider the matter far more carefully than many people want him to.

I am delighted to have the chance to speak in the debate. I congratulate the hon. Member for South-West Hertfordshire (Mr. Page) on having finally achieved the chance to hold the debate, after several months of trying. The matter is important for all parties; it is not party political. Members of all parties who have racing interests—or who have the best interests of racing at heart—will want to take part. I hope and believe that there will be cross-party consensus in favour of racing and of the transfer of the Tote—if it is to be transferred—into a trust controlled by the racing industry.

I think that my constituency has the second greatest interest—after Newmarket—in racing. We not only have a well-known race course, but a huge interest in breeding and training up on the downs. There is also a veterinary interest. I am happy to note that several owners live in my constituency. The industry provides employment, not only in my constituency but in other parts of the country, both for people who are comparatively wealthy—even if many of them spend more time losing money on racing than making it—and for some of the less wealthy members of our community. Perhaps the only chance of employment for those people may be that the racing industry should thrive and be prosperous.

At present, there is a threat to employment in the industry—especially for some of those who are less skilled in other matters—because of the potential ban on hunting. That is a contentious issue, on which I do not want to dwell in detail. I have made my position clear in the past: I am in favour of a ban on hunting. However, those in favour and those opposed will all agree that a ban is likely be introduced in the near future. When it comes in, that can only increase the threat to racing—particularly to national hunt racing. In view of that, it is especially important that we should take care not to damage the industry in any other way—for example, by losing some of the money that currently comes in from the Tote.

Sadly, several yards have already closed—I have lost one or two in my constituency. Several horses have been taken abroad, where, as has been explained, more money goes back into the industry—directly, from prize money, and indirectly, from a levy on the betting industry for that purpose. Some owners have an incentive to take their horses abroad and that is already happening.

There are race courses that greatly depend on the continuing prosperity of the Tote, so that money continues to come into the industry. As the hon. Member for South-West Hertfordshire explained, it is difficult to understand the moral grounds by which the Government would remove the Tote and would, in effect, put the ownership and managership of the industry into private hands. There is a danger that the monopoly of Tote betting could be transferred into a private monopoly. The Labour Government would surely not want to make such a proposal. It could not be seen to be in the best interests of racing as a whole if Tote betting were put into a private monopoly—for example, if it were to be taken over by one of the large betting companies.

The Tote was created by racing people for racing people. In the past, it never belonged to the taxpayer. It should not be handed over to the taxpayer. The Tote should be left in the hands of the racing industry. The obvious way to do that is to create a trust, as has been explained, and to leave the Tote in the hands of the racing industry. That would ensure that money from the Tote goes back into the industry; in that way, both the industry and the Tote can thrive in the future.

I am most grateful to have the opportunity to speak in the debate. I congratulate my hon. Friend the Member for South-West Hertfordshire (Mr. Page), who made a compelling case, both in describing the financial background to the situation in racing and, most important, in setting out a structure for the future of the Tote, which was most persuasive.

My hon. Friend mentioned the importance to employment of racing and breeding. It is commonly thought that 100,000 people are employed in the industry. Indeed, racing and breeding employ about 60,000. That needs to be put in context—one in eight of all agricultural workers are so employed. The hon. Member for Newbury (Mr. Rendel) referred to the possible threat to hunting, but, because of the terrible problems in the agricultural sector and the difficulties facing farmers throughout the country, employment in agriculture will be under considerable difficulty and pressure in the months to come. In considering employment in breeding and racing, we should bear that broad agricultural background in mind.

The health of racing is rather like the curate's egg. It is true that prize money remains low by international standards. The contribution of bookmakers via the levy, is about £52 million, so the amount of money currently contributed to racing by the Tote—£12.3 million—is substantial. That is an important contribution—apart from help to race courses and other forms of assistance from the Tote. The future of the Tote and the financing of racing through it will become even more important in the years ahead.

I am happy that the number of people going to race meetings has reached a record going back to 1965. Over the past two years, in my constituency, auctioneering activity at Tattersalls has been excellent. That shows that there is high demand for top-quality bloodstock.

My hon. Friend pointed out that the racing and betting interests are often divided over the outlook for horse racing and the industry in this country. They have radically different attitudes as to the financing of the industry. However, all can agree that a contribution of about £12.3 million, which has risen and has the potential to grow, is vital for the future viability of the industry.

The hon. Member for Newbury referred briefly to the internet. I shall deal with that matter at some length because it involves forces that are difficult to control and it will have a significant impact on the whole future financing of the racing industry and, of course, on Government finances. No Government know how to tackle that problem. The internet is driving prices down, as is evident in the retail sector. Offshore betting by telephone has been growing. Ladbroke's, Coral and William Hill have developed or are developing offshore companies. A voluntary ban introduced by Ladbroke's and Hill's was abandoned because Victor Chandler set up in Gibraltar.

At present, the 9 per cent. deduction from all bets in the United Kingdom consumes more than 40 per cent. of the money spent in betting offices and by telephone customers. In the United Kingdom, we have myriad confusing and antiquated betting arrangements. I welcome the Government's inquiry into gambling; we need to understand how gambling will react to meet the challenge of simplification and the challenges that the internet, e-commerce and offshore betting imply. Will the Minister tell us when that process is likely to be concluded?

Not surprisingly, the Treasury is seeking ways to protect its income. Three hundred million pounds is raised from general betting duty on horse racing alone. Can the position be sustainable if the pressures that I have described continue?

In November, the Government announced that it would ban advertising on Teletext by offshore bookmakers, and there is talk of tax penalties. How can Governments control the situation if Victor Chandler offers free telephone calls and a 3 per cent. deduction, versus the current 9.5 per cent. in the United Kingdom? Success beckons, with mobile telephones and the internet—ultimately to racing's disadvantage, because the money from bookmaking helps to finance the industry.

The Betting Office Licensees Association commissioned a report by Europe Economics. It studied the experience of Ireland, where duty was reduced from 10 to 5 per cent. Admittedly, the Irish economy has been doing extremely well, but betting turnover has increased by about 30 per cent. Ultimately, Governments cannot buck the market.

The British Horseracing Board agrees. It has called for a cut in off-course punter deductions to 5 per cent. from the current 9 per cent., and for a cut in general betting duty from 6.75 to 5 per cent. Of course those are Treasury matters, but the Tote's outlook must be viewed in that context. Others would like betting duty to drop to 3 per cent.

It is generally recognised that the current situation is unsatisfactory, and that there are grave questions to be asked about the future financing of racing. Therefore, the role of the Tote, and its ability to generate funding for racing, become even more important. I am delighted to say that racing takes a broadly united view of those issues.

In 1991, the Select Committee on Home Affairs recommended the sale of the Tote to a democratically accountable body. Arguably, we have that body today. The details of how it would operate betting offices and race course facilities must be addressed, so there is much to do, but there is widespread agreement among racing's constituent groups.

My hon. Friend may have inadvertently been wrong. I believe that, in 1991, the Home Affairs Committee recommended that the Tote should be given, not sold, to such a body.

If I used the word sold, I was wrong. The crux of the matter at the time was that the Committee called for a democratically accountable body.

The time has come for action. We have spoken about the need to appoint a single Minister in charge of the horse, and I believe and hope that one will be appointed. We must give the Tote a status, so that it is viable and enriches racing for the long term. Purchase price, structure and composition will need to be worked out, but I believe that there is an opportunity for the Tote to contribute ultimately and successfully to the viability of racing, that most important industry for this country.

My interest in the debate is not confined to horse racing; it is focused on the Tote, whose headquarters are in my constituency. One of the first things that I did when I was elected was to visit them, because the Tote employs about 1,000 people in Wigan. The Tote is investing heavily to bring itself up to date and into the 21st century with new computer technology. It is among the most advanced operations in the betting industry.

However, we need to sort out the Tote's future. There is far too much indecision and far too little certainty. Those who work for it in Wigan are deeply worried. I hope that the Minister will tell us that things will be settled very soon. Many of its workers are part-time, and their shift patterns are convenient, especially for those—mostly women—who have children to care for.

The point that the hon. Gentleman is making about the importance of part-time work to Tote staff applies not only to Wigan but to all 59 United Kingdom race courses.

That is absolutely correct. I am simply saying that, because the headquarters are in Wigan, the issue is greater importance to my constituency.

When I visited the Tote's headquarters, I was surprised to discover that much of the betting that takes place within the Tote involves football, boxing, rugby league and so on. If we are to hand over the Tote to a trust, it should not be restricted to horse racing. People who bet on other sports would be miffed if they thought that the money that they were putting into the Tote was going solely to horse racing and not being used to benefit the sport that they were interested in.

A windfall tax may be imposed if the Tote is privatised, or nationalised and then privatised. The Government were right to take back some of the excess profits of privatised industries because those industries had been undersold. However, in the case of the Tote the surplus will go to the general public. There is a clear difference between windfalls going into the private hands of shareholders and windfalls going to the general public for the public good.

The hon. Gentleman seems to be moving towards proposing that the Tote should be privatised. Does he recall the remark made by his right hon. Friend the Member for Livingston (Mr. Cook), now Foreign Secretary, before the general election:

"There will be no proposal by Labour to sell the Tote"?

That was perfectly plain. Does that commitment have the same status as the commitment with regard to National Air Traffic Services, which was that Britain's airspace was not for sale?

I was not debating whether the Tote should be privatised or outlining what its future should be. I was merely making the point that, if the Government decide to privatise it, there is a clear difference between the profits from privatisation going to the private sector and private people and the profits going into the public purse. If the Government privatise the Tote, it is right that the surpluses should go to the public sector for use in whatever way the Government wish. However, that is a matter for the future.

I emphasise to my hon. Friend the Minister that the issue needs to be settled. The Tote must have a clear direction. We cannot have the matter hanging round in the way that it has for so long. The interests of racing need to be taken into account, but so do the interests of the other sports in which the Tote has betting interests. The interests of the work force, particularly those who work in my constituency, clearly need to be taken into account, as do the interests of management who have a clear view of the Tote's future. I hope that, in the not too distant future, the Minister will be able to provide clear direction on where the Tote is going.

As I am required to do, I declare an interest. I have a registered interest with the Tote, and Cheltenham race course is in my constituency. It is the source of a great deal of information and, occasionally, expense.

I congratulate my hon. Friend the Member for South-West Hertfordshire (Mr. Page) on his persistence in trying to secure a debate on the Tote. I am glad that that has paid off. The fact that he has been persistent shows how much he regards the racing industry and that he, like us all, recognises its importance to this country. He ably and eloquently demonstrated why the industry is important not only to the people who enjoy it, but to the people who work in it and to the Exchequer. He also provided statistics that show its importance.

There are some good statistics on racing. The figures for the number of racehorses in training and the number of people going racing are very impressive. Some statistics are more impressive than ever. However, as my hon. Friend pointed out, there are some bad statistics. For example, a small amount of betting turnover finds its way back into racing, and owners in this country recover a lower percentage of their expenses compared with those recovered elsewhere.

It is important that we do not view racehorse owners as a group of extremely rich people. Some horses are owned by a number of people. In these days when world travel is so easy, it is important to recognise that it is much more beneficial to send one's horses abroad. We must be careful about that. There are good and bad statistics for racing and, in some ways, the position is rather static or even worse than that.

My hon. Friend used statistics to show how important the Tote is to racing. It is important not only financially, but in other ways. Under the expert guidance and chairmanship of Peter Jones, much interest has been taken in racing. That has been generated partly by the Tote's performance, especially in recent weeks. Who could have ignored the fact that, for two consecutive Saturdays, ordinary punters, such as me, have had the opportunity to win £1 million on the scoop-six bet? I was not far off winning that sum, but, as they say, a miss is as good as a mile.

The Tote has several options for the future. Of course, there is the opportunity for a straight commercial sale and there would be some advantages to that. It would offer the Tote freedom and it might lead to the injection of capital and new people becoming involved. However, in those circumstances, how would we ensure that racing received the same amount of money as it does now from the Tote? A regulatory system, such as those for the water, gas and electricity industries, could be created. We could create an "Oftot" or something like that to ensure that money went back into racing. However, if we were to promise the private company that was created that we would take its profits away, I suggest that we would not have a successful sale of the Tote. That is not a viable option, especially given the way that it was set up and the reasons for its creation that were described by my hon. Friend.

A racing trust would secure the profits of the Tote for racing and would have racing people running it. The hon. Member for Wigan (Mr. Turner) was right when he said that the Tote takes bets on other sports, but historically, it was set up for racing purposes. I am a football fan and I would not want football fans to be estranged from the Tote. However, the fact that it was set up for the racing industry is all important. People in the racing industry say that betting and horse racing are two separate industries. They are correct in technical terms, but I think that one depends on the other. It is important that the Tote remains within racing and within a racing trust.

I pay tribute to the chairman of the Tote and all those with whom he has been involved in setting up an agreement with the British Horseracing Board and others. As my hon. Friend the Member for South-West Hertfordshire pointed out, such agreements are even harder to construct in racing than they are in Parliament. The agreement shows the willingness of the British Horseracing Board and the Tote to sort out differences and problems and to come together for the benefit of racing. That point, above all others, shows why a racing trust should be set up.

It is important to set up such a trust very soon. When Ladbroke bought Coral and passed some shops to the Tote, uncertainty was created in the industry and among the people who work in it because of the delay in finalising the deal that was caused by the referral to the Office of Fair Trading. I therefore urge the Minister to make a swift decision and the Government to enact the necessary legislation quicker than they appear to intend.

Some months ago, the Home Secretary announced—I think at the Tote's annual general meeting—that there would be a change in its status. Several years could pass before the Government bring that about. The passage of so much time is not good for the industry, so I urge the Minister to make a decision, announce it quickly and persuade the Government to introduce the necessary legislation. It should not be that complicated or difficult.

I wish to consider the money that the Government appear to want to take out of the Tote. The steering group report says:

"the government has not financed the Tote and does not stand behind it, eg as a financial guarantor".

That fact is crucial as is the fact that the Government do not own the Tote. They may have given it a pool betting monopoly, but that is why it was set up and it does not provide a reason to take money out of it.

In the old nationalised industries, such as British Steel, which might have lost £1 million a day at the height of its success, the taxpayer was due a return. Taxpayers have not financed the Tote, so I do not see why they—and I am normally on their side—are due any return. It would retard the prospects of progress and, to some extent, weaken the Tote's position if a substantial amount of money were taken out. That would set things off to a bad start and—to use a racing expression—handicap it against other bookmakers. Is that fair when we want to create a successful enterprise when we change the status of the Tote?

Unlike a case in which a company acquires more shops or more business and has extra profits to pay off a loan, if the Tote's status is changed, it will not gain any extra business immediately from which to pay back the Government. Money would be taken from its present operating costs and income. That would be a smash-and-grab raid on behalf of the Treasury. I urge the Minister to stand up to the Treasury for the good of racing.

In conclusion, I repeat that racing is important to the country. There are worrying statistics, and we need to put more money into racing and to create a trust to control the Tote. That would enable the Tote to expand and carry out many more exciting ventures, which would be good for the industry. The Tote is therefore extremely important to racing. I urge the Government to make a speedy decision and to implement the necessary changes. I further urge the Minister to persuade the Treasury not to handicap the Tote and racing by taking money from it.

I have rather a sad interest to declare in this debate as I have been backing slow horses since I was about 15.

And fast women.

I shall pass on the question of fast women.

I congratulate my hon. Friend the Member for South-West Hertfordshire (Mr. Page) on securing this debate. I know that he tried extremely hard to do so, and his determination has paid off. This is a unique opportunity to do something extremely good for racing because, as far as I know, everyone in racing agrees on this matter.

I have to take issue with the hon. Member for Newcastle-under-Lyme (Mrs. Golding). I do not know anybody who opposes this measure. This is a unique moment in the byzantine politics of racing in that all parties appear to agree.

I made it quite clear that I was in favour of a trust, and I should not like the hon. Gentleman to think otherwise.

I am delighted by that intervention. I understood that the hon. Lady was advocating a delay. If I misunderstood her, I apologise and withdraw my remark.

The unique feature of this proposal is the agreement that has brought all racing interests together. I heartily endorse the comments made by my hon. Friend the Member for Tewkesbury (Mr. Robertson). He was right to say that time is short. We hear much from the Government about globalisation, and no industry can be more affected by globalisation than racing. Trying to stop people betting on the internet would be as effective as King Canute setting up his throne on the beach at low tide. Betting duties would flow straight to the new betting points abroad.

It is pointless and childish to pretend that the Government can ban adverts for internet betting. As my hon. Friend the Member for West Suffolk (Mr. Spring) said, the only way to increase betting is to do as the Irish have done and reduce duties to make the industry competitive. In Ireland, the take has rocketed to 30 per cent. It is childish to try to stop people betting abroad.

It is equally childish to pretend that in today's racing industry horses will stay here and that owners owe us a favour. When the big owners go to Keeneland, they can send their horses all over the world, to Australia, Hong Kong, France or elsewhere. They do not have to come here—we have to offer them the very best. There have been spectacular cases in the past few weeks where horses have been arbitrarily moved abroad. Many jobs and businesses are at stake.

Racing and breeding support 60,000 jobs, which, as my hon. Friend said, means that they employ one in eight agricultural workers. With the pig industry losing millions of pounds every week and milk prices at rock bottom, we have to encourage jobs in the countryside. Here we have a chance to help.

Thoroughbred exports alone are worth £100 million a year. There are 7,300 thoroughbred breeders in Britain, of whom about 350 are full-time. All that could be in jeopardy if we do not grab this opportunity. The moment is right because more people are going racing. Last year, 5.1 million went racing, which is the highest figure since 1965. The state is the winner.

In 1998–99, the Tote's contribution to racing was £12.3 million compared with £9.3 million the year before. That is thanks to the new dynamic management in the Tote. Who really won? The state took £3 million in corporation tax and £21.3 million in betting duty. Racing did not gain, as we can see from the fact that only 1.1 per cent. of betting turnover in racing goes back into the sport. That compares with 4.4 per cent. in Australia and 15 per cent. in Germany.

We must not forget that earnings can be sent to those countries with no problems at all. We cannot blame owners for sending their yearlings abroad because the average take by owners in this country, after the cost of keeping a race horse in training, is only 22 per cent. compared with 87 per cent. in Japan, 47 per cent. in the United States and 54 per cent. in France.

As my hon. Friend the Member for Tewkesbury said, if the Government act quickly, they have a chance to do something good for racing. The Government did not set up the Tote—it was set up by a private Act of Parliament in 1928—they do not own it or any shares in it and they have never subsidised it. I raised this matter in Home Office questions this week and the Minister's answer was most unsatisfactory. I noticed that the Minister nodded when my hon. Friend mentioned the monopoly of pool betting, but that is only one sector of betting. The Tote is up against fierce competition from this country and abroad, from the lottery and other forms of betting. It is not a normal monopoly.

On that basis, it is time for the state to get out of racing. The trust has the full support of the industry. How much will the state take for the transfer of an organisation that does not belong to it, and when will it transfer it?

I congratulate the hon. Member for South-West Hertfordshire (Mr. Page) on securing this debate. I apologise for my tardiness in getting here and for missing his opening speech, and I can assure him that it was entirely involuntary.

I declare an interest as a paid parliamentary consultant to William Hill. I therefore have a specific interest in gambling, although I have to say to the hon. Member for North Shropshire (Mr. Paterson) that, in a long life of trying to defeat the odds, that is the only way that I have ever managed to make any money out of a bookmaker. I finally found a way to do so, and I have not placed a bet since.

This is a welcome opportunity to debate a serious issue facing racing and the gambling industry. This is a crucial nexus. It has become clear from developments over the past six months that the industry cannot be left alone, with the Government simply assuming that it will limp along and we can patch over any cracks that appear. The offshore cracks in particular cannot be patched over, and the loss to Treasury coffers will be substantial over the next few years. I do not think that anything can be done about that.

The present telephone-based system will quickly develop into internet betting. One of the great—or, from the Government's point of view, depressing—features of internet betting is that it is impossible for Governments to control it. The quicker they realise that and the sooner they start to live with it, the better for them and for those concerned in gambling and racing, including the general punter.

The Tote, as a pool betting system, is a natural monopoly. I do not see how such a monopoly could be fully transferred to the private sector. That would be wrong and challengeable in law. It could not be defended under European Union competition law unless a trust were set up to organise it. I do not think that the Government have a prayer of getting rid of it. They should recognise that such a natural monopoly would be best dealt with by a trust that is set up to serve racing. We should bear it in mind that to serve racing was the raison d'être of the Tote when it was set up, and that primary purpose should continue.

Other hon. Members have mentioned the need for quick decisions. We cannot afford to dilly-dally over the matter for much longer. I welcome the fact that the Government are setting up a general commission to consider every aspect of gambling. That is long overdue, but the Tote cannot afford to wait until that weighty organisation comes to its conclusions, which could easily take a year or more. Therefore, I would warmly welcome a quick decision by Ministers.

If we allow matters to continue to develop as they have done, there will be a loss to the Treasury and to racing. Gambling will become prey to criminal influences: the moment it is taken offshore, it will become more difficult to control and unsavoury elements may well find a niche. It is far better to recognise the need for change and to accept a reduction in revenue to encourage gambling to remain onshore. In that way, we shall help to ensure a healthy future for racing and the gambling industry.

I congratulate my hon. Friend the Member for South-West Hertfordshire (Mr. Page) on having secured the debate. For some months, with my encouragement, he has been trying in the ballot to win a place for such a debate. However, I agree that the delay has been worth while, because the time is now right for a decision to be made on the Tote's future. In the period since such a debate was first mooted, clear progress has been made within the racing industry toward drawing up recommendations that can be put to the Government.

Although I speak now on behalf of the official Opposition, I, like many hon. Members, have a close constituency interest in racing, in that the Malton and Norton area of my constituency contains stableyards with a long history, stretching back almost three centuries. I am glad to report that they have of late enjoyed better times, with more big race winners, but much remains to be done. At this juncture, I should express my agreement with all that has been said about the importance to the rural economy of racehorse training, and the need to improve the lot of many of the yards and their staff.

I place on record my admiration and affection for the Tote. I suspect that many participants in today's debate have, from time to time, enjoyed the Tote's hospitality. My association with the Tote began when, with the hon. Member for Mansfield (Mr. Meale), I was a member of the Select Committee on Home Affairs. We grasped the nettle and inquired into the Tote, the Horserace Betting Levy Board and the equivalent body for greyhound racing.

That fascinating experience began by our being told that we would find an incompetent rabble at the Tote. In fact, we found that, under its then chairman, Lord Wyatt, it was an extremely well run organisation. I endorse the remarks of the hon. Member for Wigan (Mr. Turner) about the staff at the Wigan headquarters. Members of the Home Affairs Committee visited Wigan during our inquiry: we were greatly impressed and found that many of the allegations made against the Tote, especially by some sections of the media, were wholly unjustified. I pay tribute to the Tote's current chairman, Peter Jones, and its team of directors and executives. They have successfully developed the Tote in recent years.

As my hon. Friend the Member for West Suffolk (Mr. Spring) said, the key recommendation of the Home Affairs Committee report was that the Tote should be given to racing when a suitable body, capable of running racing, had been established. That recommendation was the spur to the creation of the British Horseracing Board. We made our recommendation for two reasons: first, to get the Government out of an organisation in which they had no real long-term role; and, secondly, to enable the Tote to develop its commercial interests to a greater extent than it could as part of the public sector, thus generating increased profits that could be fed into racing, especially in support of prize money and race course development.

That objective is within racing's grasp, but one or two fences remain to be taken. Even though hurdles are lower than fences, using the word hurdles to describe any obstacles would imply that jumping them will be difficult; in fact, it should not be difficult to do so. The chief fence that has to be cleared is the Government's decision on how to proceed.

The Tote is a strategic asset for racing. My hon. Friend the Member for South-West Hertfordshire described it as a vital part of the income stream of racing. The £12.3 million it generated in 1998–99 is significantly more than the hon. Member for Mansfield and I remember it producing nine years ago, when our Committee produced its report. That sum is almost one quarter of the revenue racing gets through the levy. The best way to illustrate the importance and effective use of money from the Tote is to draw attention to the Tote's sponsorship of key races at this country's two main racing festivals: the Cheltenham gold cup, which is coming up shortly, and the Tote Ebor handicap at York in August. They are the two great festivals of jump racing and flat racing respectively; without the Tote, they would be all the poorer.

The Tote has never received Government funding or taxpayers' support. The Government do not own the Tote and, regardless of racing's interests, that is one of the key reasons why it should not be sold off to the highest bidder. However, it is important to recognise that the Tote has enjoyed a monopoly on pool betting. In discussions with racing's leadership, I have learned that the industry wants to continue to enjoy that monopoly and recognises that it might justify a relatively modest payment being made to the Government to set the Tote free and enable it to become a directly held asset of racing.

The structure of such a transfer to racing of that asset would have to command the support of all strands of racing. My hon. Friend the Member for South-West Hertfordshire listed the many organisations that have expressed support for the creation of a new racing trust, but the three key bodies that have had to come together to try to settle a common position are the British Horseracing Board, the Racecourse Association and the Tote. Despite a shaky start, I have been encouraged by what I have seen of their deliberations. For many of the bodies involved, the experience has been a unifying one. The racing industry has, at long last, shown some maturity and responsibility in its attempts to reach agreement.

The hon. Member for Newcastle-under-Lyme (Mrs. Golding) has been treasurer of our all-party racing group for many years. It is because of the likelihood that I would have to speak on such matters on behalf of the Conservative party that I stepped down as chairman of that all-party group. The hon. Lady said that it appeared that there was a cosy club in racing, but I do not believe that that is so. Racing has been challenged to find a solution and it is not surprising that, in responding to that challenge, it has attempted to resolve all the problems that might arise by creating a new structure. However, I gather that the BHB would have only one of the eight seats on the Tote board.

I do not want to get bogged down in detail, because we have not yet seen the document that gives full details of the proposals—we have seen only the broad outline. However, it appears that, of the available options and in the light of the Government's announcement that they are minded to put the Tote into the private sector, the racing trust proposal is the most attractive. A total sell-off of the Tote is unacceptable, not least because of the likely diminution in profits returning to racing. Also, it would be unacceptable to create a privately owned Tote monopoly of pool betting, a point which the hon. Member for Kirkcaldy (Dr. Moonie) rightly made. We listened with interest to his perspective on the basis of the main high-street bookmakers.

A private pool would lead to pressure for the pool to be broken up, or it could lead to the end of the monopoly of pool betting. That would be disastrous for horse racing and it would be equally bad for punters. It is essential that the pool monopoly be retained. The same argument underpins the concept of the national lottery. I am sorry that my hon. Friend the Member for Tewkesbury (Mr. Robertson) did not win scoop 6, and I have no doubt that he is too. He spoke of the value of a massive single pool in terms of attractive bets and the opportunity through horse racing to create millionaires, in addition to the national lottery. That is an extremely important factor.

There are genuine questions about other matters—for example, the protection of the punter, efficacy and the need for the running of the pool and of the Tote itself to be properly monitored. None of these issues is beyond early resolution. There are also the interests of other betting organisations. As the hon. Member for Wigan said, there are other sports interests, which must be considered. I do not believe that these matters undermine in any way the concept of the proposed racing trust.

The Government need to take some early decisions on the deregulation of gambling. More importantly—we appreciate that this is not a matter for the Minister—there is the vexed issue of betting duty and the need to deal with the difficulties created by betting on the internet and the offshore activities of some bookmakers.

Those issues are for another day. Our opportunity this morning is to indicate our view on the future of the Tote. I hope that I have made it clear that the Conservative preference would be to give real and urgent consideration to the racing trust proposal. I agree wholeheartedly with the hon. Member for Wigan that the matter needs to be settled, not least for the members of the staff who work for the Tote throughout the country, to whom we pay tribute. The employment that the Tote generates is important to local communities.

We think that the proposed racing trust deserves every consideration. We are unconvinced by the other options. The trust is the best chance that racing has had to show what it can do for a generation or more. My hon. Friend the Member for North Shropshire (Mr. Paterson) was right when he said that this is a unique moment for racing, and racing will not forgive us if we fluff this chance.

I join in congratulating the hon. Member for South-West Hertfordshire (Mr. Page) on raising the debate. It is an enormously important issue. The racing industry is clearly important to Britain. The debate provides a useful opportunity to air many important questions that are associated with the future of the Tote and of horse racing.

There have been some extremely good speeches, including those of my hon. Friends the Members for Newcastle-under-Lyme (Mrs. Golding) and for Kirkcaldy (Dr. Moonie). The hon. Member for Tewkesbury (Mr. Robertson) made an important contribution, given his extensive knowledge of the racing industry. The hon. Member for North Shropshire (Mr. Paterson) and others also spoke very well.

I need to make it clear that the Government are not willing to announce today their conclusions about the sale of the Tote. However, I shall give you some indication, Mr. Chairman, of when we might make that announcement.

Order. I remind hon. Members that this is not a Committee but a convention of the whole House.

I am grateful, Mr. Deputy Speaker.

The hon. Member for South-West Hertfordshire said that the industry needs someone to argue for racing. I am not sure whether I want to be designated the Minister for the horse, but I am happy to say that I would want to be an advocate for the success of the industry, which is enormously important to Britain. It employs many people and millions of people have an interest in it, even if it is merely to put a bet on horses from time to time.

The industry benefits us all in many ways. For example, betting duty is paid to the Exchequer, which benefits every taxpayer. I agree with the hon. Member for Tewkesbury that racing is not only a rich man's sport. My father was very far from being a rich man, but he supported the industry for many years. Many people care deeply about racing, and not only because it benefits them economically or is of interest to them. In many ways, it is part of our country's culture. It needs to be respected for that reason.

The Tote is also extremely important to us. A few statistics might illustrate that importance. In 1998–99, the Tote had a turnover of £497 million. That was an increase of 25 per cent. on the previous year. There was a profit of £23.9 million, which was an increase of 34 per cent. From that profit, it gave £12.3 million to horse racing, which was an increase of 32 per cent. It has more than 300 betting offices and the credit betting operation has more than 50,000 customers. It operates pool betting at all 59 race courses and employs 2,800 full and part-time staff.

I agree with the hon. Member for Ryedale (Mr. Greenway) that it is time to send a clear message that the Government need to get out of an organisation in which it should not have a long-term, direct role. We must ensure that the Tote's long-term future is secured, and that is what we propose to do.

We have given the most careful consideration to how the Government get out of having a role in the Tote and to the way in which we secure its long-term future. We want to be sure that we reach the right conclusion, which pays proper regard both to the interests of horse racing and to those of the taxpayer. We would do neither a service by trying to rush our fences. As we all know, the Government decided to sell the Tote only on the advice of a steering group which was chaired by its chairman, Peter Jones. On the basis of the group's recommendations, we are satisfied that a sale would represent the best means of securing the Tote's future in the increasingly competitive and diverse business environment in which it operates.

One option, which I know is favoured by many, is the sale of the Tote to a racing trust. In considering the sale options, the Home Office received a proposal, jointly sponsored by the British Horseracing Board and the Tote itself, for the acquisition of the Tote by racing.

My hon. Friend the Member for Newcastle-under-Lyme (Mrs. Golding) referred to the politics of racing, suggesting that it made politics in this place look kind. We wondered for a while whether the various political groups in racing would be able to come together and form a coalition government given the proposal that a racing trust should run the Tote. I am pleased that there is a proposal. We will give it careful and detailed consideration. My hon. Friend the Member for Newcastle-under-Lyme called it a cosy deal, rather than a cosy club, but it is not such a done deal. She asked me to consider the views of all racing. In that regard, hers are wise words. We need to consult widely and ensure that the industry broadly supports the proposals.

Will the Minister give way?

I will give way, but only once, as I am anxious to conclude my remarks.

I cannot think of another organisation that is not signed up to the proposal. If the Minister can think of one that is not signed up, I shall pop along and see its representatives.

I hear what the hon. Gentleman says, and what others have said during the debate. I shall weigh the words of all of them with great care. We shall examine the issues with care and we intend to consult widely. The hon. Gentleman would want us to do so, to ensure an element of consensus in the industry.

The hon. Member for Ryedale is right to say that some element of agreement has been reached, and we should congratulate the industry on achieving that agreement. I agree with the comments of the hon. Member for Newbury (Mr. Rendel) on the matter. We need to ensure that the future of racing is secured for the long term.

We have looked at the issues in detail, alongside the other options, the principle of establishing a trust and the possibility of a sale on the open market or a flotation. My officials have had discussions with the relevant racing interests so that we can be confident that we fully understand the detail of the proposals.

We are aware that the Tote is considered by many to be an integral part of horse racing, not least because of its presence at each of the United Kingdom's 59 race courses and through its financial contribution to the sport over many years.

The Government recognise that racing has a stake in the Tote, and it has been one of our key objectives in this exercise to ensure that the interests of racing are safeguarded. There are other stakeholders, notably the present managers and staff, whose collective efforts have been a major factor in the Tote's success. However, it must be recognised that the taxpayer also has a legitimate interest in the business. That was an important conclusion of the Tote review steering group.

Although the Tote was originally constituted under a private Bill, the statutory framework within which it now operates is largely based on the Betting, Gaming and Lotteries Act 1963. Today's Tote is a very different and far more diverse business than that originally envisaged by Parliament under that private Act in 1928, and decisions about its future must self-evidently be taken in today's context, and not in the context of 1928.

Will my hon. Friend give way?

I will give way one last time, because my hon. Friend has not contributed to the debate so far. I am happy for him to make a contribution.

I thank my hon. Friend. He speaks of protecting the public interest. May I point out to him that a recent ruling by the Monopolies and Mergers Commission on the proposed Ladbroke-Coral merger clearly showed the danger of off-course betting becoming a monopoly? Choosing the route of the trust would prevent that for ever in the industry.

That is one of the issues to which we must give full consideration. I assure my hon. Friend that, when we make known our views, we will take account of that and many other points.

We must not overlook the extent to which the Tote's status as a public body has been a factor in its commercial success, not least through the perception of its probity and respectability, on which those who work for the Tote are to be congratulated. As the hon. Member for Tewkesbury observed, the Tote has enjoyed a commercial advantage over competitors by virtue of the grant by the Government of an exclusive licence to operate pool betting on horse racing. Indeed, that remains the foundation on which the Tote's broader success has been built.

The hon. Member for Tewkesbury argued—ingeniously, I thought—that the taxpayer—the public—would smash and grab the racing industry. I disagree with that view. The unarguable fact is that the Tote is at present a public body, and it is therefore reasonable that the taxpayer should obtain some benefit from its sale. The Government will defend the taxpayer against those who would seek to give away potential benefits.

The taxpayer has a legitimate interest and it is important that when the future of the industry is determined, we balance the interests of the industry, the long-term future of the Tote and the taxpayer, which are all legitimate interests. The fact that neither the Government nor anyone else currently own the Tote does not alter that conclusion.

Will the Minister give way?

No.

Primary legislation will be required before the Tote can be sold, and we will introduce that at the appropriate time and when parliamentary time allows.

Hon. Members will understand why I cannot say today when we will be able to introduce such a Bill, but I have noted the arguments for it to be introduced sooner rather than later. I will bear in mind the views expressed by the Opposition. The hon. Member for Ryedale said that he wanted some early movement on the matter and we shall take that on board. No doubt the matter will be discussed through the usual channels.

I am aware of the need to reduce uncertainty about the Tote's future in the interests of the business, the Tote's staff and the industry as a whole. I remain hopeful that we shall be able to announce our conclusions about the future of the Tote within the next few weeks. [Interruption.] My hon. Friend the Member for Wigan asks how long, so I say not long. The future of the Tote does not stand alone as an issue facing the industry, although it is one of the more important issues.

Alongside our assessment of the sale options, the Home Office has been reviewing the Horserace Betting Levy Board and the current levy system. It is our present intention to make a single announcement covering both the Tote and the levy board. Examination of the issues has taken some time, but it is right that we should be able to set out our conclusions clearly for those who have a direct interest in the future of the racing industry.

Although the hon. Member for Tewkesbury thinks that the process has taken a long time, it has not taken longer than we planned. We must balance the various considerations that a successful sale strategy would have to cover, and ensure that the financial implications have been properly evaluated. We must also ensure that the racing industry comes together on the proposal for a trust.

If we had gone too fast at those fences, we could have ended up with a situation in which some of the riders had come off at the back and the racing industry had not got its act together at the front. It has now done so, and we can give full and proper consideration to the proposals. We can also begin to examine the other issues that will directly affect the future of racing.

We expect to make an announcement soon. It will set out clearly our perception of the Government's future relationship with horse racing, especially with the industry's funding arrangements. Today's debate has shown that British horse racing is an industry and a sport of major national and international importance, and the Government wish it to prosper and thrive in the years ahead. I welcome the opportunity that the debate has provided to make that important point.

I am grateful for the opportunity of securing a debate on the United Kingdom banking sector. I would like to focus on banks overcharging small businesses. That is a serious matter of considerable public interest with significant implications for Government.

My attention was drawn to the problem through the experiences of a small business that trades in Bedford. Its proprietor had become convinced over the years that he was being charged too much on his business account. Strenuous efforts succeeded in generating a refund of £16,000 from the relevant bank as a final settlement of the dispute. However, my constituent persisted because he knew that more money was owed. He secured the services of a firm that specialises in recovering alleged overcharges. Even then, the bank delayed, blocked and prevaricated. I became involved at that stage, at my constituent's request. I was surprised that the bank, although it sent me lengthy and courteous letters, initially refused my request for all the parties to meet in an effort to resolve the matter once and for all. It eventually agreed to a meeting, which I attended as an observer.

After two or three hours of vigorous negotiation, the matter was settled and the bank wrote out a cheque on the spot that was well in excess of £20,000. I was taken aback. Together with the earlier cheque, the bank had returned to my constituent's business more than £36,000, including compound interest. That £36,000 should not have been taken from the business in the first place. It constituted overcharges, which represent valuable cash flow—the life-blood of any small business. It should have been available to underpin the business's activities, and assist its employment capability and its contribution to the local economy. That £36,000 was returned only after five years of effort—which would have been better expended in running the business—by the proprietor and after he involved a specialist firm and his Member of Parliament.

My first thoughts about the case were that the unfortunate experience was simply the consequence of a series of human errors and misjudgments by the bank in dealing with an individual customer. I was rather sceptical when the overcharge recovery specialists, Anglia Business Associates, told me that my constituent's experience was not uncommon and was, indeed, so widespread that several firms and individuals specialised in and made a living from recovering bank overcharges for business customers all over the country. Those firms describe themselves as the bank audit industry.

Anglia Business Associates showed me its evidence, which was not only drawn from people who had contacted the company because they believed that they had a problem, but from random testing by spot audits on business accounts in various parts of the country, organised on separate occasions in the past few years by, for example, BBC World's "Watchdog", ITV's "World in Action", Granada's "Tonight with Trevor McDonald" and The Daily Telegraph. That evidence showed that approximately 75 per cent. of all bank business customers have been overcharged at some time and that the average overcharge amounts to about £4,000. Those figures have been in the public domain in recent years and have not been countered with evidence from the banks.

High street banks claim to have approximately 3.2 million business customers. The Department of Trade and Industry says that, out of a total of 3.7 million business, 3.5 million are described as microbusinesses—small businesses, which employ fewer than 10 people. It follows that the majority of bank business customers must be small or microbusinesses. The banks will not reveal the proportion of their customers who have bank borrowing, and use overdrafts and loans. However, it is fair to suppose that businesses use bank borrowing for cash flow and other purposes.

If we make a conservative estimate that 50 per cent. of businesses use bank borrowing and apply the figures that I mentioned—75 per cent. of business customers overcharged an average of £4,000—it suggests a staggering total of £4.8 billion in overcharges. If 80 per cent. of business customers use bank borrowing, the total in overcharges is £7.7 billion. Those amounts are shocking. Doubtless, some people will be sceptical, and I do not ask anyone to accept the figures blindly. There is credible, verifiable evidence of a serious problem of bank overcharging in this country; it should be put to the test.

I want to consider what is meant by overcharging. Don Cruickshank, who is chairman of the independent Treasury review of banking services in the United Kingdom, has identified an absence of competition in the sector, especially among those that offer services to small businesses. In an uncompetitive market, it is likely that we will find uncompetitive pricing. That is a definition of overcharging. However, the overcharging identified by some customers and the specialist recovery firms to which I referred is different.

We are considering circumstances in which the advertised rate is not the rate that is applied to the customer. The advertised rate may be competitive, perhaps 5 per cent., but, on later inspection, the applied rate turns out to be 8 per cent. Overcharging does not appear in an identifiable way in accounts. Other devices include calculating interest on wrong overdraft limits; applying penalty rates that should not have been applied; and charging hidden management fees. All those devices have been used without informing the customer. That is not only uncompetitive practice; it is sharp practice.

The question is not whether such practices happen, but to what extent they happen. I would welcome testing the available evidence and gathering more. That should be done through an independent investigation commissioned by the Government. It should be done because strong evidence, beyond prima facie indications, exists of a significant and unjustified diversion of resources from businesses to banks. That can only harm the productive economy and employment prospects in this country. It represents appalling, unethical, socially irresponsible business practice, which is a national scandal and an abuse of trust.

May I draw briefly from the executive summary of British invisibles 1997 report on banking? To paraphrase, the banking industry operating in the UK is a crucial and integral part of the UK economy. The sector consists of UK and foreign banks operating in the UK and its broad customer base encompasses individuals, companies and public sector organisations. The industry's assets are well in excess of £2,000 billion. Slightly under half are held by the UK banks, which are dominated by the high street retail banks. I am not arguing with any of that. The banks are a crucial and integral part of the economy and most people's lives. It is right, therefore, to expect that they are efficient, competitive and transparent and that they serve their customers and the country well, deal straight with people, charge them fairly and, as a result, earn and are worthy of their trust. It seems that all the high street banks, in varying degrees, have overcharged at one time or another, and not only as a result of human error. Of course there is human error, but if that were the principal cause of overcharging one would expect there to be plenty of gainers as well as losers. The bank audit industry is absolutely convinced that that is not the case.

I have described what is meant by overcharging. The process also involves going into denial if and when a customer inquires or complains. There is, so I understand, a clear pattern of making excuses and saying that there is insufficient staff time to investigate. Paperwork has been lost or never existed. Progress is slow and grudging and, at some point, a partial refund is offered. After a year or so, a fuller amount may be offered to those customers who have survived the obstacle course. May I refer to an example of that?

In February 1997, Anglia Business Associates lodged a claim on behalf of a family-owned engineering business based in North Yorkshire that had been overcharged by more than £15,500. The bank's immediate response was to say that its own review of the account showed not an overcharge, but an undercharge of £650. A month later, however, it changed its mind and offered a refund of slightly more than £4,000 in full and final settlement, stating categorically that it had not made an error. After being pressed to reconsider, three months later the bank's final settlement was raised to £5,700. A little later, it was raised to £6,000 and later still there was a breakthrough to £13,000. Finally, in January 1998—almost a year after the claim was first lodged—it was raised to £15,200, which was about £500 short of the refund originally asked for. Time after time, in every letter that it wrote, the bank stressed that it had not made any mistakes at all. That is interesting: it had not made an error, but was prepared to give money away to its customer if it asked hard enough.

I am sure that you, Mr. Deputy Speaker, are aware that concern about bank overcharging and other matters in respect of the relationship between banks and their customers has been in the public domain for a long time—well over 20 years—and is not exactly new. It is remarkable that it has not been firmly addressed. Pressure from the National Consumer Council led to the banks setting up and sponsoring the voluntary banking ombudsman scheme in 1986. It has become clear that the scheme is somewhat weak. For example, it cannot recommend on policy or make rules for the banking industry. It can deal only with individual complaints, and does so only if and when all the internal procedures of the banks have been exhausted and if the matter is deadlocked, but the banks can be pretty expert in delaying the internal investigation of complaints. The ombudsman scheme as currently formulated therefore turns away a high percentage of complaints.

As I interpret the presentation of the banking ombudsman's 1997–98 annual report, which is the most recent I could find, he received almost 20,000 concern calls on his helpline and 12,000 written complaints. Conciliation settled 960 before formal investigation and 630 went through formal investigation. The indications from that are that thousands of complaints and potential complaints are not being addressed through that route. Another initial weakness of the scheme was that it was limited to personal customers and unincorporated businesses. Continuing public pressure in the 1980s led to the then Conservative Government setting up a Treasury review into banking services—the Jack committee, which reported in 1989.

The Jack committee recommended that the banks adopt a code of practice, that the ombudsman scheme be extended to cover incorporated businesses and that it be made statutory. The then Government rejected the latter two recommendations and the banking code was not introduced until 1992. It is voluntary and not all the banks signed up to it. Those that did are prepared sometimes—perhaps too often—to ignore it, as well as their own company versions of it. In 1991, again in response to representations from small businesses, the public and Members of the House, the then Chancellor of the Exchequer asked the Bank of England to carry out a survey of lending to small businesses. The concern was that cuts in base rates were not being passed on to small business customers.

As part of the outcome of that survey, the Chancellor asked the banks to suggest a code of conduct for small business customers. That is also part of the scene. By 1993, continuing public pressure led to him asking the Bank of England to repeat its survey of bank lending to small firms and, in addition, he agreed to the recommendation of the Jack committee of 1988 that the banking ombudsman scheme should include small incorporated businesses. He accepted, however, the banks' recommendation that that should be restricted to businesses with a turnover of less than £1 million a year, which is not a huge amount for a successful small business. That means that the only option for many small businesses, apart from involving a specialist firm, is legal action, which is an expensive and difficult route for them and for individuals. Only the banks are properly equipped to pursue it.

It is fair to say that, although the issue of alleged overcharging has been around for a long time, it has managed to avoid being put under the rigorous scrutiny of the Government and the regulatory authorities. The usual response has been that charges are a matter for the banks—which exercise their commercial judgment—not for action under competition legislation, and should be resolved through their internal procedures or the banking ombudsman. I am an optimist and I am pleased to sense that there are indications that the worrying and unsatisfactory state of affairs that I have described could at last be effectively addressed. As part of the general context of that, my right hon. Friend the Secretary of State for Trade and Industry has recognised the poor deal on prices that British customers get in a number of areas, compared with those on the continent and in the United States. He has promised action, for example on international price comparisons for cars.

With regard to the banking industry, the interim report of the independent review chaired by Don Cruickshank, which is due to report soon, was published last July and was responded to by the Government in the form of changes to the Financial Services and Markets Bill, which was then in Committee. One of the positive features of a very long and complex Bill is the proposed one-stop shop statutory financial ombudsman scheme, combining and replacing eight schemes, including that of the banking ombudsman. Unlike the voluntary scheme, it is proposed that the decisions of the new ombudsman will be binding on respondents, which is helpful. The new scheme provides us with a golden opportunity to address the weaknesses of the previous arrangement. There are two areas to which I wish to draw attention.

First, there is a failure to address thousands of complaints. I have no objection to requiring that a customer with a complaint first puts it to the bank for consideration by its internal procedures under its customer code; that makes complete sense. However, the new financial services ombudsman will need to be mindful of the techniques too often deployed by banks before a state of deadlock is agreed in writing.

Secondly, it is important that the ombudsman seeks to improve voluntary customer codes. The banking code, to which I have referred, is, so I understand, drawn from a number of banks and building societies, and tends to reflect the lowest common denominator rather than standards that might best serve the customer. In dealing with complaints over the years, it is essential that the new ombudsman scheme looks to raise standards and improve codes. My hon. Friend the Economic Secretary knows that I have raised that point with her in Committee, and I ask her to reflect further on it today.

There is also the key matter of regulation. Banks are regulated by the Financial Services Authority with regard to capital structure and their accounts, and to ensuring that they are run by fit and proper persons. Although the FSA is developing and is very much encouraged and required to develop an outlook more mindful of the customer—to become more customer-friendly—the regulation of banks does not include pricing, or matters that might be seen as relevant to a consumer watchdog. Indeed, there is no consumer watchdog for bank customers. The financial services ombudsman is intended not to act as a consumer watchdog but to be impartial in reaching balanced decisions. That ought to lead to a consideration of how such a state of affairs could be addressed.

How about having "Ofbank"—an office of banking? Ofbank could be an independent banking regulator, complete, perhaps, with regional customer services committees and a national customer council, charged with advising the regulator on policy issues. Such a development would tune in with the independent banking review's observations that the UK banking sector lacks competition—a position strongly supported by the Consumers Association.

Other regulators, such as the Office of Water Services, the Office of Electricity Regulation and the Office of Telecommunications, were introduced because of the obvious monopolistic nature of the privatised utilities created by the previous Government. There is not enough competition among banks. The degree of regulation would of course reflect the extent of the competition and, where competition develops, a light touch may be all that is necessary.

It is the intention of the Financial Services and Markets Bill to create the legal base for innovation, competition and greater efficiency in financial services, but until that happens in the UK banking sector, Ofbank will have a job to do.

There is one other major issue that I want to raise. It is clear, is it not, that I believe bank overcharging to be a serious problem; I want it to stop. If it were to cease from today, what would be done about the past? Customers have been overcharged and that needs to be addressed, just as the mis-selling of personal pensions during the first part of the 1990s is slowly and steadily being addressed. It is worth recalling that a final total of—perhaps—1.8 million cases will have been examined in trying to resolve the mis-selling scandal, and that compensation of between £5.3 billion and £7.6 billion may have to be paid.

I ask the Government to do six things: first, to acknowledge that there is a problem of bank overcharging, particularly on small business accounts; secondly, to commission an independent investigation to examine the evidence and establish the scale of the problem nationally; thirdly, and somewhat dependent on the outcome of the investigation, to take proactive, effective measures to compensate customers for past overcharging; fourthly, to create the legal and regulatory framework in which effective competition can take place; fifthly, to ensure that the financial services ombudsman seeks to improve the banking code; and sixthly, to give serious consideration to the establishment of a bank regulator who encompasses the role of consumer watchdog.

I do not expect my hon. Friend the Economic Secretary to be able to agree to all of that today, but I ask her to give all the matters very careful thought. I am asking for nothing less than a new deal for bank customers—without whom banks would not exist—which serves the British people and British business and makes it absolutely clear, once and for all, that the practice of bank overcharging is unacceptable, intolerable and must cease.

I am pleased to be able to make a short contribution to this important debate. I should first declare an interest, as recorded in the Register of Members' Interests. Secondly, I apologise to the hon. Member for Bedford (Mr. Hall) and the Minister because, owing to a longstanding engagement just after 12 o'clock, I may not be present for the winding-up speech

I feel that I have been brought on my first outing to Westminster Hall on false pretences. I thought that this debate was about competition, regulation and the review of the banking sector. The issue of competition crept lightly into the hon. Gentleman's comments, but only in rather scornful terms; regulation did not feature much; and Don Cruickshank was mentioned just twice. Instead, we heard something of a bank-bashing session.

I was interested to read the press release that the hon. Gentleman issued in advance of the debate. To give him his due, he referred to Anglia Business Associates, to which it might be helpful to allude further. It seems that that company is the basis for the hon. Gentleman's raising this subject. Although it might be seen in his eyes to be providing a public service, it is a commercial, profit-making organisation, which makes its money by taking a 35 per cent. cut of any money that it is able to retain on behalf of clients whose cases against banks it takes on. That should be put on record.

The press release describes the organisation's fairly alarmist claim that in excess of £5 billion has been wrongly extracted from clients of banks over a number of years: 35 per cent. of £5 billion makes Anglia Business Associates a rather wealthy company.

It would be interesting to hear more about who regulates that company and whether they are acting in the best interests of customers and the whole banking sector. The hon. Gentleman's press release refers to a Mr. Mark Radin, who I believe is the owner of the company, and gives his phone number for further inquiries.

I am no great fan of retail banks, and indeed I would be the first to admit that they have been exceedingly hapless with their public relations over a number of years, especially on the subject of charges. They certainly gained a very poor reputation in the recessions of the 1980s and early 1990s for the way in which they treated small businesses. They were greatly at fault, although the matter may not have been quite as one-sided as the hon. Gentleman made out. On average, the banks made a 21 per cent. return on their equity, so they were very successful.

The British banking sector accounts for about 4.2 per cent. of the UK economy and last year paid more than £4.5 billion in tax to the Exchequer, so there is no denying its importance. Because of the common poor perception of the sector, the Chancellor announced an independent review into its working on 3 November 1998 under Don Cruickshank, as the hon. Gentleman said.

The remit of the review was to consider the UK banking industry, with the exception of investment banking; to examine the levels of competition, innovation and efficiency in various sub-markets, and especially the relationship with small and medium-sized enterprises; and to make international comparisons. In January 1999, a consultation document was produced. For all the qualms about the extent of co-operation from the banking sector, it took a great deal of work on the part of commercial banks to provide the information that was required to make the review meaningful.

In April 1999, a progress note was issued by Mr. Cruickshank and the review was widened to include e-commerce. Specific teams were set up to deal with the subject of small businesses in deprived areas and their interaction with the banking sector. Perhaps most notably, in July 1999 Mr. Cruickshank produced an interesting interim report, focusing on the dynamic interaction between competition law and banking regulation, and making six main recommendations designed to ensure that competition considerations are more closely factored into the regulatory process.

The theory is that in future competition problems should be less likely to occur if the possible effects of regulatory decisions on banking competition are the subject of more rigorous scrutiny at the time when they are made. There was also discussion of the future role of the Competition Commission, taking advice from the Office of Fair Trading.

The publication of the report was timely for those of us, including my hon. Friend the Member for Arundel and South Downs (Mr. Flight) and the hon. Member for Bedford, who have served for many, many months on the Standing Committee considering the Financial Services and Markets Bill, which is to continue its path through the House next week. The Conservative Opposition closely agreed with the comments made by Don Cruickshank.

Indeed, the Official Report of our deliberations in Standing Committee A shows that the Conservative Opposition tabled amendments specifically to promote competition in the UK financial services industry—which includes banking—and international competitiveness. Amendment No. 46 dealt with the objective—an objective rather than just a principle—of competition, to include

"the maintenance of competition and promotion of United Kingdom competitiveness".—[Official Report, Standing Committee A, 8 July 1999; c. 42.]

We also tabled two new clauses defining the whole subject. Interestingly, in all our sittings—I was at virtually all of them—no comment was made by the hon. Member for Bedford on that subject, which overlaps neatly with today's debate. Indeed, it is clearly recorded that on 8 July the hon. Gentleman voted against proposals that would have included a competition objective and a competitiveness requirement in the Financial Services Authority. Where did his new-found interest in competition come from? When we could have done something tangible about it, by influencing relevant legislation, he had nothing to say and voted against our proposals.

The most important factor that would allay the fears that the hon. Gentleman and many others quite reasonably share is the promotion of competition in the UK banking sector. Conservative Members' entire approach to the Financial Services Authority has been to limit the impeding by regulation of the financial services industry.

There are something in excess of 560 banks in the City of London, including many foreign banks, many of which offer private banking facilities and any of which can apply for licences to set up as banks offering current accounts. There are in excess of 43 banks ordinarily offering current accounts in this country, and myriad other providers of other products along similar lines.

Such services are offered not only by the traditional banks but by the demutualised building societies, by an increasing number of credit unions—we would certainly encourage the freeing up of that sector, which plays a key role—and, perhaps most significantly of all, by the burgeoning internet services, which are proving to be extremely successful in the banking climate.

Only yesterday, the results from Prudential, which owns Egg, were published. In the space of about a year, Egg has brought in about £7.6 billion of private money on deposit, gained more than 800,000 depositors— bringing in an extra 100,000 in the final quarter of 1999 alone—and built up an asset book in excess of £2 billion. It has been enormously successful by being competitive and offering low or nil charges and preferential rates of interest. Like any other commercial company with a banking licence in this country, it is perfectly at liberty to do that. It is accessible to anybody who chooses to gain access to it and has the money to bank with it.

Similarly, Virgin is setting up a successful internet banking business. There is also much greater access for foreign banks—this has been a consideration in the Financial Services and Markets Bill—to offer facilities to British customers at competitive rates. The number of credit card providers has doubled in the past six years alone.

It is not only traditional banking houses that offer facilities to individuals. Largely with the approval of the Government—I agree with them—supermarkets such as Sainsbury's and Tesco and even car manufacturing companies are offering banking facilities to members of the public. It is interesting to note that, perhaps as a dry run, when the Government launched their initial hapless proposals on individual savings accounts in 1997, they strongly promoted new forms of providers, to increase competition in the banking sector and encourage savings schemes such as ISAs to excess.

Of course, ISAs have been an enormous disaster in terms of bringing in new investors, but that is the marketplace. The market has shown that the product is defective. The product will succeed only if there is a multiplicity of providers offering different products and services that appeal to different people.

Everything that the hon. Gentleman has, justifiably, said today, could be resolved to a large extent by the greater promotion of competition, for which Conservative Members have been arguing for a long time. In practice, there is more competition because of all the new providers entering the market. The hon. Gentleman would do better to concentrate on the prime considerations: the transparency of information on the availability of those products; greater upfront transparency on charges and agreement to them, which has happened since voluntary codes of banking practice came in in 1992; greater product innovation, which will only be hampered by excessive regulation, as has happened in other countries; and, greater moves towards making accounts portable and mobile.

The greatest incentive for a bank not to charge excessively is the power of the customer to say, "I don't like the service or the level of charges that you are imposing and I will take my account elsewhere." Some work could be done to improve the mobility of accounts, in particular when one is tied up with direct debits and such like. Those are the considerations to which the hon. Member for Bedford would do best to direct his ire.

I have no doubt that in future there will be a much tougher regime for banks that promote uncompetitive practices under the competition laws—for example, through the greater powers that are being given to the Competition Commission, the campaigns against so-called "Rip-off Britain", or whatever soundbite one wants to use. However, the marketplace and the greater mobility of customers will help most of all, in particular during the next few years as the way in which financial services operate changes radically.

The hon. Gentleman's six-point plan contained little if anything about those considerations. He said that the Government should acknowledge that bank overcharging is a problem. There has been acknowledgement of a problem with bank charges—or the perception of them—which is why the Cruickshank commission was set up. The hon. Gentleman asked for an independent investigation. One would hope that the Cruickshank review has some degree of independence—certainly some of the comments in Mr. Cruickshank's interim report in July grated with what the Chancellor had said days earlier, but the Government have not so far been amenable to accepting our amendments to the Financial Services and Markets Bill.

The hon. Gentleman asked for compensation for past overcharging. Banking codes have existed since the early 1990s and it does no one any service to rake back over the past 10 or 15 years to prove that, in what was a different environment, banks should have been liable for all those charges. That would provoke a scandal like the pensions mis-selling scandal, on a massive and wholly impractical scale.

The hon. Gentleman also asked that a legal and regulatory base be created within which effective competition can take place. The Competition Commission and what Mr. Cruickshank is trying to do will deal with part of that problem. Furthermore, the hon. Gentleman asked that the new financial services ombudsman should improve the banking code, and he came out with the extraordinary statement that the ombudsman is not there to act in the interests of the consumer. The entire Financial Services Authority is there to act on and safeguard the financial interests of consumers, so that demonstrates a basic misunderstanding on the hon. Gentleman's part.

Finally, the hon. Gentleman said that we need yet another "Of-organisation"—an "Ofbank." We have the FSA, the Bank of England and the Competition Commission. We do not want yet another tier of regulation which could succeed only in stifling competition, which would result in fewer players in the market, fewer products, and less innovation. That could mean only that choice for the consumer and the charges that go with such choice would be diminished, which is not what we are trying to achieve.

This debate has been disappointing because of the way in which the hon. Gentleman moved it. It does no one any good simply to bash the banks and to hark back many years. If the Government are to succeed in many areas, such as saving schemes and the regional venture capital fund that they want to promote, it is important for them to liaise with the banks. The banking sector is vital to the economy. Many things have gone wrong and many need to get better, but it is competition, above all, that will bring that about.

I congratulate my hon. Friend the Member for Bedford (Mr. Hall) on securing this important Adjournment debate. The hon. Member for East Worthing and Shoreham (Mr. Loughton) was somewhat mean spirited in his response. If he thinks that my hon. Friend was bank bashing, he should listen carefully to my contribution.

I shall concentrate on the on-going review of banking services and the fact that the network of rural and district bank branches is shrinking fast. In doing so, I shall draw on the excellent contribution made by the hon. Member for South-East Cornwall (Mr. Breed) to his debate on financial services on 15 December, which also elicited a response from the Economic Secretary to the Treasury. I also want to demonstrate the concern felt by all hon. Members regardless of party—expressed in early-day motion 822, which attracted about 89 signatures, and early-day motion 962—about the lack of availability of banking and financial services and the worrying pace of district bank branch closures.

I have had direct experience of the sheer lack of concern shown for the elderly and disabled customers of Lloyds TSB in my constituency. Last summer, Lloyds TSB introduced an ill-fated pilot scheme, which completely removed cashier services from four branches in the Reading area. It showed no concern for the elderly or the disabled. How are blind people supposed to use a fully automated bank branch? How are the disabled supposed to access some of the services via what are known as ATMs? What small business can tolerate a system that will offer only £200 in cash? What jobbing builder can operate in this day and age on only £200 per day for building materials? What small shops can cope with the loss of a day's interest on their deposits as a result of it taking four days to clear cheques and deposits as opposed to three when one deposits over the counter?

Only after an extremely high-profile and vigorous campaign, which I brought to this place, supported by local people and also ably supported by our local newspaper, the Reading Chronicle, was Lloyds TSB, the largest and most profitable of our banks, forced to back down and reinstate the cashier service.

I worry that that bank's ill-fated pilot scheme in Reading is simply a nasty glimpse into the future. Robots may well replace people in banking. The disabled, the disadvantaged and those living outside the large town centres would then be denied local access to a range of financial services. That is called financial exclusion and the Government need to lead the way in tackling that serious threat to the quality of life of many of our constituents.

The branch network of Britain's retail banks is shrinking as I speak. More than 4,000 branches of high street banks have closed in the past 10 years and the independent consultant, Deloitte, predicts that a similar number will close in the next five years, which is a significant quickening of the pace of closure. Barclays announced 200 more closures starting this month and, if last Sunday's The Mail on Sunday is to be believed, although I accept that it is not always right, Barclays' new Canadian chief executive, Matthew Barrett, is likely to announce a further round of closures with the bank's results next month.

NatWest has announced a further 200 closures as part of its defence against the Scottish take-over bids and for Lloyds TSB the closures are a continuing process. The closures are hardly likely to stop there. For a growing number of communities in rural areas, urban suburbs and inner-city areas, the result is a complete loss of local banking representation.

The campaign for community banking services, with which many hon. Members have been in touch in the past few years and which acts as the voice of 24 of some of the country's best-known charities and trade organisations, has forecast that at least another 1,000 communities will become bankless if present trends continue unabated.

The lack of local banking services impacts most heavily on the vulnerable, the elderly and disabled and on shopkeepers and small business people. It also impacts on those on low incomes or without the use of a car. For many, the lack of such services can mean not only inconvenience but major difficulties—early loss of financial independence and exclusion from mainstream financial services. For the shopkeeper, it often means lost turnover, as the more mobile go elsewhere for banking and take their shopping needs with them. Some of those businesses then have to close, and the lifeblood is drained from our district, rural and inner-city communities.

My hon. Friend the Minister should appreciate that, beyond the obvious problems, there are serious implications for community sustainability and environmental damage, as many are forced to use their cars to travel further—not only for their banking needs, but to shop for items that were previously available within their local communities. The situation will undoubtedly get worse as the full effects of the current takeover battle in the retail banking sector are felt. Frankly, it is spurious for the hon. Member for East Worthing and Shoreham to claim that the market will be the answer to all our needs. Clearly, it will not, and there is a need for Government action and intervention.

The Government's current attitude—which seems to be to leave the question of branch closures to self-regulation—worries hon. Members, including myself. Self-regulation by an industry in turmoil, driven by the desire to slash costs and increase profits, is likely to achieve little.

Let us look at the banks' record on self-regulation. NatWest gave five weeks' notice to close the only branch in Killamarsh in Derbyshire, which has a population of some 10,000. That was done just before Christmas in 1998. The bank refused to listen to the concerns of thousands of local people. I have referred to the tactics and behaviour of Lloyds TSB in my constituency. The company was quite happy to remove the last bank from the village of Theale in my constituency, and it moved to the self-service, fully automated scheme with no consultation with its customers—those stakeholders who provided the bank's record £3.2 billion profit last year. The village of Wheathampstead in Hertfordshire—featured in the BBC's "Panorama" programme in October—was deserted by Barclays at only two weeks' notice, either side of an August bank holiday.

So much for self-regulation—so much for community consultation. So much for giving a damn about the interests of the people who made those banks so successful and profitable. Can the industry be trusted to self-regulate? I think not.

Will the hon. Gentleman give way?

No, I will not.

In anticipation of what the social exclusion unit's policy action team might say, we have seen token experiments in social banking being planned by individual banks in half a dozen deprived areas—notably Portsmouth and Salford. By their own admission, the banks concerned see these merely as expensive one-off experiments. That is not much help for the hundreds—soon to be thousands—of communities throughout Britain who are losing their banks.

Three quarters of the cases brought to the notice of the campaign for community banking services over the last two years were not in deprived areas. What sort of help will those token social banking schemes be to middle England, or to rural areas in Scotland or Wales?

I make a plea to my hon. Friend the Minister that she, unlike her predecessor, finds time to meet representatives of the campaign for community banking services, which has been requesting such a meeting since January 1999. If not, will she at least meet hon. Members, such as myself, who are in the process of establishing an all-party campaign for community banking? Why is provision not being made in the Financial Services and Markets Bill to give the Financial Services Authority at least reserve powers regarding local access to basic banking services?

I thoroughly endorse the six points made by my hon. Friend the Member for Bedford in his measured and thoughtful speech. I believe that we have made the case for a banking regulator to guarantee access to financial services, and to tackle head-on the growing menace of the exclusion of hundreds of thousands of people from financial services.

I congratulate my hon. Friend the Member for Bedford (Mr. Hall) on securing this debate. It is important because it puts an increasing focus on banking, particularly the relationship between banking and the small and medium-sized business sector. That is particularly important, because more than 90 per cent. of new jobs are generated through small and medium-sized enterprises. The success of SMEs depends very much on their access to finance, whether venture capital or financial services. The banks have a particular role to play in that respect.

Historically, banks have failed the SME sector in this country by failing to provide funding for small businesses, and by their lack of support in their day-to-day dealings. They have failed also to understand the needs of businesses in areas such as access to cash, cash flow and the ability to give support and advice that are valid and helpful, without the people receiving that support finding that they are then liable for large bills that they did not know about and find difficult to meet.

The initiative for finding funding for SMEs has come not from the banking sector, but from outside. Principally among those outside sources is the much-derided local government sector. I was leader of Lancashire county council between 1981 and 1997, and one of our major policy innovations was to find a way in which the public and private sectors could work together to support businesses. Specifically, we found a way in which venture and loan capital could be supplied to small businesses which the banks had abandoned and, in many cases, had not even tried to help.

In 1986, through Lancashire Enterprises, now Enterprises plc—the county's economic development company—we set up the Rosebud fund. The fund was one of the first attempts to assist small businesses. It made—and still makes—loans to small businesses. Those loans were at times as small as £1,000, but, typically, they have reached £100,000 and £200,000. Those funds were then matched with funding from other sources and, in the years since the fund started, more than 260 investments have been made, over £3.5 million has been invested in small businesses in the Lancashire economy—which otherwise would not have received support—and 5,000 jobs have been supported.

The fund was set up with the support of the European Commission through European objective 2 funding. It was innovative—it still is—in that it showed how small businesses could be supported on a commercial basis. The secret of the fund's success is that finance is provided in an appropriate way and on appropriate terms, and is linked to specialist business advice. Firms—particularly small firms—that found themselves in difficulties after the first year or two are able to secure re-financing and have access to proper advice in a way that helps them to prosper.

The Rosebud fund was needed because the banking sector had failed small businesses. Since that time, parts of the banking sector have tried to step into that gap—in a variable way, but with some success. Other funds involving banks, such as the Local Investment Fund, have attempted to assist in localised, poor areas. Organisations such as the Prince's Trust do very good work, and the innovative Merseyside investment fund, using European objective 1 funding, has invested—together with other finance generated—£62 million to support 4,000 jobs in the Merseyside area.

Those schemes were required because of the failings of the banking sector. The ideas started in the 1980s through, in my case, Lancashire county council have been picked up through the new regional development agencies. The agencies are looking at setting up their own venture capital funds, geared particularly to the needs of small and medium-sized businesses. I am glad to note that Barclays has said that it will be willing to invest in the North West regional development agency's regional fund. I also pay tribute to the work that the Co-operative bank has done in identifying the banking sector with the needs of small businesses.

When we think about small businesses, the possibilities of community and co-operative businesses are often ignored. Through co-operative development agencies and the Industrial Common Ownership Fund, attempts have been made to find funding for co-operative development. That is another area in which the banking sector, apart from the Co-operative bank and—to a limited extent—one or two others, has ignored the needs of small and new businesses. I hope that, in the future, the banks will pay more attention to those needs.

Businesses need access to capital through banks, but they must also have day-to-day dealings with the banks. My hon. Friend the Member for Bedford has drawn attention to many of the problems that businesses and individuals face in their daily operations. Banks are often not friendly to small businesses. They often do not understand the cash flow needs of small businesses or understand the problems that charges for cash deposits impose on small businesses, especially the smallest. The consumer, whether a business or an individual, is often unclear about the rate of interest being charged. All too often, small businesses undertake the necessary consultations with banks, but then face a large, unexpected bill, often to the small businesses' detriment.

I support my hon. Friend's proposals for openness, support and clarity for the consumer. The Consumer Association has conducted surveys and drawn attention to the similarities in the difficulties faced by small businesses and consumers in their dealings with banks. The association also points to the difficulties that many consumers believe they would face in changing their bank if they can find a better service. Sometimes, changing banks is not as complex as it is made out to be. The association has performed an important role in drawing attention to those areas, and has assessed of the appropriateness of the different services offered by the banks according to the varying needs of their clients. There is a need for clear information, whether for individual consumers or for small businesses, on the various services offered by different banks and the charges imposed. I support any initiative that will bring more clarity to that information and make it more readily available to the consumer.

I agreed with my hon. Friend the Member for Reading, West (Mr. Salter) when he expressed disappointment with the comments made by the hon. Member for East Worthing and Shoreham (Mr. Loughton), who seemed more concerned about defending banking interests than considering the needs of small businesses and the community. I cannot share his view that the only problem is lack of competition in some sectors. Banks have responsibilities, and they must meet them—preferably by following Government guidance. If that does not work, regulation may be required.

Banks are an important part of our economy and our society. They are rightly under scrutiny because they have failed, and in many cases still fail, the needs of small businesses. Banks also have consumer and community responsibilities. In a recent statement, my right hon. Friend the Chancellor spoke about his intention to set up new investment funds in areas of particular deprivation, including one in my constituency in Liverpool. Those funds will be extremely important and will take their place with other funds that are directed to those particular needs. However, the businesses set up through the availability of such funds—like other businesses—can be successful only if they have continuing access to sympathetic and reasonable banking services.

So far, banks have not faced up to their responsibilities. I hope that they will do so under the new scrutiny of their dealings with the commercial sector, which is important in generating our economy, and with consumers in general, who are important to our society.

This is an important debate because it raises serious issues and heralds the full Cruickshank report, which is expected by the end of June. Two important specific issues were also raised by the hon. Members for Bedford (Mr. Hall) and for Reading, West (Mr. Salter). All of us will have met constituents with problems in both categories. I sympathise particularly with those problems raised by the hon. Member for Reading, West, because my rural constituency suffers from similar problems.

Better competition is not the full answer, but it is an important part of it, as has been demonstrated in the United States of America. Another issue is exactly how the FSA will regulate banks. Despite the monumental nature of the Financial Services and Markets Bill, which has 378 clauses and deals in detail with many issues, the actual banking regulation that the FSA will deliver remains to be considered.

My biggest concern is that the Cruickshank report will be subject to too much spin. The Government will say that the report proves that they are doing something about the issue, but the report will be sidelined. That has already begun to happen, as my hon. Friend the Member for East Worthing and Shoreham (Mr. Loughton) pointed out. We have consistently argued that competition should be an objective of the Financial Services and Markets Bill; the FSA is not too keen to focus on it. It has been made clear that the FSA will focus on the objectives laid down in the Bill, and that the principles are considered secondary to the objectives. The Treasury has been successful in heading off Cruickshank's intention, which we share, and has replaced it with competition arrangements that are weak by comparison, albeit worth having.

I was slightly uncomfortable to note that the hon. Member for Bedford focused on data produced by a particular organisation. We all admit that mischarging problems exist, but to quantify them as an amount for compensation is not the best approach. The new ombudsman scheme will address complaints more effectively, and I agree that he or she should review the banking code. I hope that the combined ombudsman will be more effective than the single banking ombudsman arrangements and that the relevant staff at the FSA will read the report of this debate, because it relates to the banking regulatory activities that they will undertake.

If we focus on the competitiveness of the market place, there are arguments both ways, but at the macro level there is a powerful case of insufficient competitiveness, because financial intermediation in the banking system is still enormously expensive. As a cost, it is 4 to 5 per cent. of assets. In the United States mutual fund industry, which has become as big a financial intermediator as the banks, it is about 1.5 per cent. One of the main reasons why the US has been much more successful is its ability to offer money funds that compete with bank deposits. That is not possible in this country, largely because of EU regulation, under which money funds may not account on what is called an amortisation basis. I have to say that, to protect their own position, German banks have not wanted to permit money funds to get off the ground. I have banged on about that for some time, and shall continue to do so, as I believe it extremely important to have competing money funds, as happens in the US.

The lender of last resort doctrine has also encouraged concentration. The original doctrine was that the central bank should stand behind any bank that was well run, whether large or small. That no longer prevails, and the market has been forced to conclude that the central bank—the lender of last resort—will stand behind only those banks that are so big that they cannot be allowed to fail. The resulting net reduction in smaller banks has led to increasing consolidation in the banking industry.

Conversely, the argument that banks' return on equity has risen constantly over the past decade is slightly unfair. The starting level was very low, and banks have had very low levels of bad debts for the past seven years, largely as a result of this country's economic success since 1992 and of the golden economic legacy bequeathed by the previous Government to the present Government. However, that situation will change in due course: I am afraid that the Chancellor is deluding himself if he thinks that he has abolished business cycles.

New competitive banks have emerged, such as Virgin, and Egg, which has £7.6 billion in deposits. Barclays bank has noted that it had lost 30 per cent. of the credit card market and now has only 10 per cent. The banking industry here is more productive and competitive than that in France or Germany. In principle, the internet ought to be a major vehicle for more competition, but will customers or providers benefit from the cost savings? That is the big question.

One problem for banking regulators and central banks is the fear of systemic risk. The last time that a Government really tried to get banking competition going was in the early 1970s. Hon. Members may recollect that that was followed by the 1974 banking crisis and the Bank of England's "lifeboat" to rescue a total systemic threat to our banking system.

That period of difficulty came about because lots of new, small banks founds that, although they could obtain deposits by paying high interest rates, their lending risks were high. When the economy turned down, those banks had appalling bad debts and the structure proved to be a house of cards. Regulators therefore have a bias in favour of cartels, which they feel they can manage more effectively against systemic risk, but a balance has to be struck.

I am slightly worried about the new banks that are joint ventures with supermarkets. They are not really new banks, but will be more partnerships between a supermarket and an existing large bank. Will that really provide competition? The Prudential, for example, is already a major financial services business.

Market entry remains a problem. The questions of who can be a bank and of what a bank is have not been clearly defined. Money transmission charges are high, and the relevant organisations operate to some extent as a cartel, representing a barrier to entry. In addition, there are high capital adequacy costs on change of control. Overall, banking concentration is increasing and will manifest itself on a pan-European basis, rather than merely in the domestic economy.

The hon. Member for Reading, West used the phrase "financial exclusion". I dislike that phrase, which I consider to be a politically correct usage, but the problems set out by the hon. Gentleman are real and need to be addressed. I was amazed when my own bank wrote to me to tell me that I could no longer get cash over the counter and that I had to use a machine. I wondered what a bank was for if it was not obliged to dispense my own cash back to me. The incident led me to believe that the services that banks provide might be determined when banking licences are granted. That could be a lever to help tackle some of the issues.

The large banks would be foolish if they did not take the initiative in addressing those needs, but that will depend in part on the seriousness with which the Government address the issues raised in the Cruickshank report. However, it is only fair that large banks with greater powers should address some of the community issues that have arisen.

The hon. Member for Bedford made some specific points towards the end of his speech. I consider that overcharging must come within the territory of the competent ombudsman. The concept of following the phase 1 and phase 2 pension model is not practical; the necessary regulations do not exist to do so. I do not think that it is legally possible—even were it desirable—to do what the hon. Gentleman proposes in terms of a total financial compensation deal. The territory is for the ombudsman and a review of the banking code. We are awaiting the independent investigation, but the crucial political question is whether the Government will act in earnest or will sideline the findings of the Cruickshank investigation.

The matter of separate regulation arose. The Conservative party has expressed doubts about including banking in the remit of the Financial Services Authority. The US model, the Securities and Exchange Commission, deals with securities and related industries only. However, the decision has been taken, and it does not permit establishing a separate body that might be called Ofbank. The important question is whether banking regulation will simply combine the roles previously taken by the Bank of England and other central banks, or will be wider. The key to that is a more competitive banking environment.

I look to the US model in this matter. It is not perfect, but the US banking system is more competitive and delivers customer needs better than the system here, and substantially better than the system in continental Europe. I believe that the biggest enemy of banking competition is European Union banking regulation, which retains a major element of support for cartels. This debate also reveals one significant point—the importance of the initiative that the FSA will have in formulating its activities and objectives in the area of banking regulation.

It is a pleasure to be able to congratulate my hon. Friend the Member for Bedford (Mr. Hall) on securing this Adjournment debate. He and other hon. Members have raised important matters, and the debate comes at an opportune moment.

First, I shall outline some of the background themes of this important issue. The financial services industry is one of the UK's success stories, accounting for 7 per cent. of national income and employing more than 1 million people. Increasingly, financial services are a key component of local economies throughout the UK. The work force survey shows that, of the 450,000 extra jobs created over the past year, one in three was in the financial services sector. The message is clear that financial services is a growth industry for many regional centres as well as for the City of London.

Within the general financial services sector, the UK banking industry plays a central role in the economy. A modern economy depends on effective and efficient relationships between its savers and borrowers and its financial services industry. Firms need the investment that the banking industry provides. They also need the financial markets, on which they can raise the capital that enables them to invest, grow and create jobs.

High levels of innovation, competition and efficiency are vital to an effective banking system and essential for meeting the productivity challenge. That is why, as my hon. Friend the Member for Bedford said, the Chancellor of the Exchequer announced in his pre-Budget report in November 1998 a review of the services provided by the United Kingdom banking sector.

The Government had a genuinely open mind on the issue, but a number of concerns have been expressed similar to those articulated so well by my hon. Friend about whether the United Kingdom banking industry fully meets the high levels of competition necessary. The review, announced by the Chancellor of the Exchequer and chaired by Don Cruickshank, was established to examine the innovation, competition and efficiency in various sub-markets of the banking industry, including lending to small and medium-sized enterprises, to compare them with international standards and to consider possible options for change.

Don Cruickshank published his interim report in July last year. He noted that it was crucial to get the right balance between regulatory and competition outcomes if there were to be more innovation, more effective competition and greater efficiency in the United Kingdom banking industry. He added that, in the Financial Services and Markets Bill, the Government had already taken a significant step forward in tackling the issue, and suggested ways in which it might be taken further.

Don Cruickshank made some specific recommendations. The Financial Services Authority should be responsible for making the trade-off between regulatory and competition outcomes in financial services. To ensure that that happens, the FSA should have a primary competition objective in addition to its regulatory objective. He recommended that the financial services sector should have no unnecessary exclusion from general competition law. The rules should be within the scope of scale or complex monopoly investigations by the Office of Fair Trading or the Competition Commission. The OFT should not be required legally to scrutinise every rule issued by the FSA, but its role of overseeing the financial services sector, including the impact of regulation, should be strengthened. The FSA's rule-making decisions should be open to review in respect of their impact on competition. The final recommendation was that the Competition Commission, not Ministers, should be the final arbiters of the public interest in the scrutiny or review procedures.

The Government considered the interim report very carefully and announced their response on 9 November. We accepted all but one of Don Cruickshank's recommendations, and we shall table amendments to the Financial Services and Markets Bill to give effect to them in due course. In the remaining area, although we share Don Cruickshank's objective that the FSA should have responsibility for making a trade-off between regulatory outcomes, we did not accept his conclusion that giving it a new competition objective would assist it in doing so. Instead, we believed it likely that such a change would confuse the responsibilities of the FSA, as the United Kingdom's prudential financial services regulator, and the roles of the OFT and the Competition Commission, which are responsible for competition regulation in the economy as a whole. We are considering the changes to the Bill that will be necessary to meet the underlying recommendations of Don Cruickshank's review.

In summary, the Government took Don Cruickshank's interim report very seriously. Our response demonstrated our commitment to effective competition in the banking sector. Don Cruickshank said in a statement at the time:

"I welcome the changes the Government proposes to make to the Bill to ensure that markets in financial services are subject to effective competition scrutiny."

I understand that the review team is close to finalising its report, and the Government should receive it in the next couple of months. The hon. Member for Arundel and South Downs (Mr. Flight) mentioned June.

By June.

I think that that is a generous estimate.

I should like to deal with some of the comments of my hon. Friend the Member for Bedford. He referred to the difficulties that some of his constituents have had with the banking sector, and we all sympathise with those problems. That is why the ombudsman proposals are in the Financial Services and Markets Bill and why matters are being dealt with under the FSA's supervision. We need those structures, and we are putting them in place. We recognise that there are issues to be addressed.

My hon. Friend also spoke of the details of the financial services ombudsman scheme as proposed in the Bill. I am grateful for his comments and questions. I understand why some hon. Members have attempted to turn this debate into a detailed discussion of the Bill. They will have further opportunities to do so shortly, but now is not the time. There have already been plenty of opportunities. However, the specific areas mentioned by my hon. Friend are relevant to this debate.

The first recourse for those who have a dispute with a bank or other financial institution is to try and resolve the dispute directly. My hon. Friend described some of the difficulties that occasionally arise when doing so. The banking code emphasises the need for fair dealing, transparency on charges and a willingness to correct errors and handle complaints speedily. The industry has shown a willingness to update the code regularly and to take account of the views of a range of outside bodies, including the current relevant ombudsmen.

I recognise that it is not always possible to resolve disputes directly; that is why the schemes exist and why, as my hon. Friend is aware, the Financial Services and Markets Bill covers that important issue. Part XV sets out the framework for the operation of the ombudsman scheme, the detailed operation of which will be determined in rules made by the Financial Services Authority. This scheme will replace the existing dispute resolution schemes, including the existing banking ombudsman. It will provide a one-stop shop, which is extremely desirable. The scheme's main purpose is to provide easy access for individual retail consumers to a dispute resolution procedure that is speedy and informal. However, it will be open to the authority to define certain categories of firms as eligible complainants. The FSA is consulting on this; it issued a consultation paper in November last year and is seeking responses by 10 February.

As proposed by the FSA, the scheme would provide a free, simple, informal and accessible alternative to the courts. It would enable eligible customers of the banks to resolve a range of disputes similar to those currently covered. It would, of course, also be statutory and its findings would be binding.

The FSA has proposed that firms should be eligible to use the scheme if they have a turnover of up to £1 million, and no more than four employees. A number of people have commented on the proposals, and my hon. Friend may wish to do so. As for his comments about retrospective compensation, it is worth noting that many of the claims received pre-date the banking code. Some other changes, such as advance notification of charges, have been made since then.

Let me say to my hon. Friend the Member for Reading, West (Mr. Salter) that we recognise that there is a trend towards smaller branch networks. We welcome the banks' development of alternative delivery channels. Choice and diversity are important; a number of banking options are open for many people, but not everybody. However, there are now many options that were not previously available. Indeed, a number of banks, including Lloyds TSB, have successfully established links with Post Office Counters Ltd. to ensure that banking is available where there is a post office. The post office network is far more extensive than the banking network and provides a number of other options.

I was concerned to hear how events have developed in Reading and about the lack of consultation. That is not how banks should deal with their customers. I was passed a note offering inducements to have a meeting. I shall consider further the possibility of holding such a meeting. The inducement was that my hon. Friend will love me for ever—it says here. I find that quite tempting—

Order. On that appropriate note, time is up.

I welcome the opportunity to hold this brief debate. I also welcome the Under-Secretary of State for the Environment, Transport and the Regions, my hon. Friend the Member for Sunderland, South (Mr. Mullin), who looks more like a Minister than I have ever known him to do, and I have known him for a long time. I am glad that he will reply to the debate, because, although the housing problems that he faces in his constituency are different from those in inner London, he has a good understanding of the life of people in inner London. I hope, therefore, that he will have some sympathy over the issues that I shall raise.

I have chosen inner London housing as the subject of the debate because the problems there are different from those in the rest of the country. A vacant housing agency has been set up by the Government. Members of Parliament from north-western and north-eastern constituencies frequently complain about the large number of unlettable council properties in their areas—that is a fairly common phenomenon in that region, and raises specific issues that need to be tackled.

However, the situation in inner London is completely different. Every week, my constituency surgery is full of people with desperate housing problems. Those problems impinge on many other parts of people's lives. We must consider that. Recently, a document jointly produced by the London Housing Unit and the Association of London Government set out starkly how poor quality housing affects people's lives.

I shall not quote the whole document, as that would take up the half-hour allocated for the debate, so I shall deal specifically with educational achievement. Teachers in any inner London primary or secondary school will tell us that children living in bed-and-breakfast or hostel accommodation, or grossly overcrowded council accommodation, suffer in many ways. They suffer because they do not have their own bedroom—something that all of us would want for our children—so they cannot do their homework and keep up with other children.

If a child has to share a bedroom with a couple of brothers or sisters, that is extremely unhealthy—especially for older children. Furthermore—on a practical matter—if one child is ill, all the children become ill. In an overcrowded household, the incidence of cross-infection is much higher than elsewhere. If children do not have their own bedroom, where can they do their homework? Homework clubs are fine; they are wonderful, I welcome and support them. However, children should be able to do their homework in their own home and in their own time. That is important.

Truancy rates are higher among children who live in overcrowded accommodation. Often their parents are much poorer. Increasingly, London is becoming a two-class society. In any primary school, one can see which kids have computers and good housing and who are achieving in school. One can also see children who are equally as bright, enthusiastic and intelligent, but do not have computers at home and do not have the same facilities as others. We owe it to our children to ensure that they have decent housing.

If I might migrate slightly—from the school to the doctor's surgery, or to the local hospital—we can consider the incidence of notifiable diseases and serious health problems, such as bronchial pneumonia. One can often trace those problems straight back to housing. My general practitioner, who works in my constituency, asked me, only half joking, "Why don't we swap surgeries one week, because we're seeing the same people?" Their real problem is not health, but poverty and housing. My GP told me to do my best to improve their housing and he would do his best to improve their health. However, the two matters are closely linked. If one takes into account such matters as the nutrition of people who live in poor quality housing, one can see the whole pattern.

In the attitudes of many of our young people—those in their mid-teens and older youths—towards education and life in general, I detect a sense of anger and dislocation, and a lack of belonging, because they have not had the same opportunities as others. That can often be traced back to inadequate housing. There is no lack of love on the part of their parents, nor a lack of desire to keep the family together. Their main problems are economic and are to do with housing. That is what we must try to tackle.

In inner London overall, there is a serious shortfall of housing.

Does my hon. Friend agree that that has been especially exacerbated in Tory-controlled Wandsworth? There, the situation is much worse, because the council has sold a large quantity of its social housing stock to people outside the housing waiting list, as part of its continued mad idea that such housing is not needed. Does he agree that it is important for the Government to be able to haul in Wandsworth council to try to stop that process, given the inner London housing crisis that he so eloquently describes?

I thank my hon. Friend for that intervention, which he made at just the right time; I was about to refer to the sale of council properties.

Last Sunday, on "Crosstalk", I debated poverty in London with the hon. Member for Billericay (Mrs. Gorman). She held up Westminster and Wandsworth as paragons of virtue. I pointed out that both those authorities, where a significant number of extremely poor people live in substandard accommodation, had been involved not only in the legal sale of council housing, which local authorities are forced to undertake under the right to buy legislation, but had engaged in the wholesale removal from the social register of council tenants and council properties, and had exported their homeless people to other far-flung boroughs. That issue must be examined.

I entirely accept my hon. Friend's suggestion. I hope that the Minister will ask those two authorities—especially Wandsworth—what they are doing by continuing that policy of disposing of empty publicly owned buildings. There is a big difference between that and the sale of housing to existing tenants under the right to buy.

The Housing Corporation, which funds the construction of buildings by housing associations, has constantly had its funding cut. That has not occurred only under the Labour Government; it is part of a long continuum whereby the corporation's capital allocation has been reduced and it must rely increasingly on the private sector for funding. That leads to a disparity between the rents in housing association and local authority properties. That is a serious matter.

If a tenant receives housing benefit, the rent disparity does not make much difference. However, when tenants are trying to find a job, it makes an enormous difference. If they find a job and live in a housing association property with a lower rent than a council property, the gap between being on benefit and working is more favourable than it would be if their property had a high rent—a positive disincentive is created. That matter must be considered.

The total number in the queue for affordable housing in London is about 178,000—an enormous figure. In my own borough, the number is 12,000, of whom several hundred are on the priority list at any one time. That figure masks many inequities and inequalities. To get on to the housing waiting list, it is not just a matter of going to the town hall, the council office or—in my borough—the neighbourhood office and putting oneself on the list. People are included on the list only if they are in significant housing need and if they are not single. Single people, who have no particular medical problems and no requirement to support anyone else, do not go on to the housing list. The number of people in housing need is thus much higher than that figure of 178,000.

When my hon. Friend the Minister examines housing statistics, as he obviously does, will he reconsider the problems that are faced by single people? I give hon. Members an example. A week ago, a single man visited my advice surgery; he explained, reasonably, his housing problems and said that he was trying to find a job. He is due to attend various interviews, so hopefully he will be successful. However, he cannot find anywhere to live because he cannot afford any privately rented accommodation locally. He would be eligible for housing benefit if he could find private accommodation, but he cannot raise the deposit. He is being asked for deposits of more than £1,000 to rent a small flat in the borough of Islington; there is no way that he can raise that.

Either we must consider introducing rent controls in the private sector or we must look at the role of the Department of Social Security in helping to support people in raising a deposit for a privately rented flat. Many single people simply cannot raise the large amount needed for a deposit, and therefore cannot move into a privately rented flat. Meanwhile, landlords increasingly say that they are not interested in people who are on benefit. It is a vicious circle that must be looked at.

Rented accommodation is only part of the issue. Home ownership in London also features in the equation. In the great scheme of things, London certainly has a much higher proportion of council-owned or housing association-owned property than does the south-east as a whole, or, probably, most of the country outside the great industrial cities of the midlands and the north, but house prices are very high. People who own property in London are seen to be on a ladder to permanent wealth, and permanent growth in that wealth.

However, in the borough that I represent, which is not very different from the rest of inner London, prices are rising very rapidly. In my borough, it would cost about £150,000—sometimes as much as £200,000—to buy a one-bedroom flat for single person or a couple.

The cheapest flat that I have seen on sale anywhere in my borough recently was £80,000. Out of curiosity, I went to look at it. It had one bedroom, a living room-kitchen-diner in one room and a very small bathroom, and was on the second floor of a four-storey Victorian building on Holloway road, above a shop. Holloway road is a major road, by any stretch of the imagination. The flat had been well cared for by the current owner, but it was still priced at more than £80,000—for a very small flat where no one could think of bringing up children in a normal way.

The long-term effect of the very rapidly rising prices in inner London is that if a family in housing need cannot get on to the housing list and therefore cannot be nominated to a housing association property or a council property, they must rent privately—for which they need to raise a large deposit and in which they have no long-term guarantee of tenure—or buy, or move out of the borough.

Throughout inner London—Islington, Hackney, Camden, Lambeth and Lewisham—we are witnessing a rapid migration out of people on average or below average income and a rapid migration in of desperately homeless people who are housed in bed-and-breakfast accommodation and often wait a very long time to get any housing, and of wealthier people. London will rue the day that it turned its back on the social housing needs of its people, because we shall end up with an extremely polarised city.

I hope that the Minister will acknowledge several factors. I have mentioned the problems of housing and inadequate housing, but many people are completely homeless. Some of them sleep on the streets and rely on hostels for a secure roof over their head for as many nights as possible, and some are trying to bring up children in bed-and-breakfast accommodation, which is even worse than bringing them up in substandard housing.

We must look for solutions. In the 1970s and early 1980s, I was a local councillor on Haringey council. I recall with great pride the year that our borough managed to provide 1,000 new dwellings. We were very proud of our achievement. Many of those dwellings were of high quality. We were trying to build homes with gardens—places that any of us would want to live in.

After the election of the Conservative Government in 1979, the provision of new dwellings dwindled to almost nothing as a result of the cutting off of funds with which local authorities could build, the denial of local authorities' right to borrow in order to build, the encouragement of a limited number of housing association developments and, increasingly, the private funding of housing associations. Indeed, in answer to a parliamentary question that I asked last year, the Minister for Local Government and the Regions told me that, in one year, the total number of new dwellings for social renting in my borough was only 205. We need far more, as does every other inner London borough.

For solutions, I refer the Minister to a valuable document called "Homelessness in London—a way out" produced jointly by the London Housing Unit and the Association of London Government. Under the heading "Immediate action", it calls for:

"The acquisition—over a three-year period—of 15,000 existing homes, at an estimated total cost of £497m a year. The total public sector grant would be around £1.2b over a three year period, of which 10 per cent. would be met by the boroughs, £50m from the discretionary element of current ADP and the remainder … from additional ADP."

The rest would have to be raised from other sources.

The document also calls for

"A further increase to the current cost limits for 'existing satisfactory property' and 'purchase and repair' categories.

An increase to the notional weighting given to the new homelessness indicator in the housing capital resource allocation formula.

The provision of central Government revenue support for net costs of homelessness falling to the General Fund."

The document then talks about

"new measures to be taken in the medium term to prevent homelessness occurring; such as improvements to the housing benefit system, boosting the housing advice service, improving standards in the private rented sector."

Essentially, my plea to the Minister is that unless there is a significant increase in public sector investment in good-quality housing in inner London, the situation will not even mark time; it will get worse. Since the Government were elected, in May 1997, we have welcomed the release of capital receipts, the considerable amount that is being spent on the enormous backlog of housing repair, and the improvements to estates. In my borough, there is a repair backlog of £500 million. The repairs cannot all be done in one year; we are doing our best to deal with them. I hope that the declaration of a single regeneration budget area around Finsbury Park will further increase expenditure on housing.

However, better running, better administration and better improvement to existing stock do not solve the problem. The fact that the Government quite often insist on mixed developments and allow large amounts of private sector developments on land that was formerly in the public sector does nothing to fulfil the needs of the worst-off people in our society. I ask the Minister to consider very seriously increasing capital investment for local authority and housing association properties in inner London.

I mentioned housing benefit a couple of times, because it is important in many people's lives. In the early 1980s, housing benefit was given to local authorities to administer. They did not want to administer it, and indeed are penalised for doing so. In my borough, the administration has now been contracted out to a company called IT Net, largely because the council—in common with Hackney and many other boroughs—could not afford the capital necessary to invest in a new computer system.

The administration of housing benefit is appalling by any standards. Serious grief is caused. People visit me who are in desperate straits, threatened with eviction by private sector landlords because they are in arrears with their rent because housing benefit has not been paid. Others are being threatened by eviction by the local authority for being in arrears, when they are not really in arrears; it is an administrative problem.

I hope that, in monitoring the performance of the administration of housing benefit throughout the country—obviously, in the context of the debate, including London—the Minister will take note of those companies that are making a great deal of money from housing benefit but delivering an appalling service. I hope that he will take note of the vast profits that are being made by bed-and-breakfast landlords, who are getting fat on housing benefit while providing appalling housing. We need to take a serious look at the housing benefit system and perhaps invest more in bricks and mortar than in private sector landlords.

We ended the 20th century with great bangs, great fireworks and great hopes for this century. I hoped that we would have a slightly more social objective towards the start of this century. It cannot be right that, in inner London, the divisions between rich and poor are so big, and getting bigger. It cannot be right that so many children are growing up in inadequate accommodation. It cannot be right that market forces are driving the poor out of inner London and forcing the remainder to live in substandard private rented accommodation.

We must make a real effort to improve the housing conditions of the poorest people in this city. That problem can best be tackled in the way that it was tackled in the 19th century by great social reformers, such as Annie Besant, and by the London county council and many local authorities in the great building boom after the second world war. They built property for affordable rent, to give secure homes to people who would otherwise be denied them. If we deny our young people decent quality housing, we shall deny them many other things in life. I look to my hon. Friend the Minister and the Government to recognise those needs and to provide us with the investment that we need to improve housing conditions in inner London.

In his forceful speech, my hon. Friend the Member for Islington, North (Mr. Corbyn) has raised many important issues. However, he has left me only nine minutes in which to respond to his many questions.

I beg my hon. Friend's pardon.

At the outset, I shall address one or two of the points that my hon. Friend made. However, I may have to write to him to reply to his other questions.

My hon. Friend is right. Before I moved to Sunderland in 1985, I lived in inner London for many years. I am familiar at first hand with some of the problems that he described.

My hon. Friend mentioned the special difficulties that single people have in getting on to housing waiting lists. He is right to say that it is a serious problem, but I am aware of several schemes to deal with it. The Peabody Trust has a scheme in Hackney to help single people into housing and the Bart's and Royal London trust has a similar scheme for its employees. Those schemes are aimed primarily at finding key workers somewhere reasonable to live, but we would like to see more of them.

My hon. Friend the Member for Putney (Mr. Colman) mentioned the position in Wandsworth and my hon. Friend the Member for Islington, North referred to Wandsworth and Westminster where local authorities have taken the irresponsible line of selling social housing stock and pushing the problems that they should deal with into neighbouring boroughs. That is regrettable and my officials are in an on-going dialogue with Wandsworth on that and other issues.

My hon. Friend mentioned resources. It is quite right that resources lie at the root of dealing with the huge problems that we face. However, I am sure that he accepts that it is not just a question of resources. He and I have lived in inner London for long periods and will have noticed the extraordinary incompetence and inefficiency that has occurred in some London boroughs over the years. I am glad to say that the position is getting better. We are putting much pressure on local authorities to improve their performance, and many of them have. I launched the best value housing programme this morning. I hope that it will also provide an incentive for local authorities to improve their performance. I am well aware, as my hon. Friend will be, that one can pour good money after bad. Therefore, we want the many extra resources that we are making available to be spent properly.

My hon. Friend referred to the homeless. As he will know, we are putting £200 million into a programme to help with rough sleeping. Given the constituency that he represents, I am sure that the extra pressure that asylum seekers put on housing is on his mind. He will know that we are taking steps to move asylum seekers to those parts of the country where there is no shortage of accommodation. Sunderland, the area that I represent, is for the first time accommodating asylum seekers in some of our surplus houses.

My hon. Friend referred to the Association of London Government document. My hon. Friend the Minister for Housing and Planning has already met representatives of the association to discuss its initiative and he is due to meet them again next month.

Let me make it clear from the outset that the Government are acutely aware of the difficulties that my hon. Friend the Member for Islington, North has described. We are determined to do everything that we can to meet the challenge. Our aim is to ensure that everyone has a decent roof over his head and lives in sustainable communities.

The present situation in inner London is the result of several complex factors that cannot be resolved overnight. In the same way, we believe that the solution lies not in one or two high-profile central Government initiatives. A more holistic approach is called for that involves a number of linked activities in a partnership of the private, public and voluntary sectors.

The Government have already taken significant steps to improve the quality and increase the supply of affordable housing in the capital. We are involved in a massive investment programme to raise the quality and quantity of social housing in London. Over the lifetime of this Parliament, an additional £5 billion of capital receipts will have been made available nationally to build new homes and to rehabilitate old ones. About a third of that money will go to London, reflecting the high level of need that we know exists in the capital.

As part of that support, we recently announced a £613 million package of capital resources for investment by London boroughs in the current financial year. That represents a 54 per cent. increase over the previous year and accords with spending plans arising from the comprehensive spending review. Of this, more than £400 million will go to inner London authorities. Although some authorities will want to use the money for repairs to their own stock, others will want to prioritise new supply initiatives to ease the pressures on homelessness and families in temporary accommodation.

As I said, we are keen to ensure that the extra resources are spent wisely. For that reason, the housing investment programme allocations are made not on the basis of need alone, but on the quality of authorities' housing strategies and their performance in delivering housing services. That has proved a great incentive for the London boroughs to make real efforts to improve the services that they provide to their tenants and residents. I was pleased to see that, for example, my hon. Friend's local authority, Islington, made significant progress last year and that is to some extent reflected in its award of £28.5 million for the current financial year—an increase of more than 57 per cent. on what it received previously.

Most housing authorities in London are gradually improving their standards of performance, but there are still areas where some could do better. Indeed, some local authorities—I could name them but I will not—have only recently worked out which houses they own and which they do not. We are determined that local authorities should deliver high quality, efficient services that are responsive to the needs and aspirations of local people. That is why we are introducing the best value framework that I mentioned earlier. It will start on 1 April. Housing, as one of the key local authority services, is of prime importance. The new housing inspectorate, which is part of the Audit Commission, will not only act as an independent scrutineer of local authority housing services, but will assist and support authorities to build long-term strategies and tackle service failure where it occurs.

The proposed single pot for housing, also due to be implemented next year, will give London boroughs greater flexibility on deciding their own spending priorities. It will be up to each borough to decide on the balance between investing in its own stock and in new supply. I am confident that the boroughs will take full advantage of the opportunity.

The comprehensive spending review confirmed the continuation of the Housing Corporation's development programme. We have reversed the decline in funding and it will now increase in line with inflation. In the next financial year, we shall invest £276 million in London.

London's supply of land is limited, leading to an imbalance between supply and demand, so one of our main themes is to make more efficient use of existing urban land. The publication of the report of the urban task force has given greater impetus to making urban areas in inner London and elsewhere more attractive places to live. Over time, that will help to relieve the pressures on the capital's housing stock.

We must not underestimate the contribution that the planning system makes to the supply of affordable homes in London. That is why the Government give strong encouragement to local authorities to use existing planning powers to insist that developers provide affordable housing in new developments. London boroughs reported that 2,650 homes were secured through planning policy in 1998–99 and many more are in the pipeline. Taken together with more than 15 million of developer contributions in lieu of on-site provision, the planning system makes a real contribution to increasing the supply of affordable housing. My colleagues and I are keen to encourage good practice and I am confident that the planning system could be used to better effect to deliver even more affordable homes.

As I made clear at the outset, I did not have sufficient time to respond to all the points in my hon. Friend's speech. I shall study it and, if there are points that I have not answered, I shall write to him. I thank him for raising this important issue.

I am delighted to have secured the opportunity to raise the issue of the Pegasus symbol and airborne forces in this short debate. I am particularly grateful for the presence of the entire Conservative Front-Bench shadow defence team. Another Conservative Member who would very much have liked to be here is my hon. Friend the Member for Aldershot (Mr. Howarth), who has taken a close interest in this matter, but who is unavoidably on a Select Committee visit to the Netherlands. My hon. Friend has, however, left me a copy of a publication which is one of his prized possessions. It is a venerable, official history of British airborne divisions, entitled "By Air to Battle". Typically, because the Pegasus symbol is directly identified with anything to do with the airborne forces, that symbol adorns the front cover of the publication.

My hon. Friend particularly drew my attention to the part of the publication that refers to members of the airborne forces being honoured in December 1944 at a special investiture held in Buckingham palace. It says:

"Each officer and man of these … divisions wears upon his shoulder the badge of Pegasus, the winged horse and its rider, brandishing a lance. As an emblem it is singularly appropriate, and whenever the citizens of Britain catch sight of it, they may perhaps call to mind that other horse which, long ago, it is said, brought armed men into the city of Troy—the vanguard of a victorious army."

To have an entire debate about insignia might seem to exaggerate the importance of such symbolism, but, when we consider it in contexts other than the military, we know that that is not the case. Only today, the papers are full of the argument about the future of the Royal Ulster Constabulary, and no doubt part of that will be the question of what signs, badges and insignia will in future represent that police force.

When one looks at any publication dealing with events in the history of the airborne forces, such as the account of the battle of Arnhem in Martin Middlebrook's definitive version that I have here, it is always Pegasus that illustrates its cover because Pegasus is the brand name that is inextricably bound up in the public mind with the image, the record and the heroism of the airborne forces. It is astonishing that the symbol should have been scrapped when it is so well known.

I am concerned about that matter because I view it not in isolation, but as part of a continuum. I have been noting with dismay a succession of events that have been chipping away at service morale and the military ethos. As I customarily do in these debates, I have taken the trouble to tell the Minister in advance nearly all the points that I intend to make today.

The Minister knows of my concern that, all too often, senior serving military personnel are being pushed forward by politicians into debates, to take the flak and to justify and try to excuse controversial decisions made by politicians. That is not good for the forces; it is not good for the impartiality of serving personnel, and it is imposing too much on military chiefs who have to put on a brave face when confronted by unpalatable decisions.

Politicians have a habit of showing spite to those who embarrass them. That is as true of the military field as it is anywhere else. I am old enough to remember the case of Colonel Colin Mitchell of the Argyll and Sutherland Highlanders, who was deployed in Aden in the 1960s, when Harold Wilson had announced that it was not possible or viable to continue to maintain British control there.

Colonel Mitchell, on his own initiative, showed by his successful activities in Crater and the Radfan mountains that it was entirely practicable to do so. I believed then, as I do now, that it was no coincidence that, within a very few years, a Labour Government were hell-bent on destroying his regiment, the Argyll and Sutherland Highlanders.

I shall touch briefly on other examples before I return to Pegasus itself. The first is the Berlin airlift, which was commemorated in a number of ways in this country. However, unlike in other countries, no commemorative stamps were issued here last year to mark the 50th anniversary of that successful key moment in the cold war. I have a particular interest because my constituent, Mrs. Jessamy Waite, is the widow of Air Commodore Rex Waite, the RAF officer who conceived the practicability of the Berlin airlift.

On 6 April 1998, in a parliamentary question, I asked:

"Will the Minister consider the representations of the British Berlin Airlift Association, which wants the Royal Mail to issue a commemorative stamp to mark that crucial turning point in the war? That suggestion has so far been given a idle brush-off."

The Minister for the Armed Forces was then merely the Under-Secretary. He replied with his usual insouciance:

"I cannot accept that. I have had discussions with the Department of Trade and Industry, which as the sponsoring Department, is discussing this matter with the Post Office."—[Official Report, 6 April 1998; Vol. 310, c. 13–14.]

Sadly, those discussions were unavailing and no stamp appeared.

Subsequently, when I was in Germany, I saw the German postal 50-year anniversary cover of what they call the Luftbrücke, the aerial bridge. That followed the stamp that Germany had issued for the 40th anniversary, which followed a stamp to commemorate the 25th anniversary. It is sad that the Germans have a better appreciation of what the RAF did than does the British Post Office, whatever representations the Ministry of Defence managed to make to it.

The second example is the changing-over of the long-term volunteer reserve decorations, known as the RD and the TD. In March 1999, those gave way to a combined long service decoration for reserve forces, which is applicable to all ranks. As someone who never got above the lower deck in the Royal Naval Reserve, I welcome that change.

I do not, however, welcome the fact that, whereas previously officers had the incentive to stay on and work hard for 10 years to put the letters RD and TD after their name, that incentive has now disappeared. Instead of entitling officers and other ranks to have those letters after their name, the change ensures that nobody now has those letters after their name, except those who were awarded the decoration before the end of March 1999.

The next example is the royal tournament. Almost by stealth, and certainly without any major public debate, more than 100 years of history were scrapped virtually without notice. The first that most people knew about the loss of the tournament was that it was a fait accompli. When one looked at the royal tournament website, one read the following announcement:

"The Royal Tournament will run from 20th July to 2nd August 1999. It will be a show that will live on in your memory, make its mark in history and make you proud of our heritage. This is the year you must not miss. You will not see its like again."

You can say that again.

What did the MOD have to say about that? Mr. George Robertson, who was then Secretary of State, issued a press release in which he said that

"it is timely for us to take a fresh look at this event … A number of alternatives are under consideration for this tri-service contribution to the year 2000"—

he was referring to the tournament's successor. He continued:

"A study team is currently examining how to modernise the permanent annual tournament after this millennium spectacular has completed."

That press release makes it quite obvious that the Government had no clear idea of what they wanted to put in place of the royal tournament; all they knew was that they wanted to get rid of an established and historic institution.

I revert now to the question of Pegasus and the airborne forces. In the early hours—at about a quarter past midnight—on the night of 5–6 June 1944, three gliders landed at the foot of a bridge over the Caen canal. In one of those gliders was a friend of mine, Mr. Bill Jolliffe, who was then a sergeant-major. He was a quiet, unassuming man, whom I met on what turned out to be his last trip to visit the grave in Normandy of his brother, who had been killed 10 days into the battle. Bill is not able to tell us what he thinks of the abolition of the Pegasus symbol, but one of my constituents, Mr. Bill Cornick, who is now 82, was in the second wave of gliders that landed during D-day itself. He has written to me, saying:

"How can those who have not served understand the morale-boosting effect the right to wear such insignia has upon soldiers? Arguably this is the driving force which makes men rise to efforts seemingly impossible, like all those things which go to make the individual think that his unit is the best. It's part of man management."

That is the voice of a veteran, but what do ordinary serving soldiers think about the loss of the insignia? I offer a couple of quotations from the comments of serving soldiers that were published in a service magazine. I shall identify neither the soldiers nor the magazine, in case Alastair Campbell gets to work on them. One states:

"I think it is disgraceful. I would be upset if the REME"—

the Royal Electrical and Mechanical Engineers, of which he is a member—

"got amalgamated, which is one of the worst things, but to have something your parents and grandparents earned taken away must be heartbreaking. People died for that badge."

Another says:

"Each unit needs an identity so I feel they should keep it. It gives them a sense of the past and the endeavours of those who went before them. There are too many changes going on around the Army."

A third says:

"I don't think they should scrap the Pegasus; perhaps the whole air mobile force should keep it as their emblem. I don't know if the Paras would like that, but it is one way to keep it. It would keep everyone happy, I think."

He is absolutely right—that would be the sensible solution.

In August, I wrote to the Minister about the issue. The second paragraph of his reply of 1 September appeared to be contradicted by the fourth. The second paragraph states:

"The emblem of Bellerophon astride Pegasus was introduced in 1941 for all elements of the Airborne Forces"—

I emphasise, all elements—

"which during World War II included the Parachute Regiment, the Glider Pilot Regiment"—

we know that from my account of the glider attack on the bridge that later become known as Pegasus bridge—

"the SAS, and all within the WW II Army Air Corps."

However, the fourth paragraph states:

"The reason why this emblem has not been incorporated into the new 16 Air Assault Brigade badge is that the parachute element of this new Brigade is only one of the two constituent parts—the other being the aviation or airmobile element".

That argument is undermined by the second paragraph, which states that the symbol has, in the past, been used far more widely than just by the Parachute regiment.

The change in insignia, like the scrapping of the royal tournament before Ministers had any idea of what would be put in its place, is rooted in a word that we hear all too often from new Labour—modernisation. New Labour means Labour without socialism and modernisation in the armed forces means the armed forces without their history. The problem is that the Government have no sense of history, no sense of military morale and, apparently, no sense of the value of the Pegasus symbol as a brand synonymous in the public mind with the concept of airborne forces.

I conclude by referring to one of my frequent visits to Arnhem—I have friends who live close by—made in September of last year, the 55th anniversary of the battle. I have here three photographs taken during that visit. The first shows the sign erected over the road leading toward Oosterbeek cemetery: it says, in Dutch and in English, "Welcome veterans", and silhouetted against the sky line is Pegasus, selected from all the signs that might have been chosen. The second photograph is that of a veteran in a period Land Rover: he is wearing his red beret and his Parachute regiment badge—the Minister will, no doubt, assure us that those are not to disappear; yet his tie is covered with the symbol of Pegasus.

The final photograph is of two wreaths, side by side on the memorial in the Airborne cemetery in Oosterbeek. One represents the British Legion: the card reads, "Lest we forget". The other represents the airborne forces: at the heart of it is the Pegasus symbol. By their despicable action, the Government and the Ministry of Defence have ensured that it is far more likely that we shall forget what we owe to the airborne forces of the United Kingdom.

I am grateful to the hon. Member for New Forest, East (Dr. Lewis) for the opportunity to explain the Army's decision not to incorporate the Pegasus emblem in the new 16 Air Assault Brigade badge; and to explain the Government's position on that issue. I am also grateful to him for having previously told me about some of his broader concerns; I hope to deal with them as well. I believe that he is trying to construct an over-developed edifice on some pretty shaky foundations—it must have something to do with his experience of the Oxford school of philosophy.

It might be helpful to the hon. Gentleman and to the House if I begin by correcting a widely held assumption, expressed by the hon. Gentleman during our lengthy correspondence, that the Bellerophon or Pegasus symbol is the badge of the Parachute Regiment. It is not, and never has been, specific to the Parachute Regiment. The only badge specific to the Parachute Regiment is the regimental cap badge, approved by the sovereign, which depicts a pair of outspread wings with an open parachute in the centre surmounted by the royal crest. That badge was designed to reflect the operational role of the Parachute regiment. It is not the same as the Bellerophon insignia, and it remains the cap badge of the Parachute regiment today.

The popular, and widely recognised, emblem of Bellerophon astride Pegasus was introduced in 1942 for all elements of the airborne forces. During the second world war, they included the Parachute Regiment, the Glider Pilot Regiment and the Special Air Service. Therefore, it was a specific to arm insignia, as the formation flash of the 1st and 6th Airborne Divisions; it was not a regimental badge. In the post-war period, the emblem was used as a formation insignia in airborne formations, including 6 Airborne Division, 16 Parachute Brigade and 44 Parachute Brigade (Volunteers). I reiterate that the Bellerophon design was not specific to the Parachute Regiment, but was used by the formation as a whole to reflect its inclusion of airborne elements.

The Bellerophon badge has, in recent years, been worn as the combat insignia of 5 Airborne Brigade. It was worn by all brigade members, including logistics staff, engineers, signallers and non-parachute-trained infantry battalions. Equally, it has not been worn by parachute battalions when employed outside the 5th Airborne Brigade. However, the Ministry of Defence and I appreciate fully the significant level of attachment that many feel towards the emblem. I assure the hon. Gentleman and the House that the decision to discontinue use of the Bellerophon emblem was not taken lightly, or without full and careful consideration of all the facts.

I remind the House that 16 Air Assault Brigade also includes the units of the former 24 Air Mobile Brigade, whose winged emblem, called a heraldic pinion, is also being discontinued. That badge has an equally long and illustrious history, having been used originally as the insignia of 24 Guards Independent Infantry Brigade from 1940 to 1947. It is reputed that this was the personal crest of Brigadier "Boy" Browning, who gave it to the brigade when he was its commander. The emblem has been used variously by several infantry and aviation formations over the intervening years.

The newly formed 16 Air Assault Brigade is one of the most powerful brigade-sized formations in Europe, and the most powerful air-manoeuvrable fighting unit in Britain's history—a history of which we are all justly proud. It is made up of two discrete parts; one is the parachute element, deploying from the air, and the other is the aviation or airmobile element, which will engage in battle from the air. The brigade will comprise 16 different units. In addition to the infantry and Army Air Corps elements, there will be units from the Royal Artillery, Royal Electrical and Mechanical Engineers and Royal Logistic Corps, to name but a few.

This exciting new force, with its inherent versatility and flexibility, will dramatically change the way in which we respond to crises throughout the world. The introduction of the Apache helicopter during the year will further enhance the brigade's assault power.

The hon. Gentleman claimed that, somehow, the military was being asked to ratify decisions made by civilians and by Ministers. I stress that there was a recommendation to Ministers from the Army. It is their judgment, given the circumstances that I have described, that the new formation needed its own symbol to reflect its new and unique identity, with which all its members will be able to identify in future. As the hon. Gentleman knows, the badge that has been decided upon for the new 16 Air Assault Brigade is a symbolic design of a striking eagle. However, in keeping with tradition, the new emblem incorporates both light blue for the aviation element and maroon for the airborne heritage.

I understand that many people will regard the passing of 5 Airborne and 24 Air Mobile Brigades, remembering, as well detailed by the hon. Gentleman, their achievements and rich traditions. We have not lost sight of the contribution that they have made to Britain's armed forces. However, the new brigade will reinforce the role that airborne forces play in carrying out our defence mission. I reassure the House that there is no question of the specific and unique identity of the Parachute Regiment or any other regiment being lost as a result of the formation of 16 Air Assault Brigade, or the discontinuance of the Bellerophon emblem. The identity of the regiment will continue to be represented by its winged regimental badge, which is worn on its famous maroon berets. The regimental magazine of the regiment will maintain the link by retaining the Pegasus title.

In addition, the Pegasus trophy will continue to be awarded each year by His Royal Highness the Prince of Wales to the unit that is deemed to have done the most to enhance the reputation of the airborne forces. The Pegasus symbol will be retained by a number of organisations, including the airborne forces charities, Friends of Airborne Forces, the airborne forces security fund, Airborne Brotherhood and the Airborne Forces museum.

The hon. Gentleman and the House, including the many Members who have written to the Government on this subject on behalf of their constituents, can be assured that the Pegasus symbol, and all the history and tradition that it represents, will continue to be an instantly recognisable symbol of the airborne forces, both past and present.

The hon. Gentleman raised other items in trying to construct the thesis of disregard for our history. I resent that, because we are alert to the issues and traditions of our armed forces and the important part that they play in maintaining the cohesion and operational effectiveness of our forces.

We made a significant contribution to the celebration of the courage of those who took part in the Berlin airlift and the success of a remarkable operation. The Royal Mail had responsibility for this. It considered the issuing of a commemorative stamp, but decided that it was unable to do so as it was focusing on a millennium theme in 1999. As the hon. Gentleman kindly pointed out, I made significant representations to the Royal Mail and to the Department of Trade and Industry on the matter. As they work on fairly lengthy time scales, the initiating process should probably have taken place under a previous Administration. However, the airlift was commemorated by the production of a commemorative label and a philatelic medallic cover.

Further, Royal Air Force bands participated in the traditional wreath-laying ceremony and at various concerts. The Queen's Colours Squadron and aircraft from squadrons associated with the airlift participated in events and ceremonies marking the 50th anniversary of the start of the airlift.

We had to face the real issue of the level of commitment of manpower by the services to the Royal Tournament and the reduction year on year of attendances, which led to a series of losses. The field-gun competition was the subject of some correspondence from hon. Members. Of the 30,000 man days that were taken up by the tournament, about 16,000 were taken up by the naval field-gun competition. The event had significant audience loyalty, and it continues to be held in special regard by those who participated in it. Frankly, however, it was no longer representative of the Royal Navy and its contemporary activities. In practical terms, it led to considerable pressure on other members of the Royal Navy, who were having to fill gaps created by those who were able to participate in the event.

That beggars belief. Of course the Royal Tournament took up a large proportion of the Navy's resources. However, the field-gun competition was synonymous with the Royal Tournament, just as Pegasus is synonymous with airborne forces. I find it incredible that the Labour party is suggesting that people cannot see the value of these symbolisms.

The reality is that, within the Royal Navy, many individuals were having to be devoted to the event. That was putting pressure on other members of the service when, I reiterate, attendances at the tournament were declining, which led to the making of losses. The purposes of the tournament were to provide a shop window for the armed forces, to enable people to associate with them and to generate money for service charities.

We considered how the situation could be improved, We were mindful of the significant attachment to the tradition represented by the tournament. That is why the Royal military tattoo of 2000 will be the armed forces' flagship contribution to the nation's millennium celebrations, with a theme of defence of the realm past, present and future. It will take place against the spectacular and historic backdrop of Horse Guards in July, with a performance on six evenings. It will combine the most imaginative staging, state-of-the-art technology, pageantry, son et lumière, lasers, fireworks and the world's largest mobile video screen. It will provide a worthy showcase for the men and women who make up Britain's armed forces. [Interruption.] I am surprised that the hon. Gentleman finds that amusing.

We will not lose sight of the fact that the armed forces have played a significant and integral part in our history. They continue to play their part on the world stage, and will continue to do so in future. The military tattoo will demonstrate that to the country and to the wider world.

In parallel, an annual defence event will be held during the summer outside London—it is important that we get away from London in many instances—at different locations each year. This will be based, where possible, on a successful single service event to minimise the resource implications, and the services will take it in turn to lead on the event.

I am pleased to say that the first of these events will be held in Portsmouth in 2001, with the Royal Navy in the lead, and will be linked to the popular international festival of the sea. We intend that both the location and the content of these regional events will enable the armed forces to showcase their equipment and demonstrate their capability in an exciting and modern way, including hands-on public participation, which was not possible in the royal tournament.

Our armed forces are steeped in history and tradition, of which they are justifiably proud and which contribute to operational effectiveness and to our sense of identity as a nation. Our armed forces have never stood still, and that is one of their enduring strengths. These matters must continue to be judged on their merits and on the way in which they serve the country and the armed services.

I am delighted to have the opportunity to raise a major issue of local concern in my constituency, and one that raises questions of wider regional and national importance. I am especially pleased to have this, my first debate, in the new Westminster Hall. I am a member of the Modernisation Committee and a strong supporter of the experiment.

One of the reasons that the Committee proposed the Westminster Hall experiment was to provide increased opportunities for Back-Bench Members and Select Committees to have issues debated. The topic that I bring before the Chamber today is one that I have attempted to bring before the House for some time under the traditional Adjournment debate procedure. This is my second attempt to bring it to Westminster Hall, and I am delighted to have succeeded so speedily.

I am grateful to all those who assisted me in my preparations for today's debate, in particular the Hadley Wood Association, a number of whose members are present for the debate; the Council for the Protection of Rural England; the Railway Development Society; and several of the affected local authorities, most notably Hertfordshire, Hertsmere and Stevenage councils.

Transport is clearly a key policy challenge for our Parliament, Government and country. There is wide support in my constituency for the Government's transport policy objectives—to reduce congestion, to enhance the environment and reduce pollution, to foster a shift to greater use of public transport and to promote greater integration between different modes of transport, including between road and rail.

As part of this policy development, the Department of the Environment, Transport and the Regions published in July 1998 "The Future Strategy for the M25", which takes a strategic look at the future of that road. In that document, DETR states:

"Among the issues to be addressed … will be the scope for … park and ride facilities near the motorway".

I recognise, as do my constituents, that parkway stations can play a positive and productive part in transport policy, but that an overall view needs to be taken about proposed locations which considers the benefits as well as the drawbacks, in terms of both transport and the environment. Over the past year, new parkway stations have been opened at Luton airport and, last May, at Horwich in Bolton, and they have brought many benefits to those areas. Parkways can work where the location is appropriate.

Great North Eastern Railway has expressed a wish to create three new parkway stations—one north of London close to the M25, one close to Edinburgh and one in Doncaster.

I congratulate my hon. Friend on raising such an important matter on behalf of the residents of Hadley Wood. Does he agree that in transport planning, GNER must be sensitive to local residents and local circumstances? In my constituency a new parkway station is planned, which I believe will bring enormous benefits to villages such as Rossington and Finningley, but it must be integrated into the local transport infrastructure. An area such as Doncaster could benefit tremendously, but GNER must be mindful of other partners to ensure the best outcome for all concerned.

I am grateful to my hon. Friend for her intervention. Later in my speech, I shall deal with a more appropriate location for the proposed parkway north of London. I am well aware of the benefits that can be gained, but also of the great importance of proper public consultation and involvement.

My understanding is that GNER's preferred site for the parkway station north of London is on land immediately adjacent to Hadley Wood. According to GNER, the aim of the new station would be, first, to encourage north London residents to drive out to Hadley Wood, rather than going into central London to pick up their trains, and secondly, to encourage drivers in the area north-east of London and in Kent to drive around the M25 to Hadley Wood, rather than taking the train into central London and going to King's Cross by underground or other forms of public transport.

The proposed site is greenbelt land in the borough of Hertsmere, although most of the affected residents live in the borough of Enfield in my constituency. GNER has not submitted a formal planning application because it is awaiting the outcome of the process of renegotiation of franchises, and has stated that it will not submit such an application until that process is complete.

I am opposed to the siting of a parkway station in Hadley Wood for three main reasons—first, the effect on the green belt; secondly, the impact on the local infrastructure in my constituency; and thirdly, the wider consequences for transport policy in outer north London and Hertfordshire.

The green belt was one of the finest achievements of the post-war Labour Government. My right hon. Friend the Deputy Prime Minister has reaffirmed the Government's commitment to the green belt. Hadley Wood is an attractive residential area in the north-west of my Enfield, Southgate constituency. The threat to the green belt is a threat to the amenity and way of life not only of the residents of Hadley Wood, but of all my constituents and the residents of neighbouring constituencies. I am pleased to see my colleague the hon. Member for Chipping Barnet (Sir S. Chapman) in the Chamber. We have been working closely together on the matter, along with the hon. Member for Hertsmere (Mr. Clappison), in whose constituency the proposed development would take place.

I pay tribute to the excellent work done by the Hadley Wood Association in drawing the attention of local people to the matter and getting media coverage, and in doing work that has largely informed what I shall say in objection to the proposal.

The site is in the narrowest part of the green belt around London. It is less than two miles wide. The effect of a parkway station would be to extend the urbanised boundary of London beyond Potters Bar. The area is a community forest with two working farms, both of which would have to be closed, were the proposal to proceed. They would be replaced by a 2,000-space car park. In other words, two farms would be replaced by an area the size of five Wembley football pitches for cars. That poses a disastrous threat to the green belt.

With regard to the local infrastructure, one effect of the GNER proposal would be to increase the use of roads in our area—the M25, obviously, and local roads as well. The stretch of the M25 between exits 23 and 25 is already heavily overloaded and is a well known bottleneck. It makes little sense to encourage more cars on to an already overloaded stretch of the M25.

Furthermore, like most of London and many other parts of the country, my constituency is increasingly plagued by traffic congestion. Since the opening of exit 24 on the M25, the A111 that passes through my constituency has undergone a heavy increase in traffic. The Hadley Wood Association commissioned a study by the leading traffic consultants, Messrs Colin Buchanan and Partners, in 1997, which demonstrated that during rush hour periods there were more than 1,000 vehicles per hour using that stretch of road. I am certain that there has been a further significant increase in traffic volume since that study was carried out. Buchanan and Partners estimated that a parkway station could add a further 500 cars per hour during peak times.

While one theoretical solution is to widen the roads, there would be substantial local opposition to that as there is little scope or capacity in the Cockfosters area for widening the road. Even were such a plan acceptable, it would be not be viable. In terms of the infrastructure in Cockfosters, Hadley Wood and the wider Enfield, Southgate area, the consequences of such a proposal would be to increase congestion and worsen the bottlenecks. That would contravene the wider objectives of Government policy on transport.

There is a wider argument against the proposal. I am worried about Railtrack's lack of overall planning to develop a coherent strategy for new parkway stations in our part of the country. The case against Hadley Wood is not simply a "not in my back yard" reaction to a proposal to build on the green belt; there is a strong transport argument against it. Hertfordshire county council has clear, well-thought-out transport policies in which Stevenage is the key rail centre for the county. In the past few days, Hertfordshire county council told me that it had received no evidence from GNER or anyone else of special circumstances that would justify building on the green belt. That view is reinforced by Hertsmere borough council, which stated that

"no case has been made"

for the development. Last year, GNER tried to challenge Hertsmere's local plan to facilitate a possible parkway station, but it did not pursue the matter and the local plan stands.

Stevenage council shares Hertfordshire's view that Stevenage should remain the main focus for rail in the county. It goes further, and would like Stevenage to be the site of a parkway station. My hon. Friend the Member for Stevenage (Barbara Follett) shares that view. The council told me that there was space in Stevenage to build the necessary car parking facilities, that there is scope to expand the station to six platforms, that no greenbelt issues affect it and that traffic congestion is less significant because of Stevenage's location as a relatively new town alongside the A1M. People in Stevenage and elsewhere in Hertfordshire are worried that a Hadley Wood parkway station would detract from Stevenage's position as the main rail focus for the county. Anxiety has been expressed that some trains might not stop at Stevenage because of the close proximity of the two centres.

I hope that my hon. Friend the Minister will tackle those anxieties in his response. I appreciate that, for the reasons that I outlined, there are no specific proposals from GNER. However, if GNER wins the franchise, it will want to move rapidly to effect its proposals for the three parkway stations, including Hadley Wood. That is why there is widespread anxiety in my constituency and beyond. While the residents of Hadley Wood form the focus of that anxiety, other people in the Enfield, Southgate area and colleagues in neighbouring constituencies are worried about the proposals.

Like my hon. Friend, I am a passionate supporter of public transport and a non-driver. I use public transport every day; I believe in the railways and I support a successful, thriving railway system for our country. There is a persuasive case for a parkway station north of London. However, Hadley Wood is a totally unsuitable location for it. If such a proposal were implemented, it would be a disaster for the green belt, exacerbate already appalling conditions and congestion on our local roads and threaten the future of Stevenage as a rail centre.

I hope that GNER or whoever wins the franchise will abandon the idea of a parkway station in Hadley Wood and pursue the sort of alternatives that I have outlined. I hope that the Minister will take account of my comments and offer some hope to my constituents.

I shall speak briefly to support everything that the hon. Member for Enfield, Southgate (Mr. Twigg) said in opposition to the GNER proposal. I want to make two points on behalf of my constituents. First, if the proposal goes ahead, it will constitute the most devastating blow to the metropolitan green belt in one of its most sensitive areas. The main objective in that area is to keep Potters Bar away from the metropolis. The thin strip of land has already been divided by the M25, so not only the proposed development but the attendant feeder roads would devastate the green belt in that area. I congratulate the hon. Gentleman not only on securing the debate but on the eloquence with which he put the case.

Perhaps I should declare a possible interest. For many years, I was president of the London Green Belt Council until I was appointed a Minister, when, quite properly, I had to give up that honorary position. The consolation for my friends is that my career has gone downwards ever since.

I want to underline the effect of the proposal on the local infrastructure. The roads are already overcrowded and the hon. Member for Enfield, Southgate was right to refer to the overloading of the M25 in that area. I disagree with one point that he made. He painted a rather rosy picture of the Government's commitment to conserving our green belt. He mentioned Stevenage, which is a much better location for the proposed parkway station, but the Government have permitted a significant development to the west of Stevenage on the metropolitan green belt. Their action reinforces the case for a parkway station in Stevenage, not Hadley Wood.

I begin, as is usual, by congratulating my hon. Friend the Member for Enfield, Southgate (Mr. Twigg) on securing the debate. I am aware that the proposal by GNER for a new parkway station near the M25 north of London is a source of great concern to many of his constituents.

Since his general election triumph in 1997, my hon. Friend is proving himself, in this matter as in so many others, an extremely conscientious constituency Member of Parliament and an outstanding advocate on behalf of the interests of his constituents.

I also thank the hon. Member for Chipping Barnet (Sir S. Chapman) for his contribution to the debate. As a former resident of Chipping Barnet, who often walked in Hadley Wood, I know that he is also a most assiduous constituency Member of Parliament.

My hon. Friend the Member for Don Valley (Caroline Flint) is another highly effective constituency Member of Parliament. She also made proper representations on behalf of her constituents.

I want to make it perfectly clear at the outset that there is no firm proposal for a new parkway station near Hadley Wood and no final site has been identified. The station is one of three new parkway stations proposed as part of GNER's initial bid for a replacement franchise. The other proposed stations are near Edinburgh and the M18 in South Yorkshire.

However, it is still early days. No decision on whether to replace GNER's franchise has been taken. Even if GNER's bid were successful, careful consideration would need to be given to several important issues including planning, transport and wider environmental implications, before the parkway stations could be approved.

The Chamber knows that last September, the Deputy Prime Minister issued new instructions and guidance to the franchising director asking him to deliver improvements through renegotiation of the terms of franchise agreements. When considering any renegotiation requests, we have asked the franchising director to give due weight to commitments to current performance, customer services, innovation, investment and efficiency; new or earlier investment; securing better performance; initiatives to promote integrated transport; a willingness to give passengers a greater voice in the level and standard of services; and value for the taxpayer.

In November last year, the franchising director announced that the current GNER franchise would be one of the first three to be renegotiated or replaced. The GNER, Connex SouthCentral and Chiltern franchises were chosen because they are thought to offer great potential for improvements and developments which can be delivered in a relatively short time scale.

On 22 December, the franchising director announced that Sea Containers, which is the parent company of GNER and Virgin Rail, in conjunction with Stagecoach, had pre-qualified to participate in further discussion of its franchise replacement proposals. They are now preparing their detailed proposals for discussion with the franchising director before final negotiations. It is hoped to conclude these negotiations in the spring.

However, it is important to remember that the franchising director is not committed to accepting either proposal. After careful consideration, he may decide instead to allow the existing GNER franchise to run its course until it expires in April 2003.

In considering any franchise replacement negotiations, the franchising director will consult, among others, local authorities, regional planning bodies, regional development agencies and rail users' consultative committees as appropriate. If the parkway station proposal were to be adopted as part of a franchise commitment, planning permission and full local consultation would be required.

I want to say a word about the Government's approach to parkway stations. We are keen to encourage integrated transport proposals that are designed to encourage people to travel by public transport and to reduce the need to travel by car. I understand that GNER's proposal is intended to encourage a modal shift from car and air travel to rail use and to allow a seamless transfer between transport modes. It believes that its proposed parkway stations would considerably reduce long-distance car usage, thereby reducing road and motorway congestion and associated pollution problems.

We are also keen to improve the quality of rail services and GNER believes that the parkway stations would make long-distance rail travel more accessible and attractive. The parkway stations would be served by GNER's planned new fleet of high-speed trains. I understand that stations would be airport style in design and built to accommodate the needs of passengers, including those with special needs. There is a measure of support for a new parkway station in the north London area and the London Chamber of Commerce and Industry, for example, believes that the parkway station

"could prove the single most important lever for achieving a modal shift from road to rail for long distance journeys between London and the north east and Scotland."

There are also clearly important planning implications for the scheme, however, and I am well aware that the proposed site for the parkway station lies within the metropolitan green belt. That has generated considerable local opposition and I know that organisations such as the London Green Belt Council, the Association of North Thames Amenity Societies, the Potters Bar Society and the Hadley Wood Association have expressed their concerns.

Obviously, a scheme for a parkway station would need to be the subject of a planning application. Under national planning policy guidance on green belts, which is known as PPG2, such a development would be inappropriate in the green belt. To justify approval being given, it would therefore be necessary for GNER to show that very special circumstances outweighed the harm that would be done to the green belt. The land use planning merits of a station proposal would need to be considered against the statutory development plan, and careful regard would have to be paid to all other material considerations. Those might include, for example, the impact of the development on the environment and on residential amenity as well as the effect on the M25 and the local highway network. Should the local planning authority be minded to grant consent to a planning application, there remains the possibility that it might be called in by my right hon. Friend the Secretary of State for the Environment, Transport and the Regions for his own determination should it be thought to raise matters of more than local importance.

Last October, we set out land use planning policy on transport, including park and ride, in our consultation draft PPG13 on transport. That emphasised the need for park-and-ride schemes to be introduced as an integral part of the overall planning and transport approach for an area. They should be in the local transport plan, and based on a thorough assessment of travel impacts, and should also be in the development plan and consistent with the strategic context of the regional transport strategy.

In his speech on 13 December, which set out the Government's vision for transport policy, my right hon. Friend explained that the final version of PPG13, which is due out this year, would give priority to well-designed and well-conceived park-and-ride schemes. We are currently examining the responses to our public consultation on PPG13 and aim to publish the final version in the summer.

We are keen that local authorities should consider allocating sites for interchange in their development plans, for example, park-and-ride schemes to town centres and at bus and rail stations. I am aware that GNER objected to the deposit draft of the Hertsmere local plan on the grounds that it failed to support proposals for improvements to passenger services on the east coast main line and, in particular, the provision of a parkway station on land to the north of Hadley Wood. A public inquiry into the local plan was held last year and the inspector's report is still awaited. When it is received, Hertsmere borough council will consider the inspector's recommendations and decide whether any modifications to the plan are required. Those will then be published and the public will have an opportunity to express their views on the merits of the proposed modifications.

I reiterate that GNER's proposal must be regarded for the present as an option, not a firm and agreed package that can be implemented without further consultation. There is a process still to be gone through in which the planning, transport and wider environmental implications would need to be thoroughly considered. I hope that my hon. Friend the Member for Enfield, Southgate is reassured that any decisions will be taken only after the most careful consideration.

Question put and agreed to.

Adjourned accordingly at four minutes to Two o'clock.