What assessment he has made of the impact of the changes to the working families tax credit announced in the Budget.[116600]

Three million people have now inquired on our special telephone line about working families tax credit. There are already 1 million families with children receiving the new working families tax credit, including almost 100,000 receiving the child care tax credit. Following the changes that I announced in the Budget, the minimum income guarantee for a family with someone in full-time work will be £207 a week from June this year—£80 more than the family would receive on income support—and it will be £214 a week from April 2001. Taking all our measures together, the changes introduced since 1997 will lift 1.2 million children out of poverty.

I thank my right hon. Friend for that answer. I know that the extra help will be warmly welcomed by more than 2,000 lower-paid families in my constituency, Conwy. Does he share my sadness that the Conservative party has learned so little that it would scrap the working families tax credit and thereby bring back the despair, distress and heartache felt by so many hard-working families before the general election of May 1997, after 18 years of a Tory Government?

I am grateful to my hon. Friend. Not only are 60,000 people in Wales benefiting from the working families tax credit, but in almost every constituency in the country there are at least 1,000 families who are now receiving, on average, £24 more per week. Abolition of the measure would mean a tax rise of £24 a week for working families. I do not think that any party should contemplate that.

The response to the working families tax credit is quite different from what the Opposition predicted. Three million people have inquired about it and 1 million people are on it. I believe that more people will want to join it. We are achieving two things: we are making work pay, and we are taking children out of poverty.

I know that the Chancellor likes to swagger and boast about the working families tax credit, but if it really is the greatest thing since sliced bread, as he claims, why is he proposing to abolish it? Having made such play of the fact that it should be paid through the wage packet, why is he proposing that the replacement benefit should be paid to the carer? Is it not the case that, for such a clever fellow, the Chancellor has got himself into a complete muddle and has made the benefit an unholy mess?

We are doing what should have been done years ago. We are making work pay for working families. I take it—[HON. MEMBERS: "Answer."] Opposition Members will listen. I take it from the shadow Chancellor's remarks that the next Conservative Government, if there were one, would abolish the working families tax credit. What the shadow Chancellor must now explain—[Interruption.]Opposition Members are very restive this morning. They are clearly on edge about a measure that is popular within the country.

We will expand the working families tax credit by creating an integrated children's credit and an employment credit. We will achieve two things: first, we will make work pay and, secondly, we will tackle child poverty.

I should have thought that the shadow Chancellor would think twice before wanting to abolish the benefit. In the Sunday Times of 20 September 1998, he stated:

Conservatism has become inextricably connected with uncaring social attitudes, selfish behaviour and sleaze. Of course it should be apologetic for mismanaging the economy.

Those are his words.

Why does not the Chancellor of the Exchequer answer the question? If the benefit is so good, why is he abolishing it? If it is so important that it is paid through the wage packet, why is he going to change it so that it is paid to carers? It is all very well him preening himself on the working families tax credit; does he not do that because he wants to obscure the real damage that he has done to hard-working families?

Is not the Chancellor less than honest when he speaks of the reducing tax burdens on families, when he knows that that applies only to a family who does not drink, does not smoke, does not drive, does not save, does not have a mortgage, is not married, does not have a pension and does not go on holiday? He knows that real families are not like that. He knows that the real position is that the average family now has to pay £670 more a year. Why will not the Chancellor be honest with us? Why does Mr. Toad have to be so slippery?

We will expand the working families tax credit; the Opposition are trying to abolish it. People will know at the next general election that the Opposition want to abolish not only the new deal and put thousands of people out of work, but the working families tax credit. That would lead to a tax rise of £24 a week. We know from last week's votes in the House that they did not support the first spending measure on the health service or the cigarette tax, which will provide £400 million. They would make working families worse off by cutting into health service expenditure. We are on the side of working families; the Opposition are the enemy of those families.

What estimate he has made of the impact which changes in savings limits will have on pensioner incomes. [116601]

If he will make a statement on his plans to increase the incomes of the poorest pensioners. [116614]

How many pensioners will benefit from the increases in the minimum income guarantee in Scotland. [116615]

An estimated 500,000 pensioners will gain an average of £5.05 a week as a direct result of the changes to the savings limit that I announced in the Budget. The minimum income guarantee will increase next week to at least £78.45 for the youngest single pensioners and £131.05 for pensioner couples aged 80 and above.

The minimum income guarantee benefits approximately 1.5 million pensioners, of whom 165,000 live in Scotland. In each area of the country, our take-up campaign is designed to ensure that more pensioners can benefit from the measures that are due to them.

Is my right hon. Friend aware that his changes have been widely welcomed in Yorkshire and Humberside? Thousands of pensioners will benefit from them. That is in stark contrast with the treatment of pensioners when the Tory party was in power. Will he assure me that the longer-term review that he announced will have at its heart a commitment to ensuring that pensioners who have saved a little and perhaps have a small income will be rewarded, not penalised?

I am grateful for that question, because we will publish a discussion document on a new pensioner credit to help exactly that group of pensioners, whose savings and modest occupational pensions should not penalise them by preventing them from receiving benefits that are due to them. Again, I believed that all parties would support that.

The measures that we introduced in the Budget and in previous Budgets, such as the winter fuel allowance, which will increase to £150, free colour television licences for 3 million pensioners, which will be introduced in November for those over 75, and the minium income guarantee, which relieves poverty, mean that 1 million pensioners are approximately £1,000 better off than they would have been under a Conservative Government. We are keeping our promises to pensioners, and we shall do more.

People understand from the events of the past week, especially from the statements of the Opposition social security spokesman, that the Conservative party will not even guarantee to keep the winter fuel allowance for pensioners. So much for talk of a caring attitude. The shadow Chancellor was right; the Conservatives are guilty of selfish attitudes yesterday, today and tomorrow.

I welcome the increases in the minimum income guarantee, but does the Chancellor accept that some people will not claim it? He has announced many measures that have already been introduced for pensioners, but many pensioners in my constituency complain about the small increase in the basic pension. Does my right hon. Friend have anything more to say to them?

Yes, we have followed the rules of inflation that the previous Government pursued in calculating the basic pension. From April 2001, we expect the basic pension to increase by £2 or more for single people and by £3 or more for couples, based on our forecast for inflation in September.

At the same time, we unfroze the income limits for the pensioners about whom my hon. Friend is especially worried. Those limits deprived 500,000 pensioners of the benefits of the minimum income guarantee. We raised the income limit from £3,000 to £6,000 and raised the total ceiling from £8,000 to £12,000. Those ceilings had been in play since 1988 and 1990. Nothing had been done under the previous Government. We have taken action to help those pensioners whose savings should not debar them from getting the benefits they are due.

I also welcome the fact that 165,000 Scottish pensioners will benefit from the minimum income guarantee, but I know that my right hon. Friend is well aware of the concerns among pensioners in my constituency of Ayr. In the Budget, I was pleased to hear about the review and the fact that the needs of pensioners with modest incomes who are above minimum income guarantee levels will also be examined. What opportunities will there be for pensioners in my constituency to have an input to the discussion document?

I hope that the pensioners in my hon. Friend's constituency and in all constituencies in this country will take up the benefits that they are due as a result of the take-up campaign launched by my right hon. Friend the Secretary of State for Social Security. We have raised the personal allowances for pensioners higher than the rates of inflation for those who pay tax, and 60 per cent. of pensioners no longer pay, or do not pay, tax. At the same time, we are determined to take more pensioners out of poverty and I believe that the combination of the minimum income guarantee, the winter allowance and the discussion that we are having about the pensioners credit is the right way forward. It is a scandal that more than 1 million pensioners were in poverty when we came to power. We are taking action.

Does the Chancellor regret having misled millions of pensioners on Budget day when he—

Order. Will the hon. Gentleman rephrase that sentence? I do not think that Chancellors mislead. We do not use that word.

Perhaps the Chancellor unintentionally misled. I shall refer to the text if necessary, but on Budget day he said that the changes in the savings limits for pensioners would take effect from next April. On Budget day, next April was April 2000. We now find that those changes will not take place until April 2001. As a result of the misuse of the English language, many millions of pensioners were misled.

First, 500,000 pensioners benefit from that measure. Secondly, they were not misled at all. All the documentation made the position absolutely clear, as did my speech. Thirdly, if the Conservatives are to resort to those tactics, they have very little to say to pensioners. The hon. Gentleman should congratulate us because 11,000 pensioners in his constituency will get free colour television licences as a result of what we have done, which the Conservatives would never have done.

As pensioners collect their measly 75p increase this week, might they not wonder exactly what the Chancellor and the Prime Minister meant when they wrote in the Labour manifesto that pensioners as a whole would share in the growing wealth of the economy? According to the Government's own figures in a parliamentary question this week, pensioners will get a lower share of the national economy this year than in the last year under the Conservatives.

I do not think that anybody will take lectures from the Liberal party. It never supported the winter fuel allowance; we introduced it. It never supported the minimum income guarantee; we introduced it. It never supported raising the savings limits; we have done that. The Liberals quote a House of Commons answer by my right hon. Friend the Minister of State, Department of Social Security, but it does not include free eye tests, the cut in VAT on fuel, what we have done on transport and what we have done to deal with the regulation of the utilities and to keep fuel bills down. The truth is that, by the end of this Parliament, pensioners will be getting £800 million more a year than they would have got even if we had raised the pension in line with earnings. The Liberal party said that the pension should be raised in line with inflation. It is being absolutely hypocritical.

Order. We use "hypocritical" no more than we use "misled" in the House.[Interruption.] Order. I am sure that the Chancellor will oblige the House by withdrawing "hypocritical".

I withdraw what I said. The Liberals have been unintentionally hypocritical.

Does the right hon. Gentleman not think that, when referring to all the measures that he has taken to help pensioners, he should also refer to the £5 billion raid on pension funds? Is it not the attack on pension funds that has done so much damage to the livelihood of pensioners? The right hon. Gentleman should not forget that.

The hon. Gentleman should be congratulating us on what we have done for the economy. The valuation of the assets held by pension funds has risen by about 60 or 70 per cent. since we came to power. That is no thanks to the Conservatives, who would have brought us back to boom and bust.

What steps he is taking to promote the new all-employee share plan. [116602]

A number of steps have been taken. A thousand company representatives have attended presentations around the country on the new all-employee scheme, and further training events are being planned for employers. The Trades Union Congress is working with us to inform employees, and Members of Parliament are being sent material to help them to explain the advantages of the plan in the course of their constituency work.

The scheme is fully supported by all trade unions. They have campaigned for it for years. Does my hon. Friend agree that it will greatly reduce the old "us and them" attitude that used to prevail among company bosses and their employees?

My hon. Friend is absolutely right. Encouraging employee share ownership enables us both to boost productivity and to promote fairness. We know from research that employee share ownership boosts productivity, but, as my hon. Friend pointed out, it also helps to ensure that the benefits of company success are spread fairly. The TUC has made an important contribution to the consultation, and I shall meet TUC policy officers this afternoon to discuss it.

The scheme is a clear example of our ability to build a modern economy and a decent economy at the same time.

When the Financial Secretary and his colleagues designed the brilliant new national insurance contribution for high-tech companies and their share prices, did they mean to tax success? Did they know that they were creating an unquantifiable contingent liability, which would appear on those companies' balance sheets? Are they aware that Oracle and other high-tech companies are now joining Cisco in the emigration queues, and what are they going to do about it?

As the hon. Gentleman knows, consultation is under way on employers' national insurance on share options. I am engaged in discussion with the firms affected about how best to solve the problem, and we expect to be able to present proposals sooner rather than later.

The hon. Gentleman mentioned Cisco. I am pleased to say that Cisco was an enthusiastic participant in a seminar that we had last week on how our welfare-to-work policies and programmes could be used to benefit the information technology industry. For that industry and, indeed, the whole economy, the economic success that we are currently enjoying is extremely good news.

Is my hon. Friend aware of the warm welcome given to the employee share ownership measures in the Budget by organisations such as ProShare, Capital Strategies and Job Ownership? Although the last Government talked a lot about employee share ownership, they delivered very little. Is that not the big difference? We have really broken through.

A number of organisations are helping to promote employee share ownership. Could my hon. Friend have a word with the Department of Trade and Industry? Perhaps it could get on to the bandwagon, through the Small Business Service and its other agencies, to promote employee share ownership as an important new economic development building a partnership economy, as opposed to the two-class economy that the Tories have always supported.

My hon. Friend is right. There has been wide support for the consultation on the new plan, in which many firms, organisations and trade unions are taking part. This is a partnership effort, and the wide welcome given by the Confederation of British Industry and others to the details of the plan announced in the Budget testifies to the success of our approach.

I welcome the Government's new enthusiasm for the long-standing Liberal policy of worker share ownership.

Does the Financial Secretary agree that the number of such schemes is so utterly derisory—1,750 companies are using them, out of millions—because of the convoluted, time-consuming procedures engaged in by the Inland Revenue in its valuation of unquoted companies? What does he propose to do to alleviate the problem?

We aim to double the number of companies that have an all-employee share scheme through the measures that we are taking. Many companies, particularly smaller ones, have welcomed the arrangements in the new plan. In finalising the details, we have taken account of the position of unlisted companies. They will particularly welcome the changes in the latest details that we have announced.

If he will make a statement on his plans to increase opportunities to learn about business in schools in unemployment blackspots, with particular reference to former coal-mining areas. [116603]

We are providing an extra £10 million in this financial year to enhance education-business link activities in England, including in high unemployment areas. On 11 May, we are launching Enterprise Insight, a campaign to inspire young people to follow careers in enterprise, which will focus initially on young people and high unemployment areas.

I thank my hon. Friend for that reply and welcome the initiatives that she has announced. I hope that, shortly, there will also be a welcome announcement on state aid to the coal industry. Is she aware of the work in schools such as Hemsworth high and Minsthorpe community college, which seek to bring together the education and business sectors in areas of long-term decline? Will she seek to build on that work? After all, the future regeneration of areas such as mine and those represented by many other hon. Members depends on today's younger people.

Yes, I certainly support the work in my hon. Friend's constituency and recognise its importance, as, I am sure, he recognises the importance of the work that the Government have done to raise standards of literacy and numeracy in schools, so that young people will be equipped for the world of work. I am sure that he recognises, too, the progress that we have made as a result of initiatives to reduce unemployment throughout the country.

In my hon. Friend's constituency, youth unemployment is down by 68 per cent. since the last election and long-term unemployment has fallen by 60 per cent. Those figures clearly show that business-education partnerships will be working in fertile territory in building for young people for the future.

Does the Economic Secretary regret that the Government's announcement that they will abolish training and enterprise councils will lead to the removal of business input to training, including in schools?

No, I do not regret the change. The TECs were strong in some areas, but discredited in others. A number of difficulties had arisen. Our initiative in that regard, coupled with the work of the new Small Business Service, will do only more to enhance support to small and medium enterprises throughout the country. When we set all that in the context of the fact that we are able to provide a stable economic climate in which business can flourish—unlike the boom and bust of the Tory years—we realise that those will make a positive contribution in a climate in which business can flourish and is flourishing.

On the question of coal mining communities, the hon. Lady might know that, on Tuesday, there was a substantial lobby of people from the various coal mining communities in the United Kingdom. The Welsh representatives, a cross-party group, were desperately worried about the absence of additional funding, or any commitment from the Chancellor to provide that, to secure objective 1 funding. Had he done something about it, the Prime Minister would not today have to be in the south Wales valleys, trying to shore up the haemorrhaging Labour vote.

Objective 1 status is a matter for the spending review. Obviously, the hon. Gentleman is forgetting the enormous progress that has been made in his constituency through the new deal in lowering both long-term and youth unemployment, and the initiatives that have already been launched in respect of the coal fields, which include new provision of £60 million over three years to fund the Coalfields Regeneration Trust and Coalfield Enterprise Fund. A further initiative, Network Space Ltd., has been established as a joint venture between English Partnerships and the private sector to provide workspace sites in former coal fields and to create yet more jobs.

How many families that qualified for the married couples allowance in 1999–2000 will not qualify for the child tax credit in 2001–02. [116605]

How many married couples will be liable for higher-rate tax as a result of the withdrawal of married couples allowance. [116607]

If he will make a statement on the impact on married couples reaching pensionable age after 6 April of his withdrawal of tax allowances to date. [116613]

As a result of the measures that we have taken in this and previous Budgets, pensioner households will, from next April, be on average £400 a year better off, and families with children will be on average £850 a year better off. The number of couples liable for higher rate tax as a result of the withdrawal of married couples allowance will be zero.

Why is the Minister congenitally incapable of answering the question on the Order Paper? As that answer bore no relation to my question, I shall tell him that, today, 10 million people lose the married couples tax allowance, and that, of those 10 million people, 5 million will not qualify for the child tax credit. Is the Minister proud to be part of a Government who have removed the last recognition of marriage from the tax system and a Government whose stealth taxes mean that the typical, decent, hard-working family is paying £670 a year more in tax? Does not the way in which this Government are robbing the family make Maxwell look like an amateur?

The Budget's success has clearly upset Conservative Members. My colleagues and I are proud to be members of a Government who are focusing resources on families with children and tackling the obscenity of the extent of United Kingdom child poverty which we inherited from the previous, Conservative Administration. The fact is that 5 million families will benefit from the child credit. Moreover, from next week, people will see the record increase in child benefit—£15 for the first child and £10 for others. From June, they will see the increase in the working families tax credit—£4.35 extra for a child under 16. From next April, they will see the children's tax credit of £8.50 a week. Families are benefiting from those measure because we are a Government who are working hard for hard-working families—whereas the previous, Conservative Government consigned millions of children to poverty.

Madam Speaker, do you think that the Chief Secretary's failure to answer question 7 was intentional or unintentional? The question is quite simple, and the answer has to be a number. I have asked the question twice before, but twice before the Chief Secretary has failed to give me the answer. How many families is it? My hon. Friend the Member for Chesham and Amersham (Mrs. Gillan) says that it is 10 million. Is it 10 million? Is the right hon. Gentleman ashamed to say the answer?

The hon. Gentleman not only did not listen to my answer, but seems not to have read his own question. His question was to ask the Chancellor of the Exchequer:

How many married couples will be liable for higher—rate tax as a result of the withdrawal of married couples allowance.

I gave him the answer: it is zero.

Are not the Chief Secretary and the Chancellor, in their Budget tax increase, which is effective today, also hitting 200,000 pensioner couples who this year will lose the married couples allowance? Will not those couples each be up to £500 a year worse off? Is not the Government's policy hitting hardest those who, in the Chancellor's phrase, are "most prudent" and have made some provision for themselves?

It is very important on this question to underline that those pensioners who get the married couples allowance have not lost it as a consequence of our changes. Moreover, those who become pensioners from today will benefit not only from the higher rate of personal allowances, but from the introduction of a £150 winter allowance—which Conservative Members would take away from them—and a lop tax rate on savings which we have introduced and which benefits 1.5 million pensioners. The minimum income guarantee for the poorest pensioners will give 1 million poor pensioner couples £1,000 a year more than they were receiving under the Conservatives.

The people of Eccles and Salford welcome my right hon. Friend's answer. The situation is a great improvement on what the Tories left. Does he agree that he should take no lessons from the Liberals, who were irresponsible in the city of Salford by suggesting an illegal budget, supported by their leader?

I welcome my hon. Friend's support. He is right that we should accept no lectures from Opposition Members. However, we cannot let the issue go without mentioning that when the current shadow Chancellor was taking the axe to the married couples allowance, he said:

We have considered the tax system and chosen the allowances that appear to have the least on-going justification or to be the most anomalous.—[Official Report, Standing Committee A, 22 February 1994; c. 348.]

Those are the words of the Conservatives.

Does my right hon. Friend agree that any political party needs credibility on taxation? Does he also agree that to promise to cut taxation year on year, regardless of economic circumstances, while at the same time promising to match our huge spending commitments to schools and hospitals is not only incredible, but the most sure-fire way of returning to the economics of boom and bust? If one believes recent newspaper articles, it is a policy with which even the shadow Chancellor does not agree.

Absolutely. The last time that the Conservatives made similar promises, they broke them all. They brought in the 22 tax rises and put VAT on fuel when they promised not to do so. Their sums do not add up. They cannot promise the so-called tax guarantee and at the same time say that they will maintain our levels of health spending. When they had the chance on the Budget, they refused to vote for the first £400 million for the health service from the tobacco tax.

What recent representations he has received on the level of petrol duty. [116606]

Before the Budget, Treasury Ministers received a number of representations about the level of petrol duty. Representations were received from the AA, the RAC and the Petrol Retailers Association. In addition, many private individuals contacted their Members of Parliament, who then wrote to Treasury Ministers on their behalf.

The Paymaster General will recognise that all those people will have been gravely disappointed by the outcome of the Budget. Will she confirm that the average motorist is now paying more than £200 extra a year in petrol tax under Labour? Does she not realise that for many people, particularly in rural areas, a car is essential, not a luxury, as it is for her? Does she further agree that with the regrettable closure of banks and other rural services, old people are being put at a grave disadvantage, with inadequate means to support a car?

I am glad to see the hon. Gentleman in the House. I remind him that his party introduced the escalator. In the Budget we made no real increase in the level of petrol duty—the lowest increase for nearly a decade. The Conservatives failed to match that in government. I take his concern for people living in rural areas with a pinch of salt, because when the Conservative Government had the opportunity to act, they failed to do so.

I welcome the decision to have no real increase in petrol duty this year. Will my hon. Friend take this opportunity to confirm that much of the recent price rise in petrol has been a result of profit taking by oil companies, perhaps including the oil exploration company Kerr McGee, to which the shadow Chancellor is a paid consultant?

The world price of oil has clearly contributed to the rise in prices at petrol pumps. That is outside the control of the Government. The AA welcomed the Budget, for the first time in a decade. It particularly welcomed the £280 million investment in the transport fund and the fact that there was no real increase in the price of petrol

Will the Minister explain why the penal rate of tax on vehicle petrol is justified on environmental grounds—presumably to discourage use—when the Government reduced the tax on domestic fuel, which causes even more pollution?

I am slightly surprised that the right hon. Gentleman seems to be staking out a policy on behalf of the Opposition for raising VAT on domestic fuel and returning to the habits of Conservatives when in government, which the shadow Chancellor continually denounces. The Opposition need to make up their minds. Do they or do they not agree with reaching the Kyoto targets? Do they or do they not agree that we should have environmental obligations? If they do, will they explain why they oppose every measure to meet these obligations and deny all the steps that they took to take us further away from them?

I welcome the removal of the fuel escalator—without doubt, its removal was welcomed throughout the country—but those of us who represent rural areas wish to see a way forward to reduce the cost of travel within our areas. Between now and the next Budget. what policies can be brought forward to make petrol cheaper and to ensure that rural petrol stations continue to survive?

I remind my hon. Friend that the Government took note of the particular problems for those living in rural areas and the transport difficulties that they experience, first with the transport fund and secondly with the reduction in vehicle excise duty, especially for the owners of smaller vehicles. The Government's policy across vehicle excise duty, petrol prices and investment in transport offers a balanced way forward both for those who live in rural areas and for those who live in our cities.

Will the Minister confirm that by using the little trick of raising petrol duty by an inflation index of 3.4 per cent. in comparison with the 1.2 per cent. inflation index for personal allowances, the Government have levied a further £500 million of tax on British working families?

I think that I am right in saying that the hon. Gentleman has never been in government, so I suppose he can be forgiven for not knowing how the tax system works. The methodology used for this year's increase is exactly the same as that which has been used in previous years. It is the same methodology that the Conservative Government used.

What progress he has made in securing matching public funds for EU objective regions. [6608]

Discussions are under way between Government and the English objective programme partnerships about identifying the match funding which regions need. Officials from the Department of Trade and Industry are taking the lead. My right hon. Friends the Minister for Trade and the Minister for Local Government and the Regions have undertaken to meet again the all-party parliamentary group on objective to discuss progress. I would describe that progress as very encouraging.

In the unseemly scramble to claim credit for securing objective status, will the Minister agree that there is an urgent need to ensure that there are adequate public match funds in place? Given that his colleagues in both MAFF and the DTI do not have sufficient and adequate match funds and that there are three other Government Departments with responsibilities in this area, does he agree that it is imperative that the Treasury steps in, takes the lead and at Cabinet level ensures that this golden opportunity is not mishandled?

As I have made clear to the House previously, we are in touch with all the Departments concerned and in close discussions as part of the spending review. My right hon. Friend the Minister for Trade, who wrote to the partnerships on 24 March, was able to report good progress on precisely the issues that the hon. Gentleman is raising. There is progress on helping partnerships to identify a full range of match-funding sources, exploring the possibility of adjusting matching rates between programme measures and years; the use of some regional selective assistance as match funding; MAFF funding; on-going discussions with the Commission on increasing the flexibility between the private and public sector contributions to match funding; and the announcements in the Budget of the venture capital fund; which will greatly assist the regions, and also the £50 million for clusters. I can assure the hon. Gentleman and other right hon. and hon. Members who are concerned about objective 1 in the English regions, west Wales and the valleys that every effort is being made in government to ensure that match funding is secured.

I congratulate my right hon. Friend and other Treasury Ministers on the work that they have done over the past few months to resolve the immediate problem of match funding for objective 1 structural funds. However, does not he agree that the long-term problem can be resolved only by changing the Treasury rules, achieving more joined-up government and finding more inventive ways to ensure that we do not have to look for match funding every year?

I thank my hon. Friend for his support for what we have achieved with regard to objective 1 funding. We should not forget that it was the Government's success at Berlin and subsequently that secured objective 1 boosts for Cornwall, south Yorkshire and Merseyside worth £300 million, £700 million and more than £800 million, respectively.

We are continually looking at how we can improve the arrangements for securing match funding but, as I said, I am greatly encouraged by the progress that we are making. I shall keep in close touch with my hon. Friend, and with other hon. Members who are concerned about this matter, to ensure that the regions get the benefit that they need and which they were denied by the Conservative Government.

If he will make a statement on corporate tax rates (a) in the UK and (b) in other European Union countries. [116610]

Our main rate of corporation tax is the lowest among the major industrialised countries and our small companies rate is one of the most competitive in the European Union. We have cut both by three percentage points since taking office. I am pleased to say that our new starting rate of 10 per cent., which was introduced this month specifically for small companies, is the lowest rate in the EU. About 270,000 companies will benefit from the starting rate. By means of that and other measures, we have established a stable, low-rate, competitive tax environment, in which business can thrive.

On behalf of the business community in my constituency of Hamilton, South, may I thank my right hon. Friend for his promotion of business-friendly policies. Does he agree with the director of the Institute of Directors who, the morning after the Budget, said that the Government were creating an enterprise culture in this country? Does he also agree that the Conservative Government's policy of increasing taxes, promoting boom-and-bust economics and amassing large debts created bad conditions for business?

I thank my hon. Friend for his welcome for the measures in the Budget. He is quite right: the Institute of Directors applauded the Budget for what it did to establish an enterprise culture. Those measures include our capital gains tax reforms, the lop tax rate, the shortening of the tapers, the help for unquoted companies and the promotion of employee share ownership, which we discussed earlier.

It was, indeed, a Budget for enterprise. It will foster stability, to replace the boom and bust that did so much damage under the Conservative Government.

Under this Government, business in this country has learned the hard way that, behind the headline rate of corporation tax, there is a barrage of stealth taxes. Why is the share of national income taken in business taxes in this country now twice what it is in Germany or France?

That is absolute nonsense, given all the charges that business in Germany and France has to pay. Instead of talking down this country and its achievements, Conservative Members should be praising the amount of European Union investment into this country. They should acknowledge that, thanks to the enterprise culture that the Government have fostered, inward investment into this country rose by 32 per cent. last year, and that the stock of inward investment in the United Kingdom has risen by 60 per cent. since the general election. Business has given the Labour Government a vote of confidence, in contrast with the economic failure of the previous Conservative Government.

When he will next meet the CBI to discuss its reactions to his recent Budget and the assistance that it gives to the manufacturing sector. [116612]

I regularly meet with the Confederation of British Industry and other bodies. Our Budget measures for manufacturing include making permanent capital allowances, introducing a new research and development tax credit, introducing a regional venture capital investment fund of £1 billion, 100 per cent. capital allowances for new technology, the continuation of the lowest corporate tax rates for small businesses and large companies of any of the G7 countries and, of course, the maintenance of economic stability.

Is my right hon. Friend aware that businesses up and down the country are grateful not only for the Budget for business but for the three Budgets that he has introduced, which have been very good for our economy? Is he also aware that British business is responding by trying to reach higher levels of productivity, and is gradually succeeding? Businesses will also be very pleased at today's announcement that there will be no rise in interest rates, as they are still very concerned about the value of the pound against the euro.

The Government's policy is for stability and steady growth. That is achieved by having monetary and fiscal stability. I will continue to support the Bank of England in the decisions that it makes.

Manufacturing output is rising and productivity has risen by 5 per cent. Although I recognise the difficulties caused for manufacturing by the strength of the pound against the euro, the industry is not only responding but winning in many of our world markets.

I welcome the steps that have been taken to help industry, but will the Chancellor acknowledge that the textile industry in particular is under tremendous threat? Have there been any specific discussions with the Department of Trade and Industry and representatives of the textile industry to protect one of our basic industries, which has provided employment for our people for generations?

I understand the issue that the hon. Gentleman raises about the textile industry in Northern Ireland and the whole of mainland Britain. The measures that we have taken in the Budget, such as making permanent the 40 per cent. capital allowances, will be of benefit to textiles and other manufacturing industries. I know that that is what the CBI and other organisations, including the British Chambers of Commerce and the Institute of Directors, were pressing for, and it has been achieved under a Labour Government. I also know that for companies in the textile sector which are innovating and bringing forward new products and processes, the research and development tax credit—which will be worth £150 million and available even before profit is made from these inventions—will be of help. For companies which invest more, the regional venture capital investment funds will help Northern Ireland as well as mainland Britain.

Does my right hon. Friend agree that while some sections of the textile industry are suffering, Scotland has very successful garment and fashion businesses? Does he also agree that although all the fiscal measures that he has introduced help the manufacturing sector, the manufacturing sector is also helped by the education and training that provides a skilled work force and a healthy community?

Our policies for education, which are raising standards in schools, are essential for creating the modern skills base that industry needs. In addition, with the CBI, the Institute of Directors and the British Chambers of Commerce, we are launching a national enterprise campaign that will link businesses to schools. A thousand business ambassadors will help young people learn about commerce and business for the future.

On the future of business, my hon. Friend will welcome the fact that, whereas 1.2 million businesses were employing people when we came into power, there has been a 10 per cent. growth during our time in office. There are now 800,000 people in jobs who were not in jobs in 1997. We are continuing to pursue a policy of employment opportunity for all. Economic stability is our policy—we will not allow Britain to return to the boom and bust of the Tory years.

Will the Chancellor take the CBI's advice on IR35? Four weeks ago, the Paymaster General criticised the Conservative party for standing up against the IR35 stealth tax on Britain's high-taxed, high-tech entrepreneurs, but has the Chancellor read the report in Tuesday's Evening Standard, headlined: "Tax climbdown on way as IT experts quit UK"? Will he confirm that he is under pressure from the e-commerce tsar, Mr. Allan, and from the Minister for Small Business and E-Commerce, to change his stance by easing up on IR35? It is not only the Conservative party that says that he is wrong—his own party thinks so too.

No, we are not under pressure from either of the people mentioned by the hon. Gentleman, who clearly has no documentary evidence to prove what he says. It is interesting that the Conservatives say nothing about the basic rate of tax, or the 10p starting rate, or the lowest corporate tax rates in Europe, or the lowest small business tax rates. They are, however, very interested in tax avoidance. I have often thought over the past few days that the only tax credit that interests the Conservatives is a tax credit for Lord Ashcroft of Belize as he comes back to this country.

We published our measures on IR35 last April, and they were followed by a discussion period and a consultation document. We made our decision last summer, and it was the right decision. Everyone should pay a fair rate of tax, and there should be no tax avoidance. It is about time the Opposition supported fair tax.

What has been the total sum paid from the Contingency Fund for the Gulf War operations. [116616]

No advances have been made from the contingencies fund this year in respect of Gulf war operations. I can also confirm that there have been no claims during the current financial year on the Departmental expenditure limit reserve in respect of operations in the Gulf. Any on-going Gulf related expenditure is met from within the Ministry of Defence's budget.

Has the Chief Secretary any figures for the annual cost of our Iraq commitment?

I do. As a direct result of operations in the Gulf since the conflict began in 1990, the estimates were as follows: for 1999–2000, £30 million; for 1997–98, £16 million; and for 1996–97, £6 million. The total since 1990 is £580 million, and I shall give my hon. Friend the details for the other years.

If he will make a statement on measures in his Budget to boost seaside arcade businesses and support the amusement machine industry.[116617]

The Budget introduced a package of reform for amusement machine licence duty, which will reduce tax revenue in the first year and be neutral in the longer term. It targets extra help on seaside arcades. A new exemption from duty for 10p small prize amusement machines has been particularly welcomed by those concerned about seaside tourism.

Sober-suited business men seldom dance in the streets, but one or two in my constituency came close to doing so on Budget night because it is home to seaside arcades, suppliers of amusement machines and the world's two leading manufacturers, whose businesses were secured by what the Government did. Will my hon. Friend build on the good will thus created by ensuring that he meets at least annually with trade organisations for the industry so that they may discuss future opportunities for revenue raising and identify weaknesses in the industry so that we may continue to support it?

I have, of course, met representatives of the industry, and should be happy to do so again in the run-up to future Budgets if representations are made to me. My hon. Friend is absolutely right to say that our changes have been particularly welcome at the seaside and to manufacturers of machines. The gain is for machines with non-cash prizes, which are popular at the seaside, rather than for cash-prize machines. As we often do, we listened to representations from the industry and acted on them. I am pleased to hear that people are dancing in the streets as a result.

The Liberal Democrats are pleased with the concession for small prize machines—a proposal tabled during progress on last year's Finance Bill by my hon. Friend the Member for Twickenham (Dr. Cable) and me. I am glad that the Government have accepted another Liberal Democrat idea, which will help British Legion branches, working men's clubs and even Conservative clubs. Given the number of pensioners who use such clubs and such machines, will the hon. Gentleman make representations to the Chancellor to improve pensioners' incomes rather than persisting with this month's measly 75p increase?

The changes we are introducing are good news for machines in social clubs as well. I pay tribute to all my hon. Friends who have made representations on behalf of seaside tourism in particular.

I beg to move amendment No. 13, in page 24, line 23, leave out from "imprisonment" to "or" in line 24.

With this it will be convenient to discuss the following amendments: No. 14, in page 24, line 48, leave out from "imprisonment" to "or" in line 1 on page 25.

No. 15, in page 25, line 26, leave out from "imprisonment" to end of line.

I am somewhat concerned by the remark made in business questions by my hon. Friend the Member for New Forest, West (Mr. Swayne) about the very Back Benches and wonder whether I am sitting in an unfortunate place. However, I hope that the distinction is not meaningful.

I should first declare my interest as the Bill and these amendments in particular apply to me as a member of the Regular Army Reserve of officers.

So far, the way in which the Bill has been considered has done no credit to the Government and their supporters. On Second Reading and throughout the Committee stage, only one substantive contribution was made by a Labour Back Bencher, and that was the Chairman of the Select Committee on Defence, which had conducted an inquiry into the Bill.

That is clearly a record that Labour Back Benchers wish to maintain—not a single one is present now.

My hon. Friend anticipates what I was about to say. Not one is here.

There is one.

But she is the Minister's parliamentary private secretary.

I am, of course, delighted that the Minister is supported by her parliamentary private secretary.

A Liberal Democrat is present, and we are very glad to see him.

I thank my hon. Friend for giving way, because he has given me an opportunity to apologise to the hon. Member for Hereford (Mr. Keetch), whose name I took in vain in Committee when I said that he was present very rarely. The hon. Gentleman had not told me or the Committee beforehand that, unfortunately, he would be in hospital. If he had told us, we would probably have been gentler with him.

I thank my hon. Friend for what he has said.

So far, the Government have accepted none of the amendments that my hon. Friends and I tabled in Committee. Most of those amendments were designed to improve the Bill, and to reduce the substantial burden that it will impose on the armed forces. The problem with the Bill is that it is riddled with peacetime assumptions about—

Order. I remind the hon. Gentleman that the amendments stand in his name. He is now embarking on a Third Reading speech, whereas he should be dealing with his amendments in detail.

I am grateful for your guidance, Madam Speaker. I am about to deal with the amendments.

The amendments are concerned with the Bill's effect on both peacetime operations and full operations in time of war. They attempt to improve the Bill, and to allow it to cover all the circumstances in which it will have to operate. I am thinking particularly of circumstances in which people are involved in wartime operations. In such extreme circumstances, the last thing the authorities want to do is detain people. I envisage circumstances in which people have been, in effect, remanded: they are not in custody, but they have a duty to turn up to face trial when required to do so by the authority concerned—in this instance, the judicial officer or the judge advocate.

The problem with the generality of the Bill—on which my amendments focus—is that it makes a number of assumptions about how the military operates. It assumes that we permanently deploy our military in times of peace, or in operations short of war. As Brigadier Ritchie made clear in his evidence to the Select Committee, the last thing the authorities want to do is detain people in the extreme circumstances of wartime, because it consumes resources; but they will want to be pretty sure that those concerned will turn up to face trial. The simple purpose of my amendments is to ensure that, if people fail to turn up, the court martial system can impose appropriate sentences.

1.15 pm

Under the Bill, the sentence is limited to a maximum of two years' imprisonment, which is for going absent without leave, but, in the most extreme circumstances, the accused may be told that he will not be detained because of lack of resources. If he then fails to turn up, it can be an offence equivalent to desertion; if it is an offence equivalent to desertion in the face of the enemy, it is clearly a most serious offence. The simple purpose of the amendments is to remove the two-year limit, so that, effectively, the court can produce a punishment that meets the seriousness of the situation. That would mean that the Bill would suit all circumstances during operations of the greatest seriousness and in time of peace.

I tabled the amendments in Committee. I am grateful that you have selected them again, Madam Speaker, because in Committee the Minister seriously misunderstood their effect. He said:

The purpose of the amendment, which would reduce the punishment that a court martial can impose on an accused for failure to appear at a hearing, is unclear.

That is not the case—the punishment is increased as the amendments would remove the limit.

When the Minister was considering whether to accept or reject the amendments in Committee, he clearly misunderstood their effect, or was misdirected by his officials. I hope that tabling them on Report will give him the opportunity to reconsider his position.

There was a second serious misunderstanding by the Minister: he misunderstood the Army Act 1955, the Air Force Act 1955 and the Naval Discipline Act 1957. Where clause 5(2)(b) applies, the accused,

if he is subject to military law only by virtue of section 131 or 205(1)(ea), (eb), (g) or (h) of this Act—

the Army Act 1955—

may be required to comply.

The Minister clearly had been directed only to what was meant by section 131, not to what was meant by section 205. In his guidance to the Committee, he said:

The clause will not apply to personnel who are still serving; it will apply only to those who have left service but who are subject to a charge from a previous period of service.—[Official Report, Standing Committee D, 2 March 2000; c. 100-01.]

That is not the case.

Section 205 of the Army Act and the equivalent sections in the other Acts make it clear that the measure applies to every officer of the Territorial Army who is a special member when in permanent service, when in full-time service or when undertaking any training or duties. Subsection (1)(eb)—which applies to me—applies to every officer of the Army Reserve when in permanent service, when in full-time service, when undertaking any training or duty or when serving on the permanent staff of the Army Reserve. Similar subsections apply to warrant officers, non-commissioned officers and men of the three services.

I hope that the Minister has had a chance to reconsider the facts. On his advice as to how the law stood, I withdrew the amendments and did not press them in Committee. I am sure that that is why you have given me the opportunity to raise the matter again on Report, Madam Speaker.

These simple amendments improve the Bill and enable it to operate in all circumstances, in both peace and war, which was what we were aiming for in Committee. I regret that, in arguing for other amendments in Committee, we failed to convince the Minister. There were rather more Labour Members supporting him in Committee than are present on Report.

Nevertheless, I hope that the Minister has listened to my argument, and that he will be able to reconsider his position and break his duck in amending the Bill.

I am grateful to my hon. Friend the Member for Reigate (Mr. Blunt) for tabling this group of amendments, which gives the Minister an opportunity to clarify the position. In Committee, we were almost wholly constructive in our opposition. Although we had our moments—a frisson—now and then, those were an attempt to clarify an immensely complicated system of law. People do not really understand the complexity of the three services Acts, each of which has slightly different interpretations and presents slightly different challenges in being applied to the legal system.

My hon. Friend has drawn attention to the difficulty of imposing any law on the battlefield—or in theatre in anticipation of battle, or, increasingly, in a peace-enforcing or peacekeeping role—and to the fact that we really have to be very precise about what we are asking our commanding officers and courts martial or other courts to do. I look forward to hearing the Minister's comments in clarifying the situation, which certainly was not clear in Committee.

I am sure that the House would expect me to comment on two recent incidents in Northern Ireland before I reply to the debate.

This morning, there was an explosion at Ebrington barracks, Londonderry. This further attack on the security forces is reprehensible. Fortunately, no one was injured. It is yet another crude and cynical attempt by a small number of people to disrupt the peace process by the use of violence. We cannot let them succeed. Investigations into the incident are continuing, and I am not at liberty to comment on it any further.

I was also very sad to learn of the non-terrorist-related deaths of two soldiers and the injury of one other while carrying out operations on Lough Foyle. The circumstances of that tragic incident will be the subject of a thorough investigation. Meanwhile, our thoughts and deepest sympathy are with their family and friends.

rose—

May I associate the Opposition with the Minister's remarks? The attack highlights the danger in which our soldiers—all Her Majesty's forces—are placed while we take for granted the peace in which we live. Many of us have visited our forces in Northern Ireland—indeed, in Londonderry—and I know the dangers that they face daily, even when we think it is peaceful.

May I also associate the Opposition with the sympathy expressed by the Minister for the soldiers who have died or been injured on Lough Foyle and for their families? It is a tragic part of service life that they are prepared to pay the ultimate sacrifice.

I shall give way to the right hon. and learned Member for North-East Fife (Mr. Campbell).

I am grateful. May I associate myself with the expressions of sympathy that have just been made by the official Opposition spokesman? On the first incident, although I do not expect the Government to comment in detail on matters of security, would the House be entitled to assume that, in the event of an incident of the type that the Minister has described, there would thereafter be an immediate review of the necessary precautions to assure the safety of armed forces personnel serving in Northern Ireland?

Yes. I can assure the right hon. and learned Gentleman that that is the case.

I had not intended to intervene, but as the Minister mentioned the first incident, and following the statement of my hon. Friend the Member for Salisbury (Mr. Key) on behalf of the Opposition—

Order. I am not prepared to have a debate on the matter, as we are in the middle of consideration of the Armed Forces Discipline Bill. Proper respect has been shown in relation to the Minister's statement by spokesmen on both sides of the House. I call Dr. Moonie to deal with the amendments.

On a point of order, Madam Speaker. With respect, I was about to ask the Minister a question about the consequences of today's incident, and whether he would urge his colleagues in the Northern Ireland Office, at the earliest opportunity, to make it absolutely clear who were the perpetrators of the incident—the Provisional IRA or a splinter group. The answer has a huge bearing on the armed forces and on the way we may have to deal with the matter in Northern Ireland.

The hon. Gentleman's point will have been noted by Ministers. However, as I said, in the middle of our consideration, I am not prepared to take statements on the matter from both sides of the House. Due respect has been shown by hon. Members of the two main Opposition parties.

On a point of order, Madam Speaker.

Does it relate to the same matter?

Yes.

In that case there is no point of order.

rose—

Order. Dr. Moonie will proceed. We are considering the amendments.

Perhaps it would help the House if I explained in some detail the purpose of the clause. I am sorry to disappoint the hon. Member for Reigate (Mr. Blunt), but I do not think that I shall be able to accept his amendments.

The offence created by new section 75J(3) of the Army Act 1955, which will be inserted by clause 5, applies only to persons who are not ordinarily subject to service law other than for the purposes of trying the offence with which they are charged. The first category caught by the new offence is those being tried under the service discipline Acts for an offence committed while they were subject to service law. A simple example of people in that category is ex-regular soldiers. Section 131 of the Army Act 1955 and of the Air Force Act 1955 and section 51 of the Naval Discipline Act 1957 provide that such former service personnel remain subject to service law, but only for the purpose of arrest, custody and trial, although they have ceased to be subject to it generally.

The second category is described in the four paragraphs of section 205(1) of the Army Act 1955, which is sufficient illustration of the three Acts. The category includes every officer of the Territorial Army who is a special member when in permanent service, in full-time service or undertaking any training or duty, whether in pursuance of an obligation or not. I stress the word "special", because those officers constitute a specific category of Territorial Army officer and are to be distinguished from ordinary Territorial Army officers, who are subject to service law at all times and do not fall within the groups that we are discussing. I shall elaborate in a moment on the various definitions, such as permanent or full-time service if hon. Members wish—or perhaps I shall just do it anyway.

The others covered by the offence are: every officer of the Army Reserve when in permanent service, in full-time service or undertaking any training or duty, whether in pursuance of an obligation or not, or when serving on the permanent staff of the Army Reserve; every warrant officer, non-commissioned officer and man of the Army Reserve when in permanent service, in full-time service or undertaking any training or duty, whether in pursuance of an obligation or not, or when serving on the permanent staff of the Army Reserve; and every warrant officer, non-commissioned officer and man of the Territorial Army when in permanent service, in full-time service, called out for home defence service or undertaking any training or duty, whether in pursuance of an obligation or not, or when serving on the permanent staff of the Territorial Army.

Permanent service is when someone is called out under the provisions of the Reserve Forces Act 1980. Full-time service is when they enter a commitment to work full-time for the services. Undertaking any training or duty refers to the minimum number of days that they are obliged to undertake by virtue of their membership of a reserve force. They can volunteer for additional duties if they wish. Persons on the permanent staff are known as non-regular permanent staff. They are similar to reserves who have signed up for full-time service, but the terms and conditions differ slightly.

The distinction between different types of volunteer reserve officer arises from the creation of a new category of reserve—those who enter employee agreements under part V of the Reserve Forces Act 1996. They are referred to as special members. The 1996 Act enables civilians to work in support jobs that would require their services in operations. Persons taking up those jobs agree as an employment term that the post includes a liability for call-out and training. They become a special member of the reserve force.

Because the call-out liability is related to the job and the people concerned are not volunteer reservists in the ordinary sense, they are not subject to service law at all times as an ordinary reserve officer would be. We are satisfied that regular soldiers or serving commissioned officers who are released from custody pending trial can be given a lawful order by their commanding officer to attend a future hearing. A subsequent failure to attend could result in such service personnel being charged with a service offence.

However, individuals who fall outside that specific but large category of personnel are not necessarily subject to the commanding officer's command and control at all times prior to the trial. Accordingly, in relation to these other individuals, it is necessary for the Bill to create an offence for non-attendance at a hearing after being released from pre-trial custody. In our view, without having specific provision for these two categories of personnel, the Bill will be defective in that such personnel could never be sanctioned for not attending any subsequent hearing. I think that that deals with the second point made by the hon. Member for Reigate about the categories of person that are involved.

Perhaps the Minister could illustrate the position by reference to me. I am on the regular Army Reserve of officers. If I am called out by Her Majesty's Government on permanent service, presumably section 205(1)(eb) would refer to me. I presume that if I were on permanent service, I would be called out only if something extremely serious had happened, such as war. Let us say that I was remanded for trial for an offence in action, which would probably be an extremely serious offence in those circumstances. If I failed to show subsequently—de facto, I had deserted—I would be caught by clause 5. Would I be caught as well under the Army Act? I do not know. If not, presumably I should be. If my offence was serious enough to be the equivalent of desertion, surely a tariff should be available to the court for my non—appearance at the subsequent hearing. That means the removal of the time limit, which is what my amendments would do.

rose—

Order. I hope that that will not set the standard for the length of interventions this afternoon.

I am not sure which section would apply to the hon. Gentleman. If he had listened carefully to what I said, he would understand his position in that context. I do not intend to repeat myself. It would depend on the circumstances in which the services were required.

I had hoped that the hon. Gentleman would be satisfied with the detailed explanation that I gave in Committee of the need for the clause because of the persons to whom the penal provisions within it apply. I accept that that was a complicated explanation, as it was this afternoon. The distinctions between groups of persons subject to service law can be quite subtle. The clause is aimed at those cases where an individual has been released from custody prior to trial and then fails to attend trial.

I recall that the hon. Gentleman was concerned in Committee that the maximum sentence of two years did not take into account the seriousness of absconding in extreme operational circumstances. However, he must remember that the penal provisions of the clause would not apply to service personnel. They are subject to the service discipline Acts at all times and could be charged with a far more serious offence if appropriate. The penal provisions will apply where they are no longer subject to the service discipline Acts, but are being dealt with for an offence that they are alleged to have committed while they were.

The hon. Member for Gosport (Mr. Viggers) asserted in Committee that a person may well decide that a maximum penalty of only two years is not enough of a deterrent when faced with the possibility of being convicted for a very serious offence, and that he thus may abscond. We should remember that a sentence must be proportionate to the actual offence. One possible offence would be failing to attend court. The sentence must be approached separately from any sentence that is imposed for the offence that is the subject of the proceedings. If the accused is convicted of a serious offence, he will receive appropriate punishment for that offence.

To allow courts to impose long terms of imprisonment when the accused might be acquitted of the original offence would be out of proportion. The sentence is not and should not be linked to the substantive offence, no matter how serious that may be. I might add that the more serious the original offence is, the less likely it is that bail would be granted in the first place.

If a service man fails to attend, he is likely to be charged with being absent without leave, or with failure to attend a duty. Both offences carry a maximum penalty of two years. It should also be remembered that the Crown court cannot impose a sentence of more than 12 months for failure to attend trial, regardless of the gravity of the original offence.

I have given the amendments careful consideration, even though I am not prepared to accept them. However, I think that the Bill gets the matter just about right. The penalty should reflect the offence as it stands. It is appropriate and reasonably in line with civil practice, and I see no reason to change it.

First, I wish to apologise on behalf of my hon. Friend the Member for Hereford (Mr. Keetch), who took part in the Committee proceedings on this Bill but who cannot be here today because, long before the business was allocated, he had arranged to bring some 200 of his young constituents to visit the House of Commons. He is therefore occupied elsewhere during this debate.

I hope also that the hon. Member for Reigate (Mr. Blunt), who introduced the amendment, will forgive me a moment of levity. When he said that he might be called out in an emergency, I leaned over to the hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) and said that, if that happened, gas masks and ration books would be issued at the same time. However, the Member for Reigate used himself as an interesting illustration of his interpretation of this part of the Bill.

It is always a risk to let the lawyers in, but I believe that the deletions proposed in the amendment would cause clause 4(5) to read:

A person guilty of an offence under this section shall be liable on conviction by court-martial to any less punishment provided by this Act.

I hope that I am not guilty of misreading the proposal, but that would be a rather infelicitous use of language to try to achieve the amendment's apparent objective.

The Minister's explanation of the possible punishment available under subsection (5) seems entirely reasonable. A penalty of up to two years' imprisonment for a failure to attend would be pretty high up the tariff scale, in anyone's view. One could argue that it was nearly draconian, given the powers available to the Crown court.

I understand the amendment's objective, but it and the others in the group would leave infelicitous language in the Bill if they were accepted. In addition, an unlimited punishment would be available for a failure to attend, and that would be going too far. For that reason, if the amendment were pressed to a vote, I could not recommend that Liberal Democrat Members support it.

I do not believe that the amendment would have the effect that the right hon. and learned Gentleman suggests. If the amendment were accepted, clause 5(4) would read:

A person guilty of an offence under this section shall be liable on conviction by court-martial to imprisonment or any less punishment provided by this Act.

The Minister gave the game away when he said that people charged with a serious offence would not be granted bail. That goes to the heart of why this and other parts of the Bill are defective. They do not take into account all the extreme circumstances faced by the armed forces. The simple fact is that, in extreme circumstances, people will be released on bail or from custody.

Let us take the example of a person suspected of murdering a colleague. If the case against him could not be established and the circumstances were very extreme—such as those experienced by a unit cut off behind enemy lines—it might not be possible to spare two guys to detain him and lock him up. If the person appeared to be willing to continue to fight for his unit, the decision might be made simply to allow him to do so. The Bill is supposed to cater for all circumstances, whether for current operations or those carried out in wartime. We do not want two sets of disciplinary procedures.

The amendment would simply remove the tariff. I agree with the suggestion of the right hon. and learned Member for North-East Fife that the tariff implies that it is almost inconceivable that there will be such circumstances. It is almost inconceivable, but the Bill must cope with all the circumstances that the military might face.

The Minister has said that he will not accept the amendment, even after the opportunity that he has had for reflection since the Bill was considered in Committee. I will not be pressing the amendment to a Division. However, the Ministry of Defence will be considering legislation on these matters in future, with the next quinquennial Bill and the opportunity to bring the service discipline Acts together.

Has my hon. Fried considered circumstances in which a service man may be charged with a relatively minor offence while evidence is being gathered for a more serious offence with which to charge him? Given that he may abscond before the hearing, and assuming that almost enough evidence has been gathered for him to be charged with the serious offence, it might be appropriate to remand him in prison pending the more serious charge being brought against him.

I confess that I had not considered that possibility. However, it illustrates another reason for the Bill to be flexible enough to cope with every circumstance.

This is a minor point. The situation is unlikely to arise because we will not, I hope, be at war in the next few years when such circumstances might occur. We will have plenty of opportunity to return to these issues, particularly if the Government make progress on bringing the discipline Acts together in a tri-service discipline Act. I beg to ask leave to withdraw the amendment.

I beg to move amendment No. 2, in page 29, line 24, at end insert—

or—

(c) they are a serving Officer in the Territorial Army or the Royal Auxiliary Air Force who also hold a current practising certificate, issued by the Bar Council, Law Society or Institute of Legal Executives, to practice as a Barrister, Solicitor or Fellow of the Institute of Legal Executives and who have at least two years post qualified experience'.

With this, it will be convenient to discuss amendment No. 3, in page 29, line 37, at end insert—

'or—

(c) they are a serving Officer in the Royal Naval Reserve who also hold a current practising certificate, issued by The Bar Council, Law Society or Institute of Legal Executives, to practice as a Barrister, Solicitor or Fellow of the Institute of Legal Executives and who have at least two years post qualified experience'.

The amendments would allow reservists and other members of the Territorial Army to hold the post of judicial officer, either while on exercise with their respective service or when serving as a full-time reservist. May I say how nice it is to welcome the hon. Members for Crawley (Laura Moffatt) and for Ilford, South (Mr. Gapes) who served on the Committee that considered the Bill? I look forward to listening to their contributions this afternoon.

The Bill has many practical difficulties, and these we have made clear to the Government, right through the Committee stage. Unfortunately, the Government seem determined to drive the Bill through without listening to the Committee or the House. We will, as Her Majesty's Loyal Opposition, continue to try and improve what is clearly a flawed measure. The least that we can do for the armed forces is to try and make this wretched Bill work.

The amendments would widen the pool of those qualified to serve as judicial officers. It is clear that there will be insufficient barristers within the armed forces to cope with the proposed changes. Not only will barristers have to continue to prosecute and defend cases, they will now have to exercise their role as judicial officers.

The Territorial Army already has a legal corps. However, the naval reserve does not. Furthermore, the Army and the Air Force recruit civilian lawyers to join their legal corps, but the Royal Navy recruits unqualified personnel from the supply and secretariat branch, and trains them as barristers. The Army and the Air Force can easily step up recruitment, and have done so, but, as legal training is a lengthy process, the Navy is not in the same position. It is therefore conceivable that some convictions may fail because the Royal Navy cannot put the accused before a judicial officer in time.

1.45 pm

The House will be unsurprised to be reminded that reserve forces provide essential back-up for the regular forces. The reserves contain some qualified lawyers, many of whom may practice criminal law, or even human rights law. They are likely to have a good knowledge of the special nature of service life, backed by expert legal knowledge, and they would make a fine addition to the legal services available to the armed forces.

My hon. Friend must be aware of the Inns of Court and City Yeomanry, which is particularly well qualified in this regard.

My hon. Friend makes my point for me.

The Government savaged the Territorial Army last year, cutting numbers by 18,000 men. The then Secretary of State, Lord Robertson, said that by doing so, he aimed to make the TA more usable and relevant—a memorable phrase. As the former Secretary of State was well known for his sense of humour, people may have thought that he was joking. He was not. The Government have shown themselves to be no friend of the reserves, but have had no hesitation on calling on reserve forces when they need them, as they did last year in Kosovo.

Even after the huge cuts of 1999, the Government continue to salami-slice the budget of what is left of the Territorial Army. No one would deny that the reserves play a hugely important role. It would be an opportunity wasted if we denied appropriately qualified reservists the chance to play their part in the service disciplinary process. I ask the Minister to accept a sensible, logical amendment.

I hope that the Minister will not say that the matter can be dealt with in next year's Armed Forces Bill. My golly, that will be a Christmas tree of a Bill, given all we have heard in Committee about what will be added to it. A great deal is missing from the Armed Forces Discipline Bill. I hope that the Minister will break the habit of a lifetime by conceding that our proposal is sensible and accepting it.

I assure the hon. Gentleman that I listened to everything that he said with great care. There was little else to do in Committee, unfortunately. Listening is better than falling asleep, if marginally so. I have promised to consider matters in future, but I certainly have not promised to include them in the quinquennial review Bill. Considering matters for inclusion is quite different from actually including them, but I will of course give points serious consideration where I have said that I will do so.

Amendments Nos. 2 and 3 would allow the judge advocate general or the chief naval judge advocate to appoint as judicial officers volunteer reserve officers who have specified practice certificates or qualifications with a minimum of two years post-qualification experience. I appreciate that the hon. Member for Salisbury (Mr. Key) intends to provide more flexibility in relation to those who may be appointed judicial officers, and that he is trying to be helpful. I fear, however, that it would be a flexibility too far. Two points are at issue: whether we want to use reserve officers as judicial officers, and the type of qualification and level of experience that we wish them to have. Clause 7 provides for the appointment as judicial officers of only qualified lawyers, including lawyers who are volunteer reserve officers. The amendments, however, would add legal executives to those eligible for appointment. For all their fine qualities and the breadth of their responsibilities in the civilian world, such individuals are not lawyers, and are not, in our view, qualified to serve in a judicial capacity. That assessment is based on the judgment that we made when we drafted the Bill, and is reflected in clause 7. By the same token we do not see a case for varying the qualification period for different categories of judicial officer. It would make nonsense of the legislation if we required lawyers to have at least five years' post-qualification experience before being appointed as judicial officers, but allowed lawyers and legal executives who are volunteer reserve officers to perform that function with considerably less experience.

The issue of length of experience was debated at great length in Committee. I stated then and must do so again that we believe that five years' experience demonstrates a reasonable level of familiarity with the law, so is the minimum period that should apply. I have given the matter serious consideration. I am sorry, but in this case I cannot accept the amendment.

I am particularly concerned with the Royal Navy and the Royal Naval Reserve. Is the Minister aware that in the London division of the RNR a large proportion of serving officers are qualified and well practised solicitors and barristers? I understand his point about those with lesser qualifications, but does it not make sense to make use of the excellent naval and legal experience of those people in the RNR?

If such people are in the Royal Naval Reserve, we will use them. All we are specifying is that they must have five years' experience. For the points I have made that is not an unreasonable stipulation to make.

Clearly, the role of the judicial officer is important, with considerable responsibilities to be discharged. Such responsibilities are best discharged by those who have some maturity and some direct experience of trial or court-martial procedure. For example, it is not possible to become a sheriff—a middle ranking judge—in Scotland with less than 10 years in practice, whether as an advocate—the Scottish equivalent to a barrister—or a solicitor. So it is right to set a minimum level of experience if people are to be invited to carry out extremely important responsibilities which bear on the rights and freedoms of individual citizens or, in this case, of individual members of the armed forces. Therefore, I have considerable sympathy with what the Minister said in relation to the five-year qualification period.

When the Minister responded to the hon. Member for Reigate (Mr. Blunt), however, he said that there were two questions: whether we wanted to use reserve officers and of the experience of those who might fall into that category. He answered the second question, but I did not understand him to answer the first: whether the purposes of the Bill could be served by the use of reserve officers. He came back to it obliquely at the end of his remarks. Perhaps he could make it clearer whether he is satisfied that the existing arrangements without the amendment allow for the utilisation of the very people who were mentioned a moment ago in an intervention as reserve officers in all three services with the requisite legal experience to take part in proceedings of the kind that we are considering and to fulfil the responsibilities of judicial officer. To cut out that group of people would be to waste a valuable resource which could be of great assistance in achieving the objectives of the Bill.

I agree entirely with the right hon. and learned Gentleman, particularly in regard to the Territorial Army. I wish to qualify his question to the Minister in one particular way. These people need not be officers. The Inns of Court and City Yeomanry and the Honourable Artillery Company have banisters of great qualifications who are of other ranks.