I am grateful for the opportunity to debate the work of the Health and Safety Executive, the report of the Select Committee on the Environment, Transport and Regional Affairs and the Government's response to it. I wish to place on record my thanks to the specialist assistant who helped us a great deal when we prepared the report and to our advisers, Professor Malcolm Harrington and Graham Reid. I cannot deal with the whole report in a short debate, so I shall pick out one or two issues that need to be emphasised.

I refer first to the tripartite nature of the Health and Safety Commission. When it was set up in the 1970s, such a format made sense. Much of the evidence that the Select Committee received suggested that many changes had been made to industry and to work in general, and that perhaps a different format should be adopted. Having looked into the matter carefully, I believe that it would be a big mistake to change the format of the Health and Safety Commission. Many people do not belong to trade unions. How are they represented? There is an increasing number of small businesses in this country. How are they represented? The problem is that owners of small businesses spend so much time running them that they do not have time to make contacts with other small businesses and to be representative.

The same applies to people who are not in a trade union. They do not have a framework in which to participate. We want the tripartite system to work. We should encourage people to join trade unions and ensure that employers participate in employers' organisations. The arguments that were put to us reflect the changes in industry and employment in this country, but they do not necessitate a change to the Health and Safety Commission. Through working parties and others, the commission ensures that the whole spectrum of the working population is covered.

I make a small plea to individuals. I see many people at my advice bureau who have major problems. They need someone to represent them, so even if a person is not in a place of employment where there is a trade union, it is worth while joining a union merely for insurance purposes and to have a representative if things go wrong. The tripartite system should be encouraged and be made to work.

On the whole, the record in Britain of reducing accidents at work is good, although I am not absolutely certain that that is because of the huge success of the Health and Safety Executive, safety representatives and employers. The changing nature of work in this country lies behind much of the improvement. Once we get away from mining and quarrying and some of the other heavy industries in which accident rates are high, the number of accidents should reduce dramatically. Good employers, particularly those who have good health and safety representatives, have achieved a remarkable reduction in the number of accidents at work. The HSE must concentrate on a relatively small number of employers and workplaces where health and safety matters are not taken seriously. A great deal more pressure needs to be placed on such places of work.

Health and safety inspectors must follow up accidents much more vigorously than they have been doing, and they must visit places about which they receive complaints about safety issues at work. Statistics are available to show the contact that has been made. However, I suspect that on far too many occasions contact with a company merely constitutes someone ringing up and asking what happened, and if that person is half-satisfied as a result of that telephone call, he records it as a contact. That is not the same as visiting to investigate the circumstances. It is important that the inspectorate undertakes vigorous inspection and that senior inspectors carry the work load of inspections. They are not especially good at management, and it is important that they continue to be inspectors, rather than become managers.

One of the key issues is the level of prosecutions and fines. In cases involving some appalling incidents, the courts have been extremely lenient in imposing fines. It is important that the level of fines is increased, and that the courts impose them vigorously.

If the person involved in an accident at work cannot return to his job, it is important that health and safety inspectors visit and prepare a full report, because civil proceedings will almost certainly follow. It is important that the inspectorate and the person instituting civil proceedings co-operate, to ensure that some compensation is available for people who have suffered because of a poor safety regime at work.

The Government must tell us more about the measures that they intend to take to tackle corporate killing and to deal quickly with the small number of large companies that do not have a safety culture throughout their businesses. Companies' insurance premiums for safety at work should reflect the company's record much more than at present. At the moment, companies with good safety records may be subsidising through the insurance mechanism companies with much poorer records.

The message that I want to send as a result of this debate relates to a different issue. In the past, companies have been slow to respond to new problems. We are all good at solving yesterday's problem, but we must solve new problems. For a time, no one knew anything about problems such as the injuries sustained by people who worked with asbestos. It was therefore possible to say, "Very tragic, but we were not aware of the problem." Gradually, people became aware of the problem, and perhaps we were slow to act.

The major anxiety about health at work now relates to the problems that people suffer as a result of office work. The Health and Safety Executive must pay much more attention to problems such as repetitive wrist strain, which people may develop as a result of using a keyboard, sick building syndrome and, problems caused by laser printers and stress.

Much more effort must be put into those aspects, as well as keeping up with traditional areas of activity. In particular, we have a responsibility to consider how to get people back to work. I represent Stockport and Tameside, and when I was first elected in the 1970s, big companies had a firm culture. They did not want accidents at work to happen, but if one did, they felt that they had a responsibility to find a job for the person who had been injured when he was fit to return to work. Even if the person could not return to his previous job, work was found for him.

That was a fine culture. If a company felt that it had any responsibility for an employee's state of health, or if an accident had occurred and the employee had to take time off, it would find that employee a job to go back to. The problem for a lot of people who do office-based work is that, when they have been absent with stress or other job-related illnesses, it is extremely difficult for them to get back. I make a firm plea that, in considering their task, the Health and Safety Executive and the Health and Safety Commission should examine the new problems facing people in work, rather than concentrate solely on the old ones. They should work hard to reduce the problems of stress of work, and they should investigate sick building syndrome and the problems associated with laser printers and other such equipment.

I commend the report to the House and I commend the Government's response. However, although we are doing well in comparison with the rest of Europe at reducing accidents at work, people still suffer a great deal of misery from injuries and poor health at work. We need to do more to tackle that.

There is much to reflect on in the report. However, it is striking that the structure of the Health and Safety Commission has, broadly speaking, stood the test of time in the 26 years since it was established under the Health and Safety at Work, etc. Act 1974. That shows the benefits of regulation—if I may be controversial so early in the morning. For all the complaints that we hear about business being crushed by bureaucracy, it is worth remembering that the HSE exists to protect workers from being crushed by machinery—and so it has.

In the 26 years since the establishment of the commission, the number of people killed at work has decreased from about 2,000 a year to about 400, which is 400 too many deaths, but the reduction is welcome. Half that reduction may be attributed to the change in industrial structure, and the other half to the impact of better health and safety awareness. Not all regulation is bad, but bad employers make regulation necessary and, in some cases, we could do with more of it. Over the years, the public response to events such as Flixborough, Piper Alpha or the Southall railway disaster has told us that there are always lessons to learn and to be applied.

My next point follows on from the comments made by my hon. Friend the Member for Denton and Reddish (Mr. Bennett), and it relates to the changing nature of risk in the workplace, our perception of it and how best to address the health and safety question. He referred to the problem of asbestos, and there is currently a debate about the safety of mobile phones. Nobody knows what the long-term implications of those issues will be, but we need to be on guard and to monitor carefully the impact that new products have when they come on to the market.

My hon. Friend also referred to workplace stress. There is nothing new about that type of stress. Robert Owen went around factories in the 19th century and reported on the 14-hour days worked by children aged 10, and played a large part in bringing the first of the Factory Acts into being. We have recently developed a greater understanding and awareness of the problem of stress, partly because of the use of the law. That is another change to the way in which we treat health and safety issues. Court cases that have been brought on behalf of people suffering from stress in the workplace have made employers more aware of the duty of care that they owe to their employees, which is a change for the better. However, although the law provides a remedy in the form of a civil penalty inflicted on employers, it does not necessarily act as an incentive to them to change their practice. They may have an insurance policy that pays for the penalty, and their only cost will be in bad publicity.

Bad publicity can be a powerful weapon, however, because no one likes to be clamped in the stocks of public opinion. Increasingly, companies cannot afford to have a bad reputation. Therefore, I strongly welcome what the report says about publishing more information about firms that have breached health and safety legislation. I am in favour of naming and shaming as well as the tougher penalties that the Chairman of the Select Committee spoke of a moment ago. Publicity is part of the modern armoury for dealing with health and safety risk in the workplace, as is better information about those risks and how they need to be addressed.

In a sense, safety is a state of mind. We need to renew the crusade for that state of mind in the workplace a quarter of a century after the establishment of the Health and Safety at Work, etc Act 1974. Preventive visits play an important part in creating and maintaining that state of mind. I support what the report has to say about the issue. Everyone agrees that we want more investigation of accidents, but I hope that it will not be at the expense of preventive work.

My final point concerns the role that partnership has to play in ensuring health and safety in the workplace, in particular the role of trade unions. I should at this point declare the support that I receive from the Manufacturing, Science and Finance Union. The tripartite structure is another aspect of the 1974 Act that has stood the test of time. Last night Sir Clive Thompson was bemoaning the impact of regulation, but even the Confederation of British Industry describes the tripartite structure of the Health and Safety Commission as a success story.

That is no happenstance. Workplaces with union representatives and union safety committees have half the rate of accidents compared with workplaces where there is no consultation with workers. It is even more interesting that that benefit accrues not just in big companies, but in smaller companies where there is a trade union presence. That connection was spotted way back in 1937 by Sir Henry Walker, who was the chief inspector of mines. When he reported on the Gresford colliery disaster in which 265 men lost their lives, he said:

I hope that I am not exceeding my functions in saying now what I have held for many years, that miners should be members of some effective trades union. That opinion is based on the grounds of safety, with which I am alone concerned, for I believe that a well organised trades union, wisely directed, can be as potent an influence for promoting greater safety in mines as it is already in matters, for example, of wages and conditions of employment.

He was absolutely right.

Trade unions naturally have an interest in protecting their members, and they do an effective job under the civil remedy in gaining £300 million a year in compensation for those who have been injured at work. However, all hon. Members would acknowledge that it is one thing to have a right enshrined in law and another to be able to access it. The most important role that trade unions play as part of civil society is to help thousands of people each year to access their rights to health and safety.

The hon. Gentleman is making an interesting point about the role of the trade unions. They play a valuable role in many respects, but how would he explain the apparent anomaly in that the number of accidents is at a record low, albeit at a plateau, but trade union membership is also at a record low? Surely on his logic, as union membership has gone down, the propensity for accidents at work should have gone up.

No, that is not the case. Unionised workplaces are still much safer than non-unionised workplaces. I put that down to the greater health and safety awareness in our society since the Health and Safety at Work, etc Act 1974 and the establishment of the Health and Safety Commission. The hon. Member for East Worthing and Shoreham (Mr. Loughton) anticipates the point that I was about to make.

Given the problems that we know exist in getting access to smaller workplaces to deal with health and safety, and given the cry we still hear from employers in those workplaces about what they perceive as the burden of regulation, we can do two things. The first was identified in the report: roving safety representatives should be able to visit workplaces where that union has members, even if they are not recognised, to report on health and safety conditions.

Secondly, I should like to see trade unions, which after all have a lot of expertise in the field of health and safety through their work in training health and safety representatives, offering their knowledge and their expertise as consultants to workplaces in which there may be no trade union members. If unions wanted to think innovatively about their role, they could offer employers help to ensure that they comply with legislation, advise on the systems needed and provide assistance in accessing information to ensure safer working conditions. Paragraph 85 of the report is about the possibility of giving small employers help with consultancy fees. Perhaps trade unions could offer to charge a moderate fee in return for such a service.

We have come a long way since the 1974 Act and the all-party consensus that led to it. Thanks to the work of the Health and Safety Commission, many more people are today free to work in safer workplaces. The price of that freedom is eternal vigilance.

It is a pleasure to take part in my first debate on a report of the Select Committee on Environment, Transport and Regional Affairs, as I am now one of its members. I was not a member when it agreed the report, which was probably just as well, as I would have had some difficulty putting my name to it.

I want to put the unfashionable and difficult other side of the case about the Health and Safety Executive. When people properly point to deaths and serious injuries in the workplace, it is difficult to say that a balance must be struck between the regulation of industry, the function of the Health and Safety Executive and our duty as a nation to ensure that our industries are as safe as possible. Compared with other countries, the United Kingdom has an excellent health and safety record. The hon. Members for Denton and Reddish (Mr. Bennett) and for Leeds, Central (Mr. Benn) have drawn attention to the fact that the number of deaths at work has fallen from 2,000 to 400 since the Health and Safety Executive has been active.

The Pareto principle is that for 20 per cent. of the effort one can achieve 80 per cent. of the target, and that it becomes ever more onerous to bear down on the final part of the target. That applies to industry. Given that the level of industrial activity and production has increased considerably since 1974—I accept that the nature of industries has changed and that some of the more dangerous industries do not employ the same number of people as they did—it will still require an enormous effort to reduce the figure from 400. Bearing down on the final part of the target through regulation or another mechanism will have damaging effects, as regulation is a burden on employers and leads to wider burdens on industry and wealth creation potential as a whole.

Those considerations must be borne in mind. People will say that it is reckless to attack anything to do with safety, but if we want to make things wholly safe, we should stop production. That is the only way to guarantee achieving the 100 per cent. target.

My experience is of the armed forces, in which safety and training is important. However, if training were risk free, the British Army, the Royal Air Force and Royal Navy would not enjoy such high professional standards. It is because they train rigorously that we can put troops on the ground in Sierra Leone who are second to none in the world, and are now performing an immensely valuable role on behalf of not only the British citizens there, but the people of Sierra Leone. That is a result of a demanding training regime.

That experience relates to the armed forces, but there is a parallel with the industries of wealth creation on the question of where one draws the line between trying to prevent accidents at any price and trying to prevent them by sensibly regulating the workplace. I am not saying that there should be no safety regime; that would be madness. Everyone would want Army ranges, for example, to be thoroughly well-regulated and, safety officers properly briefed and the rest of it. Safety during simple range exercises is easy to control, but fire-and-manoeuvre exercises in places such as Salisbury plain or by the British Army training unit Suffield in Canada are a different matter. The more difficult and demanding the training, the more likely it is that people will be hurt or killed—as the low-level flight training of Royal Air Force fast-jet pilots has sadly shown.

I can draw only on my experience of the services. Some people will say that there is no parallel to industry, but I believe that there is. We must make a judgment about the sensible balance to strike.

If the situation across the whole of industry were the same, I could accept the hon. Gentleman's case, but there are huge variations even between companies involved in the same activity. Some companies have done much better than others in reducing their accident rate to the 20 per cent. to which he referred. We surely need to bear down on companies whose record is poor. They are getting a competitive advantage because they are putting people's health and lives at risk.

I agree with the hon. Gentleman. I shall outline my difficulties with the report. The hon. Member for Leeds, Central said that the Health and Safety Executive could take responsibility for half the reductions in deaths but the other half could be attributed to the change in the nature of the industry. I am not sure how one can allocate such neat percentages. The Chairman of the Select Committee concluded that the improvement was due simply to the change in the nature of industrial work. The Health and Safety Executive can surely take some credit, but the good record is also a reflection of both employers and employees being committed to good practice from the start and of the use of common sense. It is obviously in the interests of employers and employees for accidents in the workplace not to happen. As the Chairman of the Committee said, there will always be unscrupulous employers and irresponsible employees, and the Health and Safety Executive will have to step in. However, the report's call to put unlimited faith in prosecutions, fines and litigation may strike the wrong balance.

I agree with naming and shaming the worst offenders and bringing prosecutions where there has clearly been negligence and irresponsibility. No one would argue against that. However, if companies believed that the Health and Safety Executive, rather than a source of advice and preventive measures, represented only legal action against any and every mistake in the workplace, the spirit of co-operation and good practice that has helped produce the good record could be threatened and damaged.

The hon. Member for Denton and Reddish drew attention to the practice of large companies in the early 1970s: if an employee had been hurt in the workplace, they would try to find him alternative work, in the best paternalistic tradition of good employers. If we create a spirit of antagonism over safety, we will undermine the tradition of employers caring for their employees—which I believe still operates among the best employers. Indeed, it is increasingly seen to be in employers' interests properly to look after their own people. We are moving to a climate in which, particularly in the UK, people rather than capital are the employer's most important resource. If we accepted the Committee's recommendation, that self-evident common sense could be undermined.

My greatest problem with the report is the Committee's wish to give additional powers to workplace safety representatives, including permission for those representatives to initiate prosecutions. I agree with the Confederation of British Industry, which is interested in facilitating the reporting by representatives or others of unsafe practices, but is worried that increasing formal powers

might promote antagonism between various parts of the company.

The Committee seems to have brushed such criticisms aside, not least those of the Royal Society for the Prevention of Accidents, which argues that such a move could allow employers to shirk their responsibilities, diluting the primary responsibility of line management. That is the danger.

In the Select Committee yesterday, we took evidence on biodiversity and the first witnesses wanted a biodiversity tsar—someone who is seen to be responsible and will take the lead. We all want someone to be seen to be in a leadership position to take responsibility, whereas in fact safety must be the responsibility of us all, particularly in the workplace. It must be the responsibility of both line management and employees. If safety is delegated or shoved off to a representative in the workplace, the ownership of the issue will to some extent be taken away from the rest of line management and other employees. I agree with RoSPA and the CBI that that would be a pity.

Health and safety has steadily improved in the United Kingdom, because the vast majority of employers and employees show a common-sense interest in voluntarily minimising risk and working safely in what the CBI pertinently describes as a "blame free culture". As always when people want to improve health and safety, no one can question the good intentions behind the Committee's report. However, there is a danger that co-operation could be replaced by antagonism and blame, which would not be in anyone's interest.

I cannot say that I agree with much of what the hon. Member for Reigate (Mr. Blunt) has just said. The precursor to much of what I have to say is the comment "mind the gap", because there are serious gaps in joint or co-operative working between local authorities, the Health and Safety Executive and the Environment Agency.

The Environment, Transport and Regional Affairs Committee report has been worth while, and I much enjoyed my involvement in the Committee's work. In particular, I was greatly enlightened when I shadowed a health and safety inspector on his routine rounds in my constituency. I found that different standards apply to different sorts of works. For instance, we visited a waste transfer station, where the attitude towards health and safety was different from the far more stringent approach at a local school of 1,000 vulnerable young people. We went into much greater detail at the school. At the waste transfer station, working practices were constrained by other factors.

I return to my original point about the gaps. I have before me part of the memorandum submitted by the Department of the Environment, Transport and the Regions, which says:

HSE has close links with the Environment Agency in England and Wales and the Scottish Environment Protection Agency (SEPA), not only because of the potential environmental implications of health and safety failures in work places that handle particularly hazardous or dangerous substances (eg chemicals), but more recently through the Control of Major Accident Hazards (COMAH) Regulations 1999. Under these Regulations, the HSE, Environment Agency and SEPA are jointly designated as the Competent Authority for authorising and inspecting safety arrangements at establishments covered by the COMAH Regulations.

Similarly, HSE has close links with local authorities as the latter have responsibility for the enforcement of health and safety legislation in shops, offices, distribution outlets, hotels, restaurants, residential care homes and leisure centres. The formal mechanism for this is the HSE/Local Authority Enforcement Liaison Committee (HELA), though much informal contact is at inspector level on a day-to-day basis. HSE provides guidance to local authorities on their enforcement function.

Part of the memorandum concerns land-use planning. The Committee did not dwell on that, but since the report's publication, huge concerns about it have arisen in my constituency. I know that the Minister cannot discuss specific examples, so I will refrain from using names, but I shall bring one or two matters to his attention. On land-use planning, the agency and the HSE

separately advise Local Planning Authorities (LPAs) on the possible impact of industrial developments on people and the environment. The Agency and the HSE recognise the need for liaison to resolve differences of view before comments are provided to LPAs.

Unfortunately, I have a problem with the HSE's powers. It has not yet been determined whether a planning application from my constituency will go to the Secretary of State. A company that deals in accident-damaged cars has applied to store those cars on a 25-acre site until the insurance has been settled, when they will be auctioned. When the local planning authority formally consulted the HSE, all aspects of the application had become retrospective, except for the auctioning. The HSE objected to the application, because the land for the proposed use was close to hazardous installations. The HSE had used its processes for risk assessment and deduced that the risk to the public from attending auctions would be too high. It advised against that and said that it would support the local authority if the application went to appeal. The HSE also said that if it were not satisfied that the local planning authority could enforce stricter conditions, it would allow 21 days for deliberation with the authority. If the HSE remained unhappy after that, it would recommend that the Secretary of State called in the application.

That is how the system is supposed to work. However, the local authority and the developer—the applicant—managed to produce conditions to satisfy the HSE in part and tried to remove the objections. The HSE tells me that the objections still stand, but that is a legal matter, because no permission will be granted until GO-East recommends that the Secretary of State call in the application, and he decides to do so, or there is a public inquiry, the outcome of which we would await. The application could also return to the local authority, which, by the way, is minded to give permission.

Such land use does not fall within the HSE's inspection remit. It is a matter for the local authority, because auctions are retail activities. It would have been the HSE's direct responsibility to inspect the site if it had been a breaker's yard. Hundreds of my constituents are worried, and through their elected representatives, who include members of an action group and people such as myself, have asked, "What is the matter with the Health and Safety Executive? Why can it not intervene?" The firm has not complied with conditions before, so why should it do so now? There is a great fear that the conditions will not be met or enforced. It is not for me to say whether that will be so, but the fear exists. The HSE will have no powers of intervention if the conditions are not met or enforcement is inadequate and the local planning authority cannot police matters. That is a grave concern. I seek the Minister's guidance on those points.

I turn to the inconsistencies that sometimes arise between the actions of the Environment Agency and the HSE. I can refer to a small, but good example, which highlights the issue. When we visited a waste transfer station with the health and safety inspector, we saw empty liquefied petroleum gas bottles of the sort used in caravans and homes, and in skips in the yard—all sorts of things go into skips. The people in charge said, "We had a visit from the Environment Agency, and they said that we had to store the bottles inside. But when the HSE came round, they said, 'No, don't leave them inside where workmen might have a quick tea break; they should be outside.'" I was asked for my opinion, and had to bow to greater experience and knowledge. I could not answer the questions of people at the yard, except to suggest that they return the bottles to the gas company. There are, therefore, difficulties with the lines taken by the Environment Agency and the HSE, which was mentioned in some of the Committee's evidence sessions. I should be grateful if the Minister replied to those points or at least investigated some of them.

First, I pay tribute to the Clerks of the Environment, Transport and Regional Affairs Committee for constructing such a good report. The Minister and the Government have welcomed it, as their response demonstrates. I shall touch briefly on the issue of corporate manslaughter and the fact that health and safety is not treated with the seriousness that it might be.

As a long-term campaigner on health and safety, and having been a safety representative in the shipyards 25 years ago, I know that the question of safety has moved along apace and that there have been improvements in the more responsible yards and factories. However, a hard core of major problem industries must still be tackled. The present regulations do not cover the problems suggested by the statistics.

In 1996–98, there were more than 47,000 major injuries in United Kingdom factories. The number of deaths has dropped to 400 a year, as my hon. Friend the Member for Leeds, Central (Mr. Benn) mentioned, but given the statistics that we received in the evidence-taking session, I still do not believe that employers are even close to treating the problem as seriously as they might.

As the hon. Member for Reigate (Mr. Blunt) said, claiming that there have been reductions in the number of accidents is virtually warping the statistics, because the number of workers in manufacturing during the lifespan of the Health and Safety Executive has dropped drastically. When the number of injuries is compared with the number employed in a particular industry, little improvement in real terms is apparent.

Not one director or manager who has been prosecuted in the past six years has received a fine of more than £1,000; that, in itself, shows another part of the problem of corporate manslaughter. A £1,000 fine was imposed in a case involving someone who was killed in the construction industry; I will not mention the company, but it has a very bad record. That shows that the issue has not been treated seriously enough—and the Government should tackle it sooner rather than later.

I note in the Government's response that the Home Office will soon introduce new measures on corporate manslaughter, first as a form of consultation. What is the Minister's definition of "soon"? It must be very much sooner than action promised by Ministers in respect of other, equally important, matters. It may not be in the Minister's brief, but as someone in the lead Department, he will be aware of the issue.

I note, too, that the Scottish Executive will have a separate responsibility to look into the matter. I shall write to the appropriate Ministers in the Scottish Executive on this issue, which has been dear to my heart for so long, suggesting that they trail-blaze, allowing the courts in Scotland to reach the same conclusion as the Trades Union Congress and to treat more seriously the matter of fining individuals responsible for deaths.

When giving evidence, my right hon. Friend the Minister for the Environment gave the clear impression that he was sympathetic to my argument; many members of the public have written to me, showing that those in the wider world are very concerned about the matter, which requires a positive response from the Government. I look forward to his reply.

I, too, commend the report because of the renewed attention it brings to the issue of health and safety. I commend it also because of the stress it lays on the importance of prevention and responsibility. I support the recommendation that there should be a crime of corporate killing, and the sooner such a measure is introduced, the better.

The report draws attention to the key and successful role played by the tripartite structure of employers, employees and others including local authorities and the public. This morning, I shall draw attention to a failing in that other section, which relates to the responsibility to consider the health and safety of those not directly employed in the workplace and to the role of a local authority as an agent of the Health and Safety Executive.

I wish to draw attention to tragic circumstances in which the system failed. On 20 May 1999, two of my constituents—Vanessa Gregson aged 19 and a strong swimmer, and Tshan Kamara aged seven—were found drowned at the deep end of an unsupervised swimming pool at Honicombe Manor holiday park in Cornwall.

Indeed, the hon. Member for South-East Cornwall (Mr. Breed) held an Adjournment debate on the subject in January this year.

At the inquest, the coroner stated that, if a lifeguard had been present, at least one life could have been saved. The coroner criticised the sudden and hidden change in gradient in the swimming pool towards the deep end. He said:

I find it almost incredible that such a hazard can be allowed in a pool to which holiday clients have access.

The coroner also pointed out that there had been two inspections of the pool by Caradon council, acting as agents for the HSE. He noted that its recommendations had not been carried out and also that there had been no follow-up. He queried the adequacy of the inspections and the expertise of those who were sent to carry them out. He doubted whether they had sufficient expertise to assess swimming pools effectively. It was subsequently found that the owner of the pool did not possess the publication "Safety in Swimming Pools"; that no emergency system was in place; and that there was no written safety policy. Today sees the start of the prosecution of the pool owner by Caradon council.

Such a tragic circumstance raises several key issues relating to health and safety. I have raised the incident with the director general of the HSE. In a letter that I received from her on 16 March, I was told:

If swimming pool operators follow the guidance given, they will be well placed to prevent unnecessary injuries and fatalities to pool users… As part of a routine programme, we regularly review all guidance to ensure the best possible advice is available…We shall be reviewing the guidance for swimming pool operators again in the near future.

I hope that the HSE will indeed review its guidance to ensure that it is effective. I also hope that, in doing so, it examines the implementation of the guidance more closely and assesses the expertise of those whose remit is to implement it. I hope, too, that it will look beyond its current guidelines. It and the Government must examine the issue of statutory licensing of pools that are used by the public. It is not good enough to be told, as I was by the director general of the HSE, that because it is more dangerous to swim in the sea than it is in a private swimming pool, we do not need to secure closer regulation of such pools.

My constituents died in tragic circumstances; two young lives were lost needlessly. The prosecution, which starts today, will reach its conclusion on that specific instance. However, I want the HSE to examine the general guidelines more closely to ascertain whether they are adequate and whether there should be greater follow-up and greater strength in the law to enforce them.

I have not had the privilege of serving on the Select Committee on the Environment, Transport and Regional Affairs, but I should like to contribute to the strands of argument on this matter. Clearly, there is a high level of consensus that the Health and Safety Executive has played an important and positive role in a generally favourable long-term trend of reducing accidents and a growing safety culture. I shall focus on the two more controversial strands of the argument, which appear to point in opposite directions. One is that the Health and Safety Executive is not sufficiently aggressive in enforcement, and the second is that, as many small businesses claim, the HSE contributes to red tape and the gold-plating of regulation.

Local small companies tell anecdotes about the inspectors who visit them; a typical example is that of a small company with an English-speaking labour force that is required to put all its signs in multiple languages. There must be hundreds of examples of such red tape, but I shall concentrate on the inadequacy of enforcement. The matter has been raised in passing, but I shall make the point more systematically.

The Select Committee and the Centre for Innovation in Corporate Responsibility have conducted some good research from which there are several criticisms—the first is the simple lack of investigation. Between 1996 and 1998, only one in every 10 serious accidents, which include amputations, was investigated; of those, only one in 10 led to prosecution—one in five in cases involving fatalities. That prompts the question: what is the HSE doing when it considers serious accidents? The argument, which was touched on by the hon. Member for Cunninghame, South (Mr. Donohoe) and others, is that because of how the HSE functions, 80 per cent. of the cases that it prosecutes are heard in magistrates courts, thus the fines imposed are derisory—£20,000 is the maximum.

Why are other powers not utilised? The Minister may say that it is because it is necessary to legislate for new powers of corporate manslaughter, but the HSE already has the power to refer matters to the police, although only 1 per cent. of its actions have ever been so referred. I stand to be corrected, but I believe that only two cases in the past 10 years have been pursued to a charge of manslaughter. The power to pursue such a case already exists; further legislation is not needed.

My final criticism is the high level of inconsistency in enforcement. There is a factor of six in the likelihood of investigation when farming and mining are compared, and a factor of about five or six in the average fine imposed in magistrates courts in Wales compared with those imposed in the west midlands. There is no obvious reason for those enormous variations.

The lack of prosecution and investigation and the disparity in fines has damaging implications; there is little deterrence in the system and it brings the concept of punishment for serious negligence into disrepute. The hon. Member for Reigate (Mr. Blunt) argued that the emphasis should be on preventive work rather than on enforcement. If the evidence that I have cited is right, it should be the opposite; too much attention is probably paid to the pernickety details of preventive work and routine inspection, and not enough to enforcement. It would be helpful if the Minister described roughly the balance of the HSE's work load and whether he is satisfied with it.

A shift in the direction of enforcement would not result in confrontation or an anti-business sense. I came to Parliament from a large multinational company in the oil industry, in which there was an intense safety culture, not for idealistic reasons, but for fear of loss of reputation as a result of a bad accident. The company would have difficulty recruiting top professionals if it was not seen as at the frontier of health and safety. There are sound reasons why good companies have a safety culture; many of those companies would like the cowboys in the industry to be prosecuted more aggressively for lapses. A shift in the direction of tough enforcement would not in any sense undermine the HSE's mission to raise standards throughout industry.

I congratulate the hon. Member for Denton and Reddish (Mr. Bennett) on securing this debate, and on the report of his Committee. Though short, it is an interesting, useful and detailed report. Many members of the Committee have spoken in this debate, citing striking personal examples of the need for the Health and Safety Executive—in particular, the hon. Member for Liverpool, Riverside (Mrs. Ellman), who referred to a tragic swimming pool incident involving her constituents.

The Health and Safety Executive has, since its establishment in 1974, done a good job. The figures speak for themselves. Whatever the reason for the better figures, there has been a remarkable reduction in the number of accidents at work. I am not sure how the hon. Member for Leeds, Central (Mr. Benn) concluded that half that reduction is owing to changing work patterns and half to safety measures, but a combination of factors has been involved.

In the United Kingdom, 1.7 fatal injuries occur per 100,000 workers, whereas in the United States the figure is 3.2, and in Europe it is 3.9. Those are interesting figures. The figure for the United States is substantially higher than that for the UK, despite the "sue first" culture in which companies tend to face lawsuits if a slight injury—or worse—is suffered in the workplace. More ironically, in Europe, business is subject to much more excessive and costly social regulation and bureaucracy. We have benefited from not being part of that. Despite those factors, the safety record in north America and Europe is much worse than in the UK.

As well as paying tribute to the work of the Health and Safety Executive, we should pay tribute to the efforts and resources that companies put into health and safety, to which various hon. Members have alluded. Health and safety is now treated seriously across the board, in most, although not all, places of work. The hon. Member for Leeds, Central described that as a crusade for a state of mind in the workplace. That crusade has been largely successful.

I agree with the hon. Member for Denton and Reddish that it would be a mistake to change the format of the HSE. Most hon. Members have commented that the tripartite approach has worked well, and should continue to do so. I agree with the hon. Gentleman that we should concentrate on the relatively small number of employers who still do not take health and safety seriously, which is unforgivable. I also agree with his point about large divergences between similar companies in the same kind of business. That is not acceptable.

We are not only considering companies. As my hon. Friend the Member for Reigate (Mr. Blunt) pointed out, many health and safety applications are received in relation to defence, in which he is an expert. The hon. Member for Riverside spoke about leisure facilities, which also present many dangers.

It is right that the report has been produced 26 years after the formation of the HSE. Working practices have changed significantly since 1974, when the majority of people worked in large manufacturing companies. Currently, 99 per cent. of enterprises have fewer than 50 employees, 80 per cent. of enterprises are run by the self-employed, and the service sector accounts for more than 75 per cent. of employment. Clearly, as the number of manufacturing jobs is still falling significantly, that trend will continue.

Changes in trade union membership patterns have been mentioned, although the hon. Member for Leeds, Central and I came to different conclusions about what that should mean for health and safety. Industries are also changing. Less heavy machinery is used, and fewer people are employed in the mining industry, which was traditionally a big source of dangerous jobs. There has also been a big increase in outsourcing, subcontracting and working from home. The last of those presents a particular challenge, although I do not suggest that, on the basis that some statistics suggest that most accidents happen at home, we should increase the HSE's work by providing for personal inspectors for everyone who works there.

The hon. Member for Castle Point (Mrs. Butler) said that different types of regulatory approach should be flexible, and I thoroughly endorse that. The health and safety regulation that applies to a school will differ from that which applies to the waste transfer station that she mentioned, where well-trained professionals rather than vulnerable youngsters will be present. It is right that we should adapt and find new ways of doing things. However, I am concerned that the HSE's work should not become overly prescriptive and that it should not expand its role simply because workplace patterns are more fragmented. I hesitate to use the term "modernise", which crops up in the report, but there must be good reason to modernise; one should not do so simply for modernity's sake, although the term is a buzz word with the Government.

I hope, therefore, that the report will not be seen as a solution in search of a problem, when there is not actually a problem. The figures might have reached a plateau, but they have probably reached a reasonable level. I fully accept that, as hon. Members have said, 400 deaths are 400 deaths too many, but we compare favourably with countries across the world. We need to avoid a blame culture, in which there is no such thing as a genuine accident.

I certainly want to avoid excessive regulation on small and emerging businesses, which are the key to the Chancellor's enterprise economy, about which we hear so much. People who work from home should not have to comply with the expensive regulations that apply to manufacturing industry, for example. The requirements on smaller businesses and on the self-employed should be minimalist, and costs should not be disproportionately high.

I want to query a few issues with the Minister. I agree with the report's conclusion that the preventative role of the Health and Safety Executive should remain its priority, because that is its most valuable role. Proactive inspections form about half the executive's regulatory contact with employers each year. What is the Government's attitude to workplace injury reporting and to criticism that more injuries are not reported? I am certainly in favour of naming and shaming the worst offenders, as long as that is done fairly and on an even playing field so that firms are not victimised. We need to set out the criteria clearly so that we know when firms have strayed from an acceptable benchmark. I am most concerned about firms that repeatedly commit the same offences against health and safety standards. The hon. Member for Denton and Reddish said that we needed to concentrate on the worst offenders and on those who repeat offences. What is the experience of workplace injury reporting in the United States and Europe? Are there more criteria? Are more injuries reported?

I also back the idea, to a limited extent, of encouraging insurance firms to reflect best safety practices in their premiums and conditions. That is a case in which the marketplace can work effectively. The problem with that approach is that it might not necessarily have the same impact on larger and smaller firms, because premiums are a fairly small percentage of turnover for large firms. I caution against the possibility of encouraging larger firms not to report their injuries where that would have an impact on their no-claims bonus or the level of their premiums. Have the Government had initial talks with the insurance industry about that? When may we expect the Government's consultation proposals on corporate manslaughter, to which the hon. Members for Cunninghame, South (Mr. Donohoe) and for Riverside referred?

The report criticised the poor record in pursuing prosecutions in cases of serious injuries. Is the number and success of such prosecutions the best measure of the HSE's success? The United Kingdom has a relatively small number of workplace accidents and the demand for prosecutions may result in the victimisation of employers who have just been unlucky with unavoidable accidents. I certainly agree, however, that we must not hold back from throwing the book at the worst offenders.

The report and various hon. Members have called for greater penalties. That is worth looking into for larger companies, for which the maximum fine of £20,000 is a mere drop in the ocean. Such a fine is already a big deterrent for smaller companies. The hon. Member for Cunninghame, South raised an interesting point when he said that the highest penalty that has been imposed in the past six years on directors and mangers of businesses has been only £1,000. His criticisms and those of the hon. Member for Denton and Reddish were mainly of the courts because they were not meting out larger penalties. We should not focus only on the inadequacies of the HSE's powers.

I shall deal briefly with the hypothecation of fines to the Treasury. There is an interesting parallel to be drawn with the Financial Services Authority. I was a member of both the Joint Committee and the Standing Committee which considered the Financial Services and Markets Bill. The current proposal is that fines levied on financial firms for misdemeanours go to the Financial Services Authority—the regulator, which is akin loosely to the Health and Safety Executive. It will be an obvious temptation for the FSA to step up prosecution regimes to expand its own empire, in order to increase the number of regulators whom it employs, the number of regulations that it delivers and the fine income from its members when firms fall foul of those regulations. It will be a vicious circle.

There is a scheme in the FSA to rebate to members the fine income against their fees. I can draw an interesting analogy. Refunds to people who are regulated by the HSE would ensure that the cost of complying with regulations is reduced and, thus, make it easier and give them greater incentive to comply with the extra regulations. It will make compliance more affordable. Does the Minister know how much money in fines has gone to the Government?

The Health and Safety Executive has already placed a large financial burden on business. Over the next three years, an extra £63 million will be spent on that—£43 million as a result of the introduction of charging in the gas, transportation and railway industries, which is a little publicised additional stealth tax. If the Government are not willing to hypothecate revenue from fines for health and safety-related matters, will they offer tax breaks for small firms, in particular, for the cost of consultancy advice on health and safety matters? As the hon. Member for Leeds, Central said, trade unions could charge for consultancy advice to members of the Confederation of British Industry.

Finally, I wish to query rail safety and its future. Ostensibly, the Health and Safety Executive performs the role of signing off the safety of rail signals, for example. When an accident is caused as a result of a faulty signal, it investigates why the accident happened and what remedial action should take place. Will the Government clarify that role?

The report is useful. The debate has been well constructed. I agree with the hon. Member for Denton and Reddish that we should concentrate on solving tomorrow's problems, not yesterday's, and work in partnership with tomorrow's businesses rather than using yesterday's excessive restrictions and regulations to solve yesterday's problems.

This has been an excellent debate, which has raised important points on which I shall reflect. I warmly congratulate my hon. Friend the Member for Denton and Reddish (Mr. Bennett), the Chairman of the Environment, Transport and Regional Affairs Committee, on the Committee's fourth report, which, like so many of the Committee's reports, is well prepared. The Government always take the Committee's reports seriously, and the fourth report is no exception. I shall try in the time available to respond to as many as possible of the main points that have been made, but if I am unable to do so I shall write to hon. Members.

My hon. Friend said that he thought that the tripartite system had worked, and I agree, but there remains a problem with getting through to small and medium-sized enterprises. It was said that the whole occupational structure of industry has changed and that there is a long tail of small companies. I do not know whether a change in the Health and Safety Commission will be necessary, or whether, as the Committee says, people should be encouraged to join their employer organisations or a relevant trade union. I am not sure that they are mutually exclusive. I strongly agree that that would be the way to make contacts with a much wider field.

The country's record on reducing accidents at work is good. It is better than that of the United States or the rest of Europe. That is unquestionably due in significant measure to the Health and Safety Commission and the Health and Safety Executive, but we cannot be complacent. I agreed with the hon. Member for East Worthing and Shoreham (Mr. Loughton) until he used the ill-advised phrase "a reasonable plateau". We cannot accept that. It has been repeatedly said that some 400 people still die each year in workplace accidents. Another statistic that I find just as alarming is that 25,000 people are injured or made ill by their work and leave the work force each year, never to return. Those are shameful statistics in the modern world of work.

My hon. Friend the Member for Denton and Reddish said that more investigations and prosecutions were needed—a point also picked up by the hon. Member for Twickenham (Dr. Cable). I agree. I am not satisfied with the number of investigations or prosecutions. It is, of course, a question of resources. When the Government came to power we immediately put extra resources into health and safety. As a result, in the past three years there has been an increase in regulatory activity. More specifically, that has meant inspector contacts with industry up to a record 188,000; enforcement notices up to a record 11,000, and prosecutions up to 1,800. I accept that that is from a low base and that it is not adequate, but we agree on the objective.

On the crucial question of penalties, the amounts are derisory. It is insulting that, when a member of a family has been killed at work, the penalties in some instances are as low as £2,000. I am pleased to say that the Court of Appeal has pointed the way and that the Howe judgment of 1988 encouraged the courts to adopt a tougher stance on sentencing. For example, Balfour Beatty learned the hard way when it was fined more than £1 million for the Heathrow tunnel collapse, when it was a miracle that no one was killed. That case showed the way in which the courts regard such accidents, and I strongly support that.

The Government will legislate—when parliamentary time allows, but not in the dim and distant future—for courts to have stronger sentencing powers for health and safety offences. That will include the prospect of jail for the majority of offences. In addition, the Home Secretary will consult soon on changing the law to make it easier for corporate bodies to be prosecuted for involuntary manslaughter. That matter was raised by several hon. Members and it would be a vital reform of the criminal justice system. Those serious measures will bring home the importance of better health and safety management where it matters most—in the boardroom.

We intend to do more to toughen penalties for breaches of the law by those with a casual, reckless and criminal approach to safety. The real aim is not simply to punish people, but to induce a positive management culture. A small minority always thinks that attention, time and resources need not be given to proper safety management, and the Committee agrees unanimously that it is those companies that must be targeted hard. We are considering making more innovative penalties available to the courts to hit hard and punish individuals responsible for health and safety failures as well as the companies. The suspension of managers without pay, the prohibition of director bonuses for fixed periods and the possibility of custodial penalties in the most serious cases involving recklessness and gross negligence are matters under consideration.

The last point that my hon. Friend the Member for Denton and Reddish made concerned occupational health and stress—the latter being perhaps the most widespread of several environmental health issues. I have long thought that Britain has never really had an occupational health system. It is clear that, in addition to reducing accidents, we must improve the nation's health at work. Some 2 million people suffer from ill-health caused by their work, and a staggering 500,000 say that their health is affected by the stress of their job. Too many people are made ill at work. That is why the revitalising health and safety agenda, which we shall publish shortly—I do mean shortly—will set out some pretty demanding targets for reducing the number of days lost through illness and injury at work.

My hon. Friend the Member for Leeds, Central (Mr. Benn) spoke about the need for sensible regulation. No one wants over-prescriptive legislation, but sensible and necessary regulation is important and has undoubtedly contributed to the gradual steady reduction in the number of deaths. I agree with my hon. Friend about the importance of naming and shaming, and I warmly welcome the HSE's initiative to publish a special annual report to name and shame companies and individuals convicted in the previous 12 months.

My hon. Friend the Member for Leeds, Central and others asked about insurance practice. Many who responded to our consultation document "Revitalising Health and Safety" thought that the insurance industry should do more to exert pressure on employers' health and safety performance, and I agree. I shall soon discuss with the industry further steps that it might take. Insurers already graduate employers' liability premiums according to the degree of risk, in the same way as is done for car users, whose record is taken into account, and that is helpful.

With regard to prevention, my hon. Friend was right to say—the figures are clear about this—that the number of accidents in firms that have health and safety representatives is about half that of similar companies which do not. I am glad that the HSE is publishing a discussion document on worker involvement, including a consideration of increased powers, which might entail issuing improvement or prohibition notices.

The speech of the hon. Member for Reigate (Mr. Blunt) was, on the most charitable interpretation, seriously misconceived, and, less charitably, nothing less than disgraceful in some of its implications. He said that it was too burdensome to address the problem of the remaining 400 people who are killed every year and to be concerned about the remaining 20 per cent. He drew a comparison with army training, in which one expects some casualties, but there is no comparison whatever between army training and the circumstances in factories where procedures are set down and equipment has to be provided in order to minimise risk.

I asked the HSE to supply the figures for previous cases in order to ascertain how many accidents were the responsibility of the employee—some, unfortunately, behave foolishly and pay for it with their lives or receive serious injury—and how many were the consequence of inadequate management. The figures showed that seven out of every eight were the fault of poor management.

The hon. Member for Reigate asked where the line should be drawn and wanted to secure a sensible balance. I totally disagree with him. However many lives short of 400 are lost—whether the hon. Gentleman draws the line at 100, 200 or 300—I am not prepared to accept them. I passionately believe that a great deal more can be done to reduce the unacceptable carnage at places of work.

We seek not to increase antagonism, but to accentuate a safety-conscious management culture, which is quite different. We want management on side—we do not aim to be punitive—and the vast majority of management is on side, but a significant minority is not. There is no question of delegating from line managers to health and safety representatives. Of course line managers retain the prime responsibility—from the boardroom downwards—but the representatives have an important role.

My hon. Friend the Member for Castle Point (Mrs. Butler) mentioned several examples, such as the local auction and the storage of liquid petroleum gas bottles, in which there was a difference of viewpoint between the HSE, the Environment Agency and the local planning authority. I shall certainly take a close interest in that matter and request an explanation. I promise my hon. Friend that I will investigate further.

My hon. Friend the Member for Cunninghame, South (Mr. Donohoe) asked when the Home Office would publish its consultation document on proposals for reforming the law on involuntary manslaughter, and I promise my hon. Friend that it will be published within the next month.

My hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman) mentioned the tragic deaths of two young people in a swimming pool at a holiday site. The matter is now the subject of a prosecution and we shall watch carefully to see how the case unfolds. She asked about statutory licensing, and, again, I undertake to examine the issue further and, if necessary, to reply to her in writing.

The hon. Member for Twickenham referred to there being too few investigator prosecutions. I have already said that the HSE's resources are inadequate and we have bid for a significant increase in the spending review. I insist on no reduction on front-line preventive work; additional resources must come on top of that. I am sure that all hon. Members would agree that prevention is better than prosecution after the event.

The hon. Member for East Worthing and Shoreham asked about reporting. There will always be questions surrounding non-reporting, but I am not satisfied with failures. New arrangements for reporting by telephone and through the internet should improve under-reporting. I understand that the HSE will set up a reporting centre for incidents by April 2001, which is expected to increase response rates. The HSE will also review the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995 next year, and consider how employees and their representatives can be actively involved in reporting accidents and ill health.

The question of ill health and fines was raised, for which the courts have responsibility. I am concerned that cases in magistrates courts are not sufficiently referred to Crown courts, where the penalties are higher.

Order. We come to our next subject for consideration.

I am grateful for the opportunity for a brief debate on concerns regarding the cost and availability of generic drugs to the national health service, and on several of the points raised in the report of the Select Committee on Health that was published on 9 December. I express my appreciation to Professor Joe Collier, the Committee's specialist adviser on the inquiry, and to its Clerk, Dr. John Benger, and his excellent staff for their work on the report and their consistent work throughout the Parliament.

In recent years, the Health Committee has resolved to consider briefly some topical issues. Its attention was drawn to concerns on this subject by several hon. Members, especially my hon. Friend the Member for The Wrekin (Mr. Bradley), who might hope to catch your eye this morning, Mr. Deputy Speaker. He was active in expressing worries about what had been brought to his attention in his constituency. I should also mention the South Huddersfield primary care group, which covers two wards in my constituency. Its chairman, Dr. Bill Parker, and its chief executive, Mr. John Roebuck, drew my attention to the implications of the problems facing the group arising from generic drugs. Following representations, the Committee determined to take evidence on 4 November from a range of interested parties, including Government representatives.

Generic drugs are crucial to the national health service's drive to keep prescribing costs down. The performance assessment framework document from the national health service executive, "Quality and Performance in the NHS: High Level Performance Indicators and Clinical Indicators", describes generic prescribing as one of the

high level indicators of performance.

Generic prescribing grew from 11.5 per cent. of the NHS drugs budget to around 21.7 per cent. in 1997. The average generic prescribing rate for all practices was 63 per cent. by the end of 1998, and the Government have set a target of a 72 per cent. rate by the end of March 2002.

Our inquiry was prompted by a range of reports about huge rises in the costs of generic drugs. I shall give one or two examples, which are set out in more detail in the report. Amoxycillin cost 47p for 28 days' supply in September 1998, but a year later it cost £1.69, an increase of 260 per cent. Thryoxine cost 21p for 28 days' supply in September 1998, but cost £1.62 a year later, an increase of 670 per cent. The worst example which we found was Frusemide, which increased from 26p to £2.14 over the period, an increase of 723 per cent.

The scale of the problem was brought home by an excellent report on BBC 2's "Newsnight" on 19 October. With the co-operation of the BBC, we were fortunate to be provided with the raw data that informed the report, which showed that, of 464 commonly prescribed generic drugs, 132 had increased in price by more than 50 per cent. in the previous 12 months. The impact of that was devastating for health authorities and primary care groups, which were in their first financial year under the new structure. Croydon health authority has told us that

any overspend on PCG prescribing budgets will impact on other areas of health services expenditure, because now this budget is cash-limited as part of the PCG unified Hospital and Community Health Service.

Many hon. Members have spoken about the local implications of the increases. I met people from the South Huddersfield PCG last Friday; they told me that the projected full-year additional costs to their group were £248,000. To be fair, the Government have so far contributed £153,000 additional allocation to that group, but that high figure shows the extent of the problem. We have received evidence from other primary care groups. Birmingham PCGs anticipate an overspend of £800,000 on their prescribing budget, Manchester PCGs report an overspend of £604,000, even allowing for use of their contingency fund, and West Sussex health authority anticipates a deficit of £750,000.

The health service faced serious problems at a local level in the first year of the new operational PCGs. There was also an impact on individual patients, who had to come to terms with different packages, colours of tablets, dosage instructions and so on. That confused many of them, especially the elderly patients, and, inevitably, a great deal of NHS staff time has been used in explaining the changes to people who might not otherwise have understood them.

There has been no shortage of reasons advanced by different parties for the huge price rises. The generic manufacturers and industry representatives placed most emphasis on two factors. First, Regent GM, one of the largest manufacturers of generic drugs, closed suddenly after the Medicines Control Agency's findings that some of its drugs could have been contaminated by penicillin. At the time, that company had a market share of about 10 per cent. Secondly, there was a move away from bulk dispensing towards patient packs to comply with an EC directive.

Did the hon. Gentleman's Committee come to any conclusions about the action taken by the Government immediately following the closure of Regent GM? It was easy to anticipate that that closure would have a significant impact on the market for generic drugs.

If the hon. Gentleman will bear with me, I will cover that point. As he knows, we took evidence on that matter, and the report referred to our thoughts on it.

It would appear that, as late as 20 October 1999, the Government accepted the two key reasons for the price rises that had been identified by the industry. That was made clear in a parliamentary answer that day from the Minister of State, Department of Health, my hon. Friend the Member for Barrow and Furness (Mr. Hutton), which gave the impression that those two reasons were central to the Government's understanding of the cause of the problem. The Committee concluded that the supply shock caused by the Regent closure might have been a catalyst for that problem, but could not be called the cause. We noted that it was significant that production levels had returned to normal but that prices had not. Our view, therefore, is that the industry overstated the impact of the Regent closure and that the Government may have been a little naive in accepting it as the major factor for as long as they did.

The patient packs question may be more complex. Government and industry agree that the move caused shortages of some products. In our report, however, we state that some products that were never in shortage underwent huge price hikes. The industry argues that it understood that the Department of Health had agreed a phased and orderly transition to patient packs, and that it had hoped for financial support for that from the Government. The Department of Health strongly rejects that suggestion. Ministers told us that it was "simply not the case" that plans had been agreed for an orderly transition. We felt that we could not take a view on whether the Government should have offered financial support for the transition but that the breakdown of talks had ultimately proved extremely expensive. The PSNC estimated that the cost of transitional support would have been around £20 million. Clearly, the cost to the NHS of the whole affair has been many times that amount.

We also criticised the Government for not giving a higher priority to ensuring that the transitional arrangements were properly co-ordinated. Even if the Department of Health is correct in saying that no formal agreement had been reached, the evidence we saw suggested that the industry could hardly be blamed for assuming that such an agreement was in the bag. Nevertheless, unlike the Department of Health last October, we were not convinced that any of these factors was in itself sufficient to explain the price rises that we had witnessed. The BBC "Newsnight" survey pointed out that of the 132 products surveyed that, had undergone price rises of more than 50 per cent., only 18 had been repackaged. We therefore looked elsewhere. The more the Committee studied this, the more we concluded that the operation of the drug tariff itself lay at the heart of the problem. This is a complex area, but I shall refer briefly to what we looked at and the basis for our concerns.

The Prescription Pricing Authority monitors the supply of a drug by two major wholesalers and three major manufacturers to ascertain the basket price. When two wholesalers or one wholesaler and two manufacturers declare that they have less than four weeks' supply of a drug it is placed in category D and the supplier is paid the price of the drug, which can be the brand name price, rather than the generic price. The flaws in that mechanism became all too apparent in the evidence to us. First, the four-week measure was outdated because most wholesalers now hold stock for 12 to 15 days. Secondly, it is up to the manufacturers and wholesalers who are monitored for the drug tariff to determine what levels of stock they maintain. We thought it unsatisfactory that the system relied on a few wholesalers and manufacturers who were free to determine levels of stock and thus could trigger category D status, which, in turn, had commercial implications for their industry.

In the year or so before we took evidence, the number of category D listed drugs rose from 30 to 192. An enormous burden was put on the Prescription Pricing Authority. In our view, it acted with commendable promptness and was among the first to realise the urgency of the situation. But that was at some cost: 140,000 overtime hours were worked between April and November 1999 and 230 more staff were recruited, at an annual cost of £3.2 million.

The final and most powerful factor in the equation was the nature of the generic markets. This was a commodity market, which the Minister admitted was not "working effectively at present". We felt that the flaws in the category D system, the fact that the drug tariff was slow to respond to trends between bulk and patient packs and the limited number of players in the generic market made the market ripe for manipulation. Who was manipulating it remains an open question. One group that was clearly fingered in the evidence to us was the short-line wholesalers. They moved in and out of the market with speed and were quick to spot trends. They were well placed both to corner stocks and to profiteer from shortages. Although we believe that they were well placed to exploit the market, we felt that they became the potential scapegoat for everyone else because they were the only major force not represented in oral or written evidence, as they did not have a collective trade body.

Does the hon. Gentleman agree that short-line wholesalers also have the potential to lubricate the market and to act as a force for bringing in supplies from elsewhere whenever there is a shortage? In any market, players who duck in and out can enhance its working, as well as gum it up in other ways.

The nature of any market is exactly as the hon. Gentleman described. Our worry is that the current mechanisms created a shortage and allowed key players to cash in on that shortage. They were thus at an advantage and able to enhance their own interests at the expense of the national health service. We could not draw conclusions about the individual guilty party; the finger could be pointed at a range of people who had taken advantage of a difficult situation. We hope that we will learn lessons from what happened and, to be fair, the Government have attempted to draw conclusions from the difficulties that occurred.

Market manipulation, hoarding and collusion were not limited solely to the short-line wholesalers who were pointed out by several witnesses at the evidence session. The Government's recent consultation paper seems to agree with our conclusion that none of the original reasons cited fully explains the continued high prices in generics. The paper stated that the Government had not been made aware of any factors that would justify prices remaining at their current high levels for so long.

Our final conclusion drew attention to the absurdity of the current situation; we were assured that manufacturers took steps to block excessive orders, but that the wilier short-line wholesalers might buy up large quantities on a Saturday morning. The report stated:

It seems to us entirely undesirable that the proper functioning of the market in generics should have to rely on companies having to refuse to sell their products and on management being present on a Saturday morning to prevent sales from taking place.

We felt that the price rise of the past 18 months must have enriched many individuals at the expense of the national health service.

I come now to what has been done and what needs to be done; the first thing to remember is that most of the players in the industry told us that they were unhappy with such a disorderly market and would welcome more regulation and control. Thus the Government are in a strong position to act to avoid a recurrence. As I said, the Government did not grasp the urgency of the situation as early as they should have done; perhaps it is not surprising that they dissented from that analysis. In their reply to our report, the Government argued that at no time did they give a firm commitment to fund the transition to patient packs. They also maintained—contrary, in my view, to the evidence—that what the Pharmaceutical Pricing Authority noted in March 1999 was not what we termed a looming crisis but a

rising trend in medicines in Category D.

That explanation is less than adequate. However, the Government acted promptly to reform category D; eight days after we took evidence the Department met the PSNC and agreed modifications to the entrance and exit procedures and to reduce the stockholding period to two weeks. More important still, the Department has pledged to undertake a fundamental review of the operation of the generics market and the drugs tariff, which we greatly welcome. The proposals set out in the consultation document show that the Government have tackled the problem directly and taken wholly appropriate measures. Just as our report criticised the Government, I hope constructively and not without reason, it is right to pay credit to the thoroughness of their new approach, which I welcome.

I also welcome the proposal to fix the prices of generic medicines that fall within the scope of the scheme at a ceiling that corresponds to prices between November 1998 and January 1999. That is an appropriate response to those profiteering at the national health service's expense and is the only measure that will bring the market into line reasonably quickly. The improvements in data gathering will be invaluable in the longer term in giving the NHS a better feel for what is going on in the market.

The generics market has, in general terms, served the NHS well. The Committee was anxious that the real benefits of generic drugs were being dissipated by a sudden and apparently inexplicable crisis in the market. I hope that the Health Committee's contribution to the debate helped prompt the thorough measures now proposed. We feel that a properly regulated generics market that is free from the turbulence of recent months would benefit the generic manufacturing industry as well as PCGs, health authorities, patients and taxpayers.

May I take this opportunity to commend the Health Committee for arranging this debate and for the investigation that it undertook last year into this important issue? I welcome the opportunity, too, to play my part in exposing what I consider to be cynical and organised profiteering by some sections of the pharmaceutical industry—a form of profiteering that has driven many health authorities, including my own in Shropshire, and many health trusts and PCGs, to the point of bankruptcy, ironically at a time when investment in the NHS is at an all-time high.

I am sorry to interrupt, but the hon. Gentleman makes a serious allegation. He used the phrase "organised profiteering". Is he suggesting collusion between companies?

I am grateful for the hon. Gentleman's interest. I am scarcely under way; indeed, I do not believe that I have reached the first semicolon. As my contribution unfolds, he may have a clearer idea of my views.

The Government were elected on a pledge to restore the national health service, and we are now witnessing unprecedented levels of funding, including, this year alone, an additional £2 billion as part of a £21 billion package. That extra investment is intended principally to benefit patients and, indeed, people who work in the NHS. It is not intended to enrich already pretty affluent and successful directors and shareholders of drug companies. Too high a proportion of that new investment is entering through the front door of the NHS, only to disappear out the back as quickly as it arrives.

I am not arguing against the profit motive. Last week, in this very Chamber, when debating the conduct of privatised utilities in my constituency, I made the point that private sector companies are perfectly entitled to take a profit and to make their margins. However, in this sector, as in others, private profit should work in the public interest. I do not believe that that has been the case over the past couple of years in the NHS drugs market.

I acknowledge the pharmaceutical industry's contribution to our economy. It directly employs some 60,000 people, and it is argued that a quarter of a million people indirectly owe their employment to the pharmaceutical sector. Investment in research and development is £7 million a day, and that high investment must be redeemed through the market. We can take pride in the fact that six of the 25 best-selling drugs are made in this country. The pharmaceutical sector in this country earns £2 billion-worth of exports annually.

None the less, I am not happy about the power that pharmaceutical companies wield throughout the NHS or the stranglehold that they have seemed to have had in the past in negotiating with the Department of Health. Their powerful employment base and their research and development activities in this country give them undue leverage in such negotiations. Nor am I happy about the ways in which they can distort the medical research sector through their enormous financial clout. We have talked a lot about the market, and I am sure that we shall hear more about it this morning. It stands to reason that pharmaceutical companies have a vested interest in investing in research connected to treating conditions rather than preventing them. We can hardly blame the sector for taking an interest in that from which it will profit most, but it nevertheless has an undue influence on the general character of research in this country, which is much to be regretted. Moreover, there is a growing disquiet about the ability of the pharmaceutical sector in this country and elsewhere to patent the very means of life and death in the research being undertaken on genes. Lastly, but most serious in the context of this debate, it is my view that the drugs industry has systematically ripped off the national health service.

In an Adjournment debate last year, before the category D issue became evident, I drew attention to the cost of hospital-led prescribing. For many years, the drug industry has made disproportionate profit from the NHS by that means. The equation is simple. Drug companies provide branded drugs as loss leaders to hospitals, because they know that only 20 per cent. of NHS drugs are dispensed in hospitals and that 80 per cent. of drugs are prescribed or dispensed in the community. That is the catch. They hook the patient in hospital, and when discharged, the patient will tell a doctor that he or she now wants the drug that was prescribed in hospital, and that the consultant believed was the best for his or her condition. In many cases, general practitioners will prescribe the branded drugs. They may be unaware that the cost of those drugs in the community is astronomically higher than it is in hospitals, where, for example, Imdur costs 2.5 per cent. of its value in the community, and the popular drug Frumil costs 6 per cent. of that value. That is a cynical and calculated scam and it is all too effective.

The problem is serious. In 1997–98, the NHS overspent its drug budget by £69 million, which is the equivalent of about 4,000 grade D nurses. If generic rather than branded drugs had been prescribed, £66 million of that £69 million could have been saved, and patients would have suffered no discernible deleterious effects. Of 100 English health authorities, 78 overspent their drugs budgets—five by £2 million or more, and 34, including my local health authority, Shropshire, by more than £1 million. That is an intolerable drain on the NHS's budget.

I will briefly refer to a second problem. Dispensing doctors often load additional costs on the NHS, because their remuneration system contains an in-built incentive to prescribe branded drugs, which are more expensive than generic drugs. In 1998–99, even before category D became an issue, those two problems already cost Shropshire health authority £1.2 million. In 1999–2000, that cost was more than £1.5 million.

Last year, primary care groups were introduced in Shropshire and elsewhere. Primary and secondary health care sectors were working more closely together, and innovative software was introduced to help GPs to identify the best-value drugs that they should prescribe or dispense. There was at last an opportunity to reduce the NHS drug costs. The Government negotiated a 4.5 per cent. reduction in the cost of branded drugs through the pharmaceutical price regulation scheme, but ironically, just when it seemed that there would be good news for the NHS and its patients, the category D list issue loomed.

At the same time as the cost of branded drugs was to reduce, the cost of generic drugs escalated. My hon. Friend the Member for Wakefield (Mr. Hinchliffe) described the consequences of that. In autumn 1998, only 30 drugs were on the category D list of the generic drugs that were difficult to obtain. By summer 1999, 170 were on the list, and the number rose further to about 190. The cost of some generics increased by more than 700 per cent., and the drug barons claim that the closure of Regent GM was a major factor. That may have had an effect, but it is difficult to accept that the closure of one manufacturer in such a buoyant and profitable sector could have had such a disproportionate effect on the market.

I thought that drug barons came from Colombia. The hon. Gentleman talked about a shocking 700 per cent. increase. Does he know what percentage of the NHS drugs budget covered the increase in the cost of generic drugs during that year? He will find that to be a less dramatic figure than that which he quotes.

If the hon. Gentleman is going to mount a defence of the pharmaceutical sector later in the debate, I will be fascinated to hear it; he will be one of the very few outside the industry to have attempted that. The overall cost to the NHS of both generic and branded drugs has risen considerably in recent years. That has occurred for many reasons, some of which are quite acceptable, such as breakthroughs in drug technology and the availability of drugs, which we welcome. My argument, and that of the Select Committee, is that there was not a reasonable explanation for the increase in the cost of generics last year.

The argument about the switch from bulk supplies to patient packs is not credible either. It is difficult to accept that an industry as sophisticated, profitable and succesful as the drugs industry could not have anticipated better and planned more effectively for that transition, even if it were not without problems.

There is overwhelming circumstantial evidence that the market was rigged and that there was stockpiling and hoarding among wholesalers and pharmacies, if not by manufacturers. The cost to the NHS is at least £0.25 billion, and probably higher; perhaps the Minister will be able to provide more precise figures. That was a major blow to the primary care groups in their first year, at a time when they were seeking to establish confidence and extend and improve primary health care. It was a major blow also to their patients—the people who really matter in all this.

In Shropshire, the category D issue—the increase in the price of generic drugs—meant that the difference in the cost of drugs to the health authority between November 1998 and November 1999 was about 16 per cent. Between £2 million and £3 million is the price tag that Shropshire health authority has had to meet for the increased prices of generic drugs. That is without considering the additional and undue costs of hospital-led prescribing and dispensing GPs. I would estimate that, last year, Shropshire health authority lost from its budget £4 million to £5 million-worth of resources that should have been spent on front-line health care.

The Government have acted—I believe, belatedly, although I welcome their action. They provided £90 million last winter to compensate—at least in part—for the additional burden on primary care groups and health authorities. The Government are moving to cap drug prices, and we await with great anticipation the results of the OXERA review of the generics market.

Finally, there is a reference to the Office of Fair Trading last August and I, for one, am looking forward with anticipation to its findings. However, I will not be foolish enough to hold my breath, since I referred to the OFT an issue relating to this sector as long ago as 27 April last year, and I am still awaiting its response. I do not consider it to be in the public interest that, when serious issues such as these are raised with the OFT, it should take quite so long to come to a conclusion.

Whatever the OFT's findings are, it is essential that the Government ensure that this form of price fixing in the NHS can never happen again. The pharmaceutical companies are entitled to their profit, but they are not entitled to rip off the NHS. Whatever the OFT establishes, someone along the supply line got very rich very quick, and did so at the expense of my constituents. Every penny of the billions of pounds that the Government are now investing in the NHS on behalf of the taxpayer is precious. I look forward to hearing how the Minister will ensure that every one of those precious pennies is spent on health care for my constituents, for the Minister's and for everyone else's.

As a new Member, I am afraid that I have not had time to read the report. Until recently, I might have had to declare an interest. However, I have now given up pharmacy. It may be of interest for Members to hear about my practical experience.

The big factor for me is the impact on the patient. There is no doubt that the change to patient packs—and possibly the closure of Regent—has had a real impact on patients. We have struggled to obtain supplies of drugs. A number of people had to go without their medicine for a few days because, in Southampton—where I worked—we could not get supplies. That is a worry on a level that is other than financial.

Nobody has yet mentioned an additional impact on the NHS. Previously, a lot of patients were issued private prescriptions by their GP because it was cheaper for them to get a private prescription for a generic drug than it was to pay £6—or £5.90, as it was last year—for an NHS prescription. Because of the big price increases, patients now find it cheaper to spend £6 on an NHS prescription. Obviously, that is another load on the NHS. I do not know how big an impact that will have—nobody has done any work on it—but it is another factor in the equation.

I doubt whether the drug tariff is bedtime reading for many hon. Members. However, I would be interested to see how it is to be updated with reference to the 14-day lead time. Currently, it is updated monthly. In the past, there has been a time lag between pharmacies' having to pay increased costs for the drugs and that fact being recognised and their remuneration coming through. In the past, the tariff system has worked against the financial interests of pharmacists. A system that responded more quickly would be in the interests of all concerned.

The introduction of patient packs was a complete fiasco from a professional point of view. There has been no standardisation on the size of pack and no move to encourage GPs to prescribe according to the size of pack. The resulting mess leads to confusion for the patient and has an impact on the pharmacist, who has to cope with the extra volume of stock. It may be too late now, but we must learn the lessons from that and plan for the future.

The hon. Member for The Wrekin (Mr. Bradley) was concerned about hospitals prescribing branded drugs, and said that that was being forced on to the community. That is not a problem. GPs these days are painfully aware of the cost of drugs. They understand that generic drugs will save them money and most are keen to get the best benefit from their budgets for their patients. That was a red herring; it does not happen in practice, and certainly not in my area.

I welcome the contribution of the hon. Lady, the newest Member of the House, and I congratulate her on her diligence in speaking again today, having made her maiden speech only last night. I provided figures in my speech that suggested that, before the category D issues arose, the cost to my health authority of the hospital-led prescribing scam—as I described it last year—was more than £1 million, and that that cost was replicated throughout the health sector. Seventy-eight of 100 health authorities had a similar experience. Surely her anecdotal evidence does not measure up to that statistical evidence.

I admit that I can only speak for the area in which I worked. Yes, manufacturers provide drugs in their packs and the patients like to think that they are getting the same again. However, where there is a history of generic prescribing in an area, patients quickly realise that they often receive packs with different presentations. In the area that I represent, GPs are cost-conscious, and generic prescribing is the name of the game. Most of them have a little button on their computers which, when pressed, automatically generates prescriptions in a generic form. That causes some confusion with items such as baths oils, but, on the whole, it works in the best interests of the patient.

I agree with what has been said about dispensing doctors—I would, wouldn't I? The evidence shows that where doctor dispensing is the norm, the drug costs are higher. That should be looked at.

When prices are agreed for the drug tariff, surely the onus is on the Government. Twenty years ago, when I first qualified, the Government slashed the prices that they would pay for drugs such as valium and vitamins and targeted particularly a company called Roche. If they could do that then, and if they could encourage the 4 per cent. cut in drug prices a few years ago, I see no reason why, with the will, they could not do that today.

The onus should be on the manufacturers to justify the price rises. I do not believe that Regent was a major factor because the closure of a factory does not mean increased costs. It does not suddenly cost more to produce a drug just because somebody is not doing it. That is a difficult argument to follow.

There is no doubt that, in many cases, the packaging costs more than the drugs being supplied. That is a worry, but patient safety is a factor. We now have to enclose leaflets to explain to the public the properties of the drug and its side effects, which is welcome, but that cost has not been mentioned.

As an observation, I would say that the vast majority of pharmacists are honest. However, I know of cases where weaknesses in the drug tariff have been exploited. If the drug tariff were one's bedtime reading, one could make a lot of money. For some drugs it is necessary to endorse the pack size dispensed, which may be 28 tablets in a little box or a little bottle from a pack of 1,000. Pharmacists are supposed to say what has been given out. The costs are different and the vast majority of pharmacists will note accurately what is given out. However, some do not and there is no way of checking what has been supplied by the pharmacist. That should be tightened up so that those claiming the higher-priced packs can be checked. That would be beneficial for the profession and the public purse.

I welcome this debate. There is a problem, but we must be careful that we do not penalise pharmacists who have to suffer a time delay. Sometimes one has to pay more for drugs without getting the money back. That must be addressed. We must also address the need to keep prices down so that GPs, or whoever is paying for the drugs, can spend the money on other patient services.

I still hold some sessions as a general practitioner and, therefore, declare an indirect interest in the debate. I want to put that on the record.

There was once a time when the cost of drugs was of concern to only the Government. General practitioners had no interest in it because the budget was open-ended and there was no cash limit on the cost of drugs available to GPs. They could prescribe exactly what they chose in the interests of patients and it made no difference to them. That was undesirable in many ways. It did not foster cost-effectiveness or prompt GPs to look at their prescription habits. It did not prompt them to check wastage or compliance with patients or to look at the overall structure of what they were doing. They wrote the prescriptions and somebody else paid the bill.

That was a huge opportunity cost on the NHS. If there was inappropriate prescribing and wastage, and if GPs inadvertently used the most expensive version of a drug by branding it, money was used that could have been spent in other parts of the NHS to benefit patients in other ways. That was undesirable and, over the years, Governments have sought to address that problem by introducing various schemes to make GPs more cost-effective.

First, we had PACT—prescribing analysis and cost—under which, every month, GPs are sent a statement of the cost of their prescribing in relation to their colleagues and the national picture. That enabled them to see where they stood. They also receive an analysis of the percentage of generics used so that they can compare themselves locally and nationally. Also, the monthly PACT statement shows the target budget for the year so that GPs can assess whether they are overspending or underspending.

Some health authorities have introduced prescribing incentive schemes where practices that achieve a locally set target can recoup some money. For example, if a GP saves 2 per cent. on a drug bill this year, some money will go to the practice to spend on equipment or other patient services. That is welcome because it provides an enormous incentive for GPs to look at the cost of prescribing.

I was interested to hear the hon. Gentleman's historical analysis of the increase in generic drug prescribing. Would he care to pay tribute to my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke) for his key role in setting off the trend dramatically to increase generic prescribing in the NHS?

I will do that because, to be fair to the previous Government, they did address the problem. In fact, my next sentence was going to be in favour of fundholding. Fundholding introduced cost discipline on GPs and, to some extent, it was worth while. The problem is that fundholding was unfair and produced a two-tier service. It took resources away from some practices and gave them to others. There were clear losers as well as winners, but the principle was right in that it introduced a discipline for GPs. They looked carefully at what they were doing, analysed the effects and made sure that money was spent in the best possible way. I welcome that, from whatever Government it came.

We now have primary care groups, which represent the Rolls-Royce of reorganisation for GPs. Primary care groups embrace all GPs, not just those who are entrepreneurial enough to make a go of fundholding at the expense of their colleagues. The good news about that is that every GP now has a clear incentive to be cost-effective. The downside is that, just as GPs were getting used to the new unified budgets and to the idea that what they spent on prescribing could not be spent on referrals and so on, they were suddenly hit by the whammy of a huge increase in the cost of generics which, as has been mentioned, has spiralled out of control.

Some of the examples are striking. I shall give the hon. Member for Runnymede and Weybridge (Mr. Hammond) an example. It was estimated last year that about £200 million was spent on the generic problem. That equates to about 3 per cent. of the NHS drug budget—a significant sum. Three per cent. is a significant cost, particularly at times of low inflation, of which the Government can rightly be proud. We are talking about large sums of money and a significant impact on NHS costs.

That has caused a huge overspend and, as my hon. Friend the Member for Wakefield (Mr. Hinchliffe) said, it has caused massive pressure on the Prescription Pricing Authority, from which it has not yet recovered. For example, this week I received my PACT statement for December—over four months late. It is impossible for a GP practice or primary care group to budget properly for their drug costs if they are only now receiving statements relating to last December.

I am glad that the hon. Gentleman has raised that—it was raised in the Select Committee report and it confused me then. Is the hon. Gentleman suggesting that GPs who are prescribing generically—in the cheapest and most cost-effective way—should change their prescribing practice, which could only mean issuing fewer prescriptions, in response to information that their budget is becoming overspent? Is that what the hon. Gentleman recommends?

Quite the opposite. Most GPs are very cost-effective prescribers, and there are now many reasons for them to be so—primary care groups also have incentives to be cost-effective—but if they cannot judge what they are spending on an item because the response from the Prescription Pricing Authority is four or five months late, it makes it extremely difficult to set budgets. It makes it almost impossible to get involved in a meaningful prescribing incentive scheme, simply because the data are meaningless. One cannot equate what one is doing now with figures that may arrive many months late.

Of course all GPs have an interest in the increasing use of generics. As the hon. Member for Romsey (Sandra Gidley) rightly said, many GPs now have a simple conversion system on their desk, which is a welcome development.

I want to make a clear distinction between the manufacturers of branded and of generic medicines. It is not fair to blame the branded manufacturers. The vast majority of companies that manufacture branded drugs do not also manufacture generic drugs. We must not confuse the two. The generics manufacturers must shoulder their part of the blame.

I acknowledge the distinction that my hon. Friend is making, but does he not accept that in many cases there are links between the companies and that many of the ultimate owners own both branded and generic companies?

I was of that opinion before the Select Committee conducted its inquiry, but the vast majority of the evidence that we received was that they are entirely different companies, owned by different people, although I accept that there must be some overlap. I want to ensure that we place the blame where it belongs.

Enormous difficulties have been caused for general practices, primary care groups and trusts. I welcome the fact that the Government made available £90 million last year to cover some of the overspend, but there are two problems: many primary care groups are complaining that they remain overspent through no fault of their own; and the money should have been spent on nurses, hospitals and equipment. The NHS could ill afford to lose that £90 million, so it is a great shame that the Government had to use it in that way.

Schedule D is well and truly overdue for reform. For all the reasons that hon. Members have mentioned, it is too open to manipulation. I do not want to point the finger directly, but any market that is effectively controlled by a basket of five suppliers and manufacturers, with a series of short-line wholesalers hanging out on the wings, is almost certain to be ripe for manipulation by one person or another. I would like to believe that the majority of people in the system are honest, but I cannot believe that they all are. There is far too much evidence that manipulation has occurred, with all sorts of distortions of the market, stockpiling and the deliberate running down of stock to force drugs onto schedule D. That is extremely worrying.

The Government have already suggested that they want to replace schedule D with a maximum prices scheme. That will go a long way towards solving the problem, but I urge caution. If we introduce maximum pricing—I have heard rumours that this is happening already—what is to stop manufacturers simply removing themselves from the generics market altogether and saying that, for the price that the Government are prepared to pay, they are not prepared to manufacture? That would have severe repercussions.

I currently chair the all-party group on pharmacy and I have discussed some of my worries with representatives of pharmaceutical groups and community pharmacists. The worry is that if manufacturers stop producing generics, the pharmacists will be in a very difficult position. They will have only three possible responses.

First, pharmacists could refer the patient back to the GP and say, "I'm sorry, we can't get the drug because the manufacturers have stopped making it in sufficient quantities at the price that the Government are prepared to pay. Go and get an alternative prescription." Secondly, they could say "I can't get the drug, but it's worth shopping around in case another pharmacist can." That would be very unsatisfactory for the patient. Thirdly, the pharmacist could dispense a more expensive version and bear the cost himself or herself. That would also be very undesirable and an unreasonable burden on community pharmacy.

The Select Committee is considering how to enhance the role of community pharmacists, who are clearly concerned about the problem. If generics became in short supply because the price went down too far, that would be a cynical manipulation of the market and would be extremely regrettable. What does my hon. Friend the Minister think we can do to prevent that, if we do indeed abandon schedule D and replace it with a maximum prices scheme?

I welcome this debate, which is on an important subject, and would appreciate a response to the points that I have raised.

Like my colleague the hon. Member for Dartford (Dr. Stoate), I declare an interest as a member of a primary care group. I am not as sure as he is whether such groups are the Rolls-Royce of primary care or whether we are developing a Rover—time will tell.

I congratulate the Chairman of the Select Committee, the hon. Member for Wakefield (Mr. Hinchliffe), under whom it is a pleasure to serve. The Select Committee system seems to be very effective, especially in relation to the health service, because quite often we have only to announce that we are to launch an investigation, and we get Government action even before we report. The Minister is clearly proud of that fact. It saddens me, however, that it took the Select Committee only one day's worth of evidence, plus a perusal of the written submissions, to come up with real problems and suggest real solutions, prompting Government action that was too late and too slow.

Our investigation focused not only on generic prescribing but on the bigger issue of the place of market forces in the supply of drugs to the national health service. At present, there is no such thing as market forces in NHS drugs procurement. We have an extraordinary system in which, if there is a cartel fixing prices, the Government appear to be part of that price-fixing ring, either as a willing victim or a dupe—I am not sure which. The evidence on which decisions are made is seldom published, and the way in which the tariffs are set and the pharmaceutical price regulation scheme produces its magic figure is highly secretive.

We have a nonsensical system in which the Department of Health is the licenser of the drug, promotes research and development and takes seriously its responsibility for supporting an industry that is important to this country, both economically and from a jobs perspective, but is at the same time the major purchaser of that industry's products. That system is long overdue for an overhaul. I know that the industry is not keen on introducing a further hurdle, but we must understand that there has been a massive escalation of drug costs in the past 10 years, not only in real terms—in cash terms, the cost has gone up from just over £2 billion to £5 billion—but as a proportion of NHS expenditure.

The point was well made by the hon. Member for The Wrekin (Mr. Bradley) that that is much to be commended in some instances, where there are now pharmaceutical ways of treating people rather than carving them up or relying on very restrictive life styles. As a clinician, I am extremely grateful to the pharmaceutical industry, without which we doctors would be much less effective—in fact, we would be totally useless.

The Government should consider experiences elsewhere. In New Zealand, the drugs budget was rising by about 10 per cent. a year, as tends to be the case here. A new contracting system was introduced that stopped prices surging ahead and slowed down the rise to 3 per cent. a year, which is probably a better reflection of the increased use of drugs.

We have a system in which a drug is licensed for use, but that licence does not automatically allow it to be prescribed in the NHS. There should be a separate round of contracting to determine which drug and which manufacturer supplies the NHS. That would overcome the problem to which the hon. Member for Dartford referred. If a manufacturer bids to supply a generic drug to the NHS, it will not move in and out of that market willy-nilly; it will be geared up for a big contract. A contracting round—presumably carried out annually, or on a rolling annual basis—would achieve value for money for the NHS. It is not clear that value for money and fair remuneration are achieved at present.

I am fascinated by the hon. Gentleman's comments, but it flies in the face of all accepted principles of economics to suggest that having a single supplier and allowing other potential competitors to fall away would benefit the buyer. In the long run, that would be extremely detrimental to the buyer.

No, there is not a single supplier. There are multiple competitors and the reference price would be set in the contracting round. If other manufacturers wanted to compete by charging less than a particular price, we could ensure a supply of products—including branded products—at an affordable price. Research shows that the NHS drug budget could save more than £1 billion, which would pay for new drug development and ensure that new drugs were available without postcode prescribing. That could end the enormous anomaly of prescription charges.

We must either overhaul the prescription-charging system, which is based on clinical categories established in about 1950, or scrap it altogether. I think that we should scrap it because that would make life much simpler. The £300 million that it costs could be easily recouped by better contracting by the NHS. That would also move us away from the perverse incentive to which my hon. Friend the Member for Romsey (Sandra Gidley) referred; it is splendid that a knowledgeable professional has taken part in the debate. Doctors, such as the hon. Member for Dartford and myself, tend to speak on all NHS matters, but we must remember that others have a great deal of professional expertise.

We have a perverse system in which the rewards for pharmacists and dispensing GPs depend on the cost of the drug that they hand out. That cannot be a sensible way to run an economy. We must find better ways of rewarding our community pharmacists for their professional work. We rely far too much on their expertise as business men and shopkeepers who sell all sorts of other goods, which underpins their professional work. We must find a system in which they are rewarded for doing the right thing rather than for using drugs with high tariffs and high on-costs that give them a higher share of profit.

The drug industry has done tremendous things for clinical practice in this country and it is important to have an open scheme for ensuring that it has enough money for research and development. That could be done through the Medical Research Council, for example, and the Department of Trade and Industry should provide any necessary help with investment. The current system, in which the Department of Health is the main consumer and the supporter of the industry, has led to obfuscation and secrecy, which, in the 21st century, is no longer suitable.

This has been a useful and well-informed debate. We must view the problem in context. The hon. Member for The Wrekin (Mr. Bradley) used some inflammatory language and spoke about price increases of several hundred per cent. There have been large percentage increases in the price of individual drugs, but the hon. Member for Dartford (Dr. Stoate) put that in context. We are talking about a problem that has added between 3 and 4 per cent. to the prescription budget and perhaps 0.5 per cent. to health authority allocations overall. I would not deny that that is a significant problem, but using inflammatory figures such as 700 per cent. does not help to achieve a solution.

Is it not a fact that the cost of Frusemide increased by 720 per cent. in a short time? That is not inflammatory; it is inflationary.

The hon. Gentleman's fact is indisputable, but it is important to understand that we are talking about a 3 or 4 per cent. increase in the overall prescribing budget. That is a significant figure, which we must address, but not a catastrophe of the proportions that bandying around figures of several hundred per cent. might suggest.

I congratulate the Select Committee on its extremely well written and coherent report, which provided a helpful analysis. I found it extremely useful, especially in pointing up the weakness of the operation of category D of the drug tariff in terms of the method of entry and exit and the lack of incentive for a pharmacist to prescribe the cheapest possible available category D product that meets the doctor's prescription.

The hon. Member for Isle of Wight (Dr. Brand) hit the nail on the head when he said that the United Kingdom drugs market is managed. When we hear phrases such as "market manipulation", we must remember that we are talking not about a free and open market but about a market that is managed by virtue of there being only one overwhelming buyer. The solution that the hon. Gentleman proposed would make the problem that he identified worse, not better.

To bring the tone of the debate back down from some of the extremes that have perhaps been reached, we should acknowledge that we are debating structural defects in a managed market. That is a matter not of honest or dishonesty—words that have been used this morning—but of market players responding to signals from the market. Those signals may be false and may lead the market in the wrong direction.

I certainly did not say that anything dishonest or illegal has happened in the market—nor did I hear other hon. Members say that; but does the hon. Gentleman nevertheless accept that there has been manipulation and that that has cost the NHS and patients who depend on it a considerable sum, which should have gone into front-line health care? That is a serious matter, and it is not diminished by the fact that the companies or individuals who have rigged the market have behaved within the law.

On reading the report of the debate, the hon. Gentleman will find that the words "honesty" and "dishonesty" have been used, but I readily acknowledge that the Select Committee report has identified a defect in the way in which the market operates. We can all agree that the market has not operated and does not operate properly, but, to achieve the targets on which we all agree, it is important not only that the market in generic drugs operates properly but that the Government's target of significantly increasing the percentage of generic drugs in the mix is met.

Paragraph 14 of the Select Committee report talks about delays in feedback. I had an exchange about that with the hon. Member for Dartford. It would be bizarre to suggest that GPs should change their prescribing practice as a result of the feedback that they got from the Prescription Pricing Authority. I accept that, from a budgeting point of view, they need that information, but, from a prescribing point of view, I hope that they do not need it if they are already prescribing generics.

There is no doubt that, under the present system, the overspend has impacted on GPs and on their budgets. I wonder whether the Minister has given any thought to whether, given the nature of the managed market in prescription drugs, it might be better for the system of GP budgeting to be based on the drug tariff in place at the outset of the budget period—together with a considered measure of what inflation is likely to be in that period—so that it is the Government who take the risk of dramatic fluctuations in prices from the posted drug tariff at the outset, rather than that risk being borne by GP practices and primary care groups, which have no way of inputting to the management of the economy in drugs and are thus vulnerable to a risk that they cannot control.

I have read the Select Committee report and it is evident that the Government did not know what was going on in relation to the generic drug marketplace in 1999. When they did find out, they failed to act effectively. Ministerial answers, with the benefit of hindsight, clearly provide an inadequate explanation of what was going on.

I think that we have agreed that, whatever the arguments about the continuation of higher prices in the market, there is no dispute about the events that triggered those changes in the marketplace: the closure of Regent and the patient packs fiasco. The first was a problem that the Government did not precipitate, but which had clearly predictable outcomes. I would be interested to hear from the Minister what the Government did in the immediate period after the closure of Regent—and, indeed, in anticipation of the Medicines Control Agency's closure of Regent—to deal with what were entirely predictable consequences.

In the case of patient packs, when I was first appointed to the Opposition Front-Bench health team, one of the first functions that I attended was the British Generic Manufacturers Association dinner in the summer of 1998, at which Baroness Jay was the speaker. I was surprised by the genuine sense of anger among the people to whom I spoke about what they saw as a complete volte face by the Government. They had given them a clear and long-term indication, both at political level during the time of the previous Administration and at official level, that they supported and condoned the move towards developing patient packs in accordance with the European Union directive, and changed direction 180 degrees when they came into office.

It is a problem for which the Government bear full responsibility. It is an example of staggering Government incompetence and an abdication of Government responsibility for moving the industry into compliance with the EU directive in a timely way. The industry was forced to implement the directive independently. Ironically, the switch of supply to patient packs is likely to leave short-term shortages of bulk supplies. Because there is a marketplace of sorts out there, short-term shortages of supply will lead to an increase in prices and opportunities for brokers. I use the term "brokers" rather than "short-line wholesalers" because, in many senses, they share the same characteristics as brokers: they are players who come into the market to seek to arbitrage defects in the workings of the market.

The inevitable conclusion from reading the Select Committee report is that, in seeking to save £20 million, the Government have precipitated a chain of events that has cost the NHS many times that figure. I say with respect to the Chairman of the Select Committee, the hon. Member for Wakefield (Mr. Hinchliffe), that I thought that paragraph 31 of the report, which is a gentle criticism of the Government's actions—or inactions—was a model of understatement. I could almost sense the clenched teeth as I read it. I know that Ministers would agree that the hon. Gentleman is not always as gentle in his comments on Government policy.

Again, it was ironic that the Government, who have made so much of the bureaucracy around the extra-contractual referrals regime that was implemented by the previous Government—which generated some few thousands of pieces of paper per health authority—should be responsible for a bureaucratic explosion in the activity of the pharmaceutical pricing agency. We understand from the Select Committee report that 230 additional pen-pushers were taken on to process the extra paperwork that the fiasco has generated. A total of 140,000 hours of overtime were incurred, which sits rather ill with the Government's commitment at the last general election to cut bureaucracy in the NHS and redirect resources to patient care.

I hope that the Minister will tell us about the Government's ideas for reform of the drug tariff system. I hope that she can tell us what the current status is of the fundamental review that was set up by her noble Friend Lord Hunt. The review is due to report in the summer, but the document published by the NHS Executive on 20 April, which indicated a set of proposed maximum prices, appears to many people to pre-empt the outcome of that review. I would be grateful if the hon. Lady could clarify how we should interpret the publication of that document.

It seems that the maximum price approach is precisely the wrong one for the Minister to pursue. Examples from around the world and across history show that imposing maximum prices on a market where there are shortages will simply starve the market of product. Although the decision on how to proceed must be one for Ministers, they can be sure that we will hold them to account if the result of their reforms of the drug tariff system is to make supplies of certain drugs unavailable in the UK, or—perhaps more realistically—to push the UK into being the swing marketplace for producers, which they sell into only when demand is low elsewhere, or when they happen to have surplus production capacity, so that patients in this country cannot be sure of the continuing availability of drugs.

This is a sorry story of Government incompetence, which has been hidden behind an elaborate conspiracy theory. The Select Committee's report was a good job of work, if understated in its criticism of the Government. The danger in reacting too late to the situation that the Select Committee has identified is that the Government will do what they have done already in the patient packs situation, and, in trying to save some money for the NHS, will introduce a regime which, in the long run, costs the NHS more and damages the interests of patients and GPs.

I am grateful to the Chairman of the Select Committee on Health, my hon. Friend the Member for Wakefield (Mr. Hinchliffe), for initiating what is a timely debate. I pay tribute to the use of Westminster Hall. It gives us an opportunity to discuss Select Committee reports and to recognise their significance.

The Select Committee was quick to recognise the significance of last year's events in the generics market. The report on its inquiry made an important contribution to that debate. We certainly had its recommendations in mind when we developed our recent proposals for setting maximum prices for generics. I welcome the opportunity to provide some more details.

I am surprised at the comments by the hon. Member for Isle of Wight (Dr. Brand), who said that it took the Government too long—they were too late—in the same breath as welcoming the Government's swift action. I hope that, in the course of the explanation that—

Will the Minister give way?

There is very little time and I should like to outline the position, but the hon. Gentleman cannot have it both ways. It seems that we responded quickly, but also too late.

As the Select Committee's report says, the reasons for what happened during previous years are by no means clear. A measured and appropriate response had to be given at the time. Hindsight is a wonderful thing, which we all sometimes wish we had, but the Committee assessed the circumstances fairly. I wish the comments of the hon. Member for Runnymede and Weybridge (Mr. Hammond) had been as measured and considered as the Committee's response.

We regard the increase in generic prescribing rates over a number of years as a success story for the national health service. It is widely accepted that non-proprietary or generic drugs are as effective as, and in general cheaper than, their proprietary or branded counterparts. That is why we are taking action to secure higher rates of generic prescribing. The proportion of generic prescriptions in England increased from 43 per cent. in 1992 to 63 per cent. in 1998. I am sure that my hon. Friend the Member for Dartford (Dr. Stoate) will be pleased to learn that we too are committed to ensuring that every penny spent in the NHS is focused on patients.

The increase to which I referred has allowed us to channel money, and we are determined to build on that success. Indeed, we have set ourselves the fairly ambitious target of increasing the average generic prescribing rate to at least 72 per cent. by the end of March 2002, and we are well on the way to meeting that target.

Our policy of encouraging generic prescribing depends on a reliable supply of old and new generics, which must offer value for money. We believe that that can best be secured through a soundly managed and fully competitive generics market. I must take issue with the economic analysis presented by the hon. Member for Isle of Wight about how we can square the circle in this regard: how can a sole purchaser exist alongside competitive forces?

By and large, the system has worked well, but last year it clearly failed. In response to that failure, in December we commissioned a fundamental review of the generics supply chain from Oxford Economics Research Associates. The hon. Member for Runnymede and Weybridge asked what action we were taking. When the first soundings were coming in, we were assured by the market that the situation was temporary rather than long-term, but we began discussions. It was then suggested that the market was not competitive. We referred the matter to the Office of Fair Trading, and are still awaiting its report.

When it became clear that the situation was not temporary, we took two steps. One was the long-term review, whose objective was to decide whether the existing arrangements best served the NHS, and to consider possible alternatives. OXERA's work on the fundamental review is well under way.

Our priority is to safeguard the position of the NHS, and services for patients. Last year's price increases in the generics market put substantial and, we believe, unwarranted cost pressures on the NHS. The cost to the NHS in England is expected to be some £200 million in 1999–2000. My hon. Friend the Member for The Wrekin (Mr. Bradley) described the pressures placed on primary care groups and health authorities. The Government intervened, and provided an extra £90 million to deal with the pressure immediately. Some of that will have to be absorbed by contingency funding.

I do not subscribe to the view of the hon. Member for Runnymede and Weybridge that we should change the budget for primary care groups and primary care trusts, taking the drugs budget out. I think that we are talking about the allocation of, as it were, a whole envelope. When things happen unexpectedly, as they did last year, the Government provide extra funds.

We had to intervene, because it would have been irresponsible not to do so, but it must be recognised, given the nature of the market, that we do not intervene lightly. Logic suggests that in commodity markets prices can go up as well as down. A number of factors were involved, many of which have been mentioned today. I will not go into details, but we are responsible for ensuring a secure supply chain. That means that the number of permanent players in the market must be fairly fixed: movements in and out of the market would not be conducive to permanent supply. That is why we are talking to the industry, and why we are removing category D, which has clearly contributed to the instability.

The fundamental review will allow us to make strategic decisions about the future shape of the market. We are talking to all the interested parties: this is a genuine consultation. At the same time, it appears that there is continued pressure on the NHS, and I think it important to describe our short-term response. That involves negotiating with industry—consultation will end on 24 May—on the imposition of a maximum price range for generic drugs. We propose to use powers provided by the Health Act 1999—subject to parliamentary approval—to introduce maximum prices that will be applicable across the United Kingdom, which will be reviewed in 15 months' time.

Will the Minister give way?

Ever so briefly.

Having given the hon. Member for Isle of Wight (Dr. Brand) a lesson in economics, will the Minister tell the rest of us what normally happens to supply in a marketplace when a product is priced at a certain level, and someone imposes an artificially much lower price?

As the hon. Gentleman said earlier, this is a managed market. In a managed market, mechanisms must be introduced to allow the industry to operate, and also to allow the NHS to secure safe supply. I therefore do not think the question entirely relevant.

As I have said, there is a short-term review and a long-term review, and they are working in tandem. Members have asked how the two interact.

I welcome the hon. Member for Romsey (Sandra Gidley). It is delightful to work with a new Member, especially when it is another woman: we do not have enough of those. The hon. Lady raised two significant points on the basis of her experience as a pharmacist. She mentioned patient behaviour, and control of prescribing by pharmacists. We will take her points on board, and feed them into the long-term review that is being conducted by OXERA.

I thank my hon. Friend the Member for Wakefield for his succinct and precise summary of the Committee's findings. My hon. Friend the Member for Dartford described the PCT arrangements as a "Rolls-Royce": I consider that equal to Rover—as a Member whose constituency is next to Longbridge, but not in any other context. He described the difficulties, but also the benefits, of the system, and explained how we should manage it in the interests of all players. He expressed concern about what would happen if manufacturers simply said that they would not go on producing. That is exactly why the long-term review and the consultation with the market are genuine. This is a two-way relationship. If we exclude the last year—which was really quite unusual—it is possible for the long-term arrangements to be successful, and we will build on that.

It was suggested that the introduction of patient packs was a major contributory factor. There is no evidence for that. Let me put on record, however, that we have not left it to the industry to comply with a European Union directive that was introduced in 1992. The directive requires the provision of a patient leaflet, and also the provision of certain information on the label. That cannot be equated with a patient pack. We are complying with the directive. The previous Government thought patient packs were the way forward, but the present Government gave no indication to the industry that we would pursue that. However, I would by no means describe our disagreement with the policies of the last Government as a U-turn.

We need to recognise the tremendous importance of pharmacists, but also the Government's responsibility to ensure that the market is successful, and that NHS patients are supplied with drugs as and when they are needed—but at a price and within a structure that give us, as taxpayers and as a Government, value for money. I believe that the two reviews—the short-term review on maximum price, and the long-term review—will deliver that.

It usually gives me the greatest pleasure to initiate debates on issues that are within the Government's competence, but, sadly, that is not so in this case. This debate is based on my concerns about various shocking cases of which I am sure that the Minister is already aware. I would perhaps not be so concerned if the issue arose in only an isolated case, but, on the basis of my information, it seems to be arising across the country. I feel—as I am sure that other hon. Members do—that my constituents have a right to consistently high service standards, but, in disability living allowance, they are not receiving them.

I should like to raise three issues, the first of which is the problem of inordinate delay in DLA administration. The second is the difficulty in obtaining, quickly, accurate information. The third is the difficulty in finding anyone within the Department of Social Security with any knowledge of anything within its remit on the details of a particular case.

Delay is perhaps the most important issue. I am told that, when a person applies for DLA, it takes 11 weeks for a decision to be made. That situation is most unsatisfactory, and I should be interested to hear from the Minister just how he intends to improve it. About 87 per cent. of cases are dealt with within 53 working days. Although those cases satisfy the Department's own targets, I think that it is a very poor performance, and that the targets are not sufficiently strong. I suggest that the Minister has to resolve that obvious disparity. Furthermore, the situation is not improving, but—although the Department's own business plans make no mention of it—deteriorating.

Some cases that I have had are taking years to resolve. I shall give just three examples. In August 1998, Mrs. Fulton, a constituent of mine, tried to renew her DLA. In March 1999, she got in touch with my office, as the DLA unit was showing persistent incompetence. Such was the incompetence that the unit offered £200 as an ex gratia payment. The unit lost files. It was inaccurate, even sending out an inaccurate reply from its chief executive. Although the case began in August 1998, it went to appeal only last month. However, because of further incompetence, Mrs. Fulton will have to go to the commissioner to resolve the situation. Absolutely no solution to the case is yet in sight.

The Minister will also know about the second case, concerning another of my constituents—who does not want his name to be mentioned in this debate. His DLA was stopped in February 1998. The tribunal was in October 1998. However, because of the Benefits Agency's incompetence, the appeal could not be heard. I understand that, as the Benefits Agency had not reviewed its original decision, an appeal is now not legally possible.

The individual contacted me in August 1999. He said that there was to be a second appeal tribunal—which, eventually, occurred in February 2000, after further massive incompetence within the Department. However, a review of the case is still not possible. In a recent letter from the chief executive, the information on the case was three weeks out of date. Now that we have brought attention to the case, we have finally been promised that there will be a review.

The third case is that of another of my constituents, Mr. Stewart, who first contacted my office in May 1999. He had two claims, the first of which—dating back to 1995, when the original claim was made—was with the ombudsman. The second claim was for renewal of benefit. The latter claim has, so far, taken 19 months, but it has still not been decided by a commissioner. There is absolutely no indication when a decision on it will be made.

Mr. Stewart's initial claim to the assessors was made in March 1997. I am sure that the Minister has a copy of the assessors' damning report on the handling of the case, and that he will mention it in his reply. However, even in that case, no date for a tribunal has been set.

How have such delays been created, and how can they be stopped? Time limits on resolving cases must be established, and there must be some way of enforcing them. Perhaps automatic compensation should be made to constituents with cases such as those that I have mentioned.

Accurate information is another problem, as it is almost impossible to obtain such information from the Department. Locally, I have no problems with the Benefits Agency. I have the manager's telephone number, I lift a telephone and contact him or one of his officers, and I receive a response almost automatically—in most cases within a day; certainly within a fortnight. The local situation with the Benefits Agency differs extremely from the national one, particularly on DLA. Replies take at least a month. Frequently—as I have outlined in the above cases—they are inaccurate.

I realise that the national organisation is larger, but I reject completely that it should be so inaccurate in its replies. I should also expect, as a member of Parliament, to receive much quicker responses. The worst element of the situation is that at no stage does any checking seem to be done within the chief executive's office itself. Letters seem to be written by someone outside the agency, without being checked for accuracy by the chief executive himself or by anyone in his office.

No one within the chief executive's office or the agency itself seems to know what is going on. Frequently, when a constituent's case has to be dealt with by action beyond a usual decision, review or appeal, my office has to contact someone within the agency who—I should like to think—has some understanding of that case. My experience is that, in such cases, one is passed from pillar to post. One telephones the Benefits Agency, but is then knocked about from one person to the next. One tries to resolve the problem, and one thinks that one has done so. Then, nothing happens. One again contacts the agency, but then has to deal with another person. It can go on for month after month without a resolution.

I ask the Minister to consider for a moment the possibility of establishing at the agency a "Member of Parliament's hotline", such as that operating at the Child Support Agency. It would at least ensure that we know that the individual whom we talk to will go and do something on the case. A similar set-up at the DLA unit is long overdue.

Currently, it is impossible in any circumstances quickly to resolve even obvious problems. It is certainly impossible to resolve problems with a telephone call. When one tries to do so, one encounters complete bureaucracy. Finally, one has to write to the chief executive, who—right across the board—knows nothing about the case and shows no understanding or competence in his replies. I believe, based on both the evidence that I have gathered and anecdotal evidence, that my constituents are not receiving the service to which they are entitled.

I encourage welfare groups in my area. My constituency is not one of the leafy suburbs, but an area of high unemployment and high dependency on entitlements from the state. Those people tell the same story of delays and inaccurate information. It is bad enough that the Benefits Agency fails to reply to letters, but I am told that Ministers never reply either. That is worrying.

I am concerned that the Benefits Agency seems to think that everything is fine. Its annual reports do not mention the problems. I trust that, on the basis of what I have said and what he must know from other hon. Members, my hon. Friend the Minister will try to do something to change the situation.

Some parts of the Benefits Agency give people a reasonable service. I do not have a problem locally. However, I hope that my hon. Friend can ensure that the obvious problem in the disability living allowance unit will be resolved. I hope that he can assure me and, more importantly, my constituents, that changes will be made.

I congratulate my hon. Friend the Member for Cunninghame, South (Mr. Donohoe) on securing this debate. He has raised some important deficiencies in the administration of that important benefit, which the Government take seriously.

Disability living allowance and its sister benefit, attendance allowance, which is payable to people who make claims after the age of 65, make a very important contribution to the welfare of the 3.3 million people who currently receive them. The Government have a responsibility to administer the benefits fairly and efficiently. I agree with my hon. Friend that members of the public have a right to a consistently high standard of service from the Benefits Agency and the DLA unit. In most cases, they get it, but in some cases they do not. My hon. Friend has highlighted three particularly worrying cases. We must address the problems that have led to those cases not being properly managed.

I shall respond to my hon. Friend's three cases in as much detail as I can. I am grateful to him for giving me advance notice of them so that I can look into the background. Despite the problems, it would be a mistake to believe that they are typical of the service that the Benefits Agency provides. We receive and process 70,000 new claims for DLA and attendance allowance every month, as well as 12,000 renewals and 5,000 appeals. Usually, we avoid making serious errors. However, the fact that we normally get it right is no excuse for getting it wrong on occasions. I hope to have a little time to talk about the Department's policies to improve the quality of administration of DLA.

I agree with my hon. Friend on the important role of welfare groups in providing advice and assistance to people claiming those benefits. I have recently been convening meetings with the National Association of Citizens Advice Bureaux throughout the countries of the United Kingdom, including a recent meeting in Edinburgh for welfare rights advisers in Scotland to discuss medical services reports, which are a vital component of the benefit. My officials and I have had a lot of good feedback and some good ideas from those meetings. As a result of ideas put forward at the meetings, we have recently started to ensure that SEMA, the contractor of medical services, regularly meets the head of the independent tribunal service, Judge Harris, to get feedback on the outcome of appeals. The Department's chief medical adviser was already doing that, but the contractor was not. The two now meet the tribunal service regularly to get feedback. It is important for us to listen to those who are working in the field with people claiming the benefits.

My hon. Friend raised several issues relating to the general delay in processing the benefits. He was concerned that 11 weeks was a long time to process a new claim to benefit. Because of the nature of the benefit, we have set a 53-day target. Whereas entitlement to most benefits depends on facts—such as whether a person has savings, whether they work or whether their husband has recently died—entitlement to disability living allowance depends on opinions about issues such as whether a person needs care throughout the day and the night. Decision-makers often need to seek medical evidence from GPs or other medical professionals to build up a complete picture of the care and mobility needs arising from the person's disability. Writing reports for the Benefits Agency is not a high priority for most doctors. I know from individual cases that hon. Members have written to me about that it can often take two or three reminder letters and several weeks to get the necessary medical report for making a correct determination of entitlement to benefit. Would that it were easier and quicker, but it is because of the nature of the benefit that the target time is so long.

We have special rules that ensure that claims from people with progressive diseases and those who are terminally ill are dealt with quickly. The Benefits Agency is currently clearing 86 per cent. of such cases within 10 days.

I accept that the Benefits Agency's performance against the target of processing 85 per cent. of new claims within 53 days has been worsening. Last year, we did not meet the target for mainstream DLA claims, excluding the special rules cases, although we did meet it for attendance allowance. I shall deal later with how we intend to improve the administration of the benefit.

I shall refer to the constituent, whose name my hon. Friend did not give, as Mr. X. His entitlement to benefit was suspended when he was imprisoned in December 1995. On his release in December 1997, he asked the Benefits Agency to reinstate his disability living allowance, which it did from the day of his release, on 10 December 1997. In February 1998, the Benefits Agency sought additional evidence from Mr. X's GP to confirm that his medical condition and the mobility and care needs arising from it had not changed. As a result of the GP's evidence, the adjudication officer decided that Mr. X no longer qualified for the care component of disability living allowance, with effect from 4 February 1998.

Since July 1996, BA staff have been required to seek additional evidence in all cases involving claims for the highest rates of both components of DLA, which included the case that my hon. Friend raised. In retrospect, I agree that it would have been sensible for the additional evidence to be sought before the benefit was reinstated in December 1997, although there was no legal requirement for that.

Mr. X appealed against the decision to change his benefit entitlement, but, as my hon. Friend has said, the appeals service referred the case back to the Benefits Agency, because it did not consider that the decision-maker had conducted a mandatory review of the decision to change an award of benefit.

Under the old rules for DLA appeals, there had to be a review process before an appeal could be heard. The Benefits Agency, on the other hand, felt that it had followed the law correctly in both its review decisions to reinstate the benefit on Mr. X's release from prison and to reduce his benefit following the receipt of new medical evidence.

I strongly regret that the difference of opinion between the Benefits Agency and the tribunal service led to an impasse that lasted two years. The BA believed that it would be unlawful to review Mr. X's benefit for a third time and the tribunal service judged that it would be unlawful for it to hear an appeal which, it felt, had not been previously subjected to a second-tier review.

Under the old legislation, the impasse was insoluble, however, the Government have introduced new decision making and appeals legislation which gives us the opportunity to do something that could not have been done in the past—to implement a further review. The DMA legislation in relation to disability living allowance was introduced in October 1999 and amended the legislative framework by introducing a far simpler and more flexible system. As a result, the case is now being reconsidered by a Benefits Agency decision maker and Mr. X was sent a decision yesterday. Normal appeal rights will, of course, apply to that decision. So the works are ungummed, but I regret that the system led to an impasse that lasted two years.

Although it acted within the law, the way in which the case was handled by the Benefits Agency has caused considerable delay for Mr. X, and, through his Member of Parliament, I offer my sincere apologies.

I now turn to the case of Mrs. Fulton. I am informed that, on 16 June 1999, Mrs. Fulton appealed against the decision not to extend the care component of her DLA beyond 30 January 1999. On 16 August 1999, the disability benefits unit sent all relevant documents to the appeals service. The appeal was arranged for 20 December 1999, but the hearing was adjourned as the tribunal did not have all the necessary documents. I have been unable to establish whether all of these documents were sent by the Benefits Agency, whether they were received by the appeals service or whether they were lost in transit. However, I accept that the lack of certain documents should have been spotted by the appeals service before the hearing. I am pleased to inform my hon. Friend that the appeals service has now introduced procedures and training for all clerks to appeals tribunals to ensure that cases are checked for completeness before a date is set for a hearing. Once again, I accept that there was a problem and we have taken action to seek to ensure that it should never happen again.

On 22 February 2000, the tribunal reconvened, but again adjourned. At the hearing, it requested a doctor's report to provide additional information about Mrs. Fulton's mobility and care needs. The tribunal has the authority to consider Mrs. Fulton's entitlement to both components of DLA if it considers that there are good reasons for doing so. Obviously, if it identifies certain questions that it needs to determine properly to deal with the case, it needs to obtain the necessary evidence. That is a matter for the tribunal service, which is entirely independent of the DSS and not accountable to Ministers.

I am sorry for the inconvenience that any mishandling has caused Mrs. Fulton. As my hon. Friend mentioned in his speech, two ex gratia payments of £100 each were made to Mrs. Fulton for this inconvenience, the first in August 1999 and another in April 2000.

The case of Mr. Stewart, the third constituent to whom my hon. Friend referred, is a long and complex one and I am afraid that I can say less in response to the points that he raised. As the case is currently the subject of an investigation by the Parliamentary Commissioner for Administration, it would not be appropriate to comment on the service that Mr. Stewart has received from the various welfare agencies.

I understand that Mr. Stewart's appeal against the decision of the appeals tribunal to award him the lower-rate care component for a fixed period is currently being considered by a social security commissioner and questions concerning the handling of the case should be directed to the Lord Chancellor. Like tribunals, social security commissioners are not accountable to the DSS. However, my hon. Friend asked what might be done to allow people who take their case beyond the appeal stage to the social security commissioners and to check on its progress. I can confirm that people in that situation would need to contact the appeals service and ask for a form called OSSC1, on which to register their appeal to the commissioners. On that form are the contact details for the office of the social security commissioners.

My hon. Friend made an interesting proposal that Members of Parliament should have a helpline or a complaints line in relation to DLA and attendance allowance similar to that for the Child Support Agency. If I recall rightly, under the previous Government when there were difficulties following the introduction of DLA, there was such a helpline. I shall certainly look at what happened then and consider whether it would be appropriate to reintroduce it.

My hon. Friend also mentioned the independent assessors report. Although he gave me advance warning, I have not yet seen the report, so I shall respond in writing to the issues that he raised.

The level of service provided by the Benefits Agency and the appeals service is undoubtedly unacceptable in these cases. I apologise directly and unreservedly to my hon. Friend's constituents. I cannot undo the problems that they have encountered, but I can tell my hon. Friend what we are doing to prevent similar problems from occurring in the future.

The length of time that it takes for DLA and attendance allowance claims to be processed has increased and the Benefits Agency is taking steps to address the issue urgently. I am taking a close interest in that work. We are moving part of the work load from areas where the backlog is greatest to areas with less backlog and streamlining the processes to remove bottlenecks. We are simplifying some of the forms and letters to customers, recruiting and training additional staff and making maximum use of overtime within the strictures of the working time directive. That will have an effect, but it takes about six months to train a decision maker on DLA and attendance allowance as they are the most complicated benefits. So I am afraid that it will be some months before we reduce the times to acceptable levels.

We have introduced a programme of work within the Benefits Agency specifically designed to improve the way in which DLA is administered. This programme—the disability benefits modernisation programme—has introduced a new system for reviewing awards—called periodic inquiry—to ensure that customers receive their full entitlement to benefit. In the majority of awards that change it means an increase in benefit, although it can lead to a reduction in benefit in some cases. In addition, we are testing more personalised ways of dealing with new claims to benefit. Elderly people in particular find the application form daunting. It is a 40-page form which asks a lot of searching questions which are necessary in relation to securing entitlement to benefit. Indeed, it was designed as a self-assessment benefit in which claimants, who know best the effect of their disability or illness on their daily lives, to make an assessment of their needs. Therefore, claimants have to provide a great deal of information. We are testing the effectiveness of taking claims verbally, with somebody going out to meet claimants.

Hon. Members may also be aware that we are currently committed to introducing a fairer system of determining entitlement to disability benefits—called activities for managing life. It involves a set of proposed new tests that have been developed by and with voluntary bodies representing disabled people. If such a system came into use, it would be a significant change which the House would not expect us to introduce without careful consideration, consultation and testing, although I hope that we will be able to test the ideas produced by the working group some time next year.

The launch of the appeals service has reduced the number of outstanding appeals—

Order. We must now move on to the next debate

The rural white Paper has been a long time coming. Its delay is one of many reasons why people living in the country believe that the Government do not understand rural issues and are not concerned about their needs. I ask the Minister to ensure that, when we finally see the White Paper later this summer, there is not too much talk about vision, and instead some tangible, practical ideas to make rural life better.

The last thing that we want is a White Paper full of spin and good intentions, covered with words such as "sustainable", "inclusion", "integrated", "empowerment" and "workable modernisation", which sound wonderful, but often to not add up to more than a row of beans.

The countryside is not afraid of change. After all, the agricultural revolution came before the industrial revolution. The replacement of the horse with the tractor between the two wars had far-reaching implications for rural life, and agriculture, on which the rural economy is still largely based, has undergone great swings in the agricultural cycle over the years.

The changes taking place are profound. If one had told a farmer even 20 years ago that the production of wheat was less important than the number of skylarks, he would have thought that one was mad. He may still think that, but wildlife and the environment are now considered more important than maximising crop yields. How the pendulum has swung over the past 20 years.

There is another major factor at work. The population in the countryside is growing, but the services that people expect are lagging far behind those available in the towns. Public transport is non-existent in many areas; police services are grossly overstretched; social services are poorly funded; and there is a lack of affordable housing for local people. There is a growing feeling that the Government have been content to spend more in urban areas at the expense of those living in the country.

Finally, the rural community, which used to comprise thousands of more or less self-contained villages, with shops, pubs, schools, police, houses, churches and chapels, is dangerously fragile. That has happened over many years. The car, the supermarket, and intensive large-scale farming practices have all had their impact. Especially for the old and the young, living in the country is often lonely and expensive, and it is difficult to make a living there.

The rural White Paper will need to address these and other issues. Inevitably, it will have to contend with multiple and conflicting objectives. There will be a temptation to descend into platitudes, and Sir Humphrey will have to be kept in close check.

I shall set out a few of my own ideas, drawn from my experience of having lived in the country for most of my life and of representing North Norfolk, a very rural constituency, for the past three years.

First, I shall speak about farming. Every aspect of farming—livestock, vegetables or arable—is going through the wringer. Rightly, subsidies for production are being phased out, and prices are coming down to world market levels. The post-war period in which food production and yield improvement were king, is over.

A new regime which provides subsidies for landscape management, less intensive farming systems, wildlife habitat and environmental benefit, is with us. I hope that that will increasingly be extended to include rural development. Area payments, graduated and linked to the environment or the intensiveness of agricultural practice are, in my view, the way forward.

Against that background, farmers must be able to rely on the Government to provide them with a level playing field so that they do not have to compete against other countries with less rigorous hygiene, animal welfare and environmental standards. It cannot be right, for example, to import from Asia chickens that have been fed on substances banned in this country, or to import from Europe pork from pigs that have been raised in welfare conditions that are rightly illegal in Britain.

Imports that do not comply with our own minimum legal standards should be banned, and to the extent to which farmers are saddled with extra costs not recognised in the market, they should be compensated. Furthermore, food labelling should accurately state the country of origin, not just where it was processed or packaged, and it should contain more accurate information about the production methods used.

Finally, the Government must cut regulation. The Minister of State, Ministry of Agriculture, Fisheries and Food, the right hon. Member for Gateshead, East and Washington, West (Ms Quin), has just written to me stating that

we must regulate only where it is really necessary…The Government's policy on implementing EU obligations in relation to farming will be to avoid all "gold plating" of the legislation, its implementation and enforcement; to regulate in the least bureaucratic and burdensome way and to avoid implementing legislation ahead of specified EU deadlines. We will also negotiate in Brussels to secures measures which minimise regulatory burdens.

Tell that to the marines. Sadly, that does not apply in practice.

I shall deal now with the services that people need in the countryside. The Government must recognise that it often costs much more to provide local public services in rural areas, where the population is sparsely spread, than in towns. That applies to policing, school transport, social care and smaller schools.

My hon. Friend is right about the sparsity factor in the allocation of Government resources. Will he also note that there are some rural communities in which the population is scattered, as well as sparse? That certainly applies to the Lincolnshire fens, which I represent. A scattered population must also be taken into account in the allocation of public services.

My hon. Friend makes a good point, which is as valid in North Norfolk as it is in The Deepings. Lack of public transport denies access to goods and services that many people in towns take for granted. Central Government support for rural areas must reflect that.

There is a consensus that we must have more front-line policemen. The number of policemen has gone down by 50 in Norfolk since 1997, and by some 2,000 across the country. That trend is in the wrong direction. Much crime in the countryside is not reported, particularly on farms. Response times are far too slow. Many groups of travellers seem to be almost untouchable and beyond the law.

There is little visible police presence in many of our market towns. The morale of the police is not high, swamped as they are by paperwork and bureaucracy. Too little of their time is spent out and about in the community. Moreover, even when convictions are obtained, the courts seem reluctant to hand out longer custodial sentences, most notably for persistent offenders.

The cost of policing geographically widespread areas such as Norfolk is not reflected in the current funding formula that determines the central government grant. That must be addressed as a matter of urgency in the White Paper.

I am sorry to have to say it, but the confidence in the police to maintain law and order effectively has been severely dented over the past few years. As Fred Broughton, the chairman of the Police Federation, said earlier this week:

The Police Service has now lost confidence in the system and the public has lost confidence in the Police Service. The public are not getting the service that they are entitled to.

On transport, the Government's high fuel tax policy may make sense in big towns where there is alternative public transport, but it penalises the rural motorist. The Government should consider differential petrol and car tax for people living in the country, and should devolve resources and decision making to district, town and parish councils, so that flexible and voluntary community transport schemes can be supported.

The Minister should note that 75 per cent. of English rural parishes have no daily bus service, 94 per cent. have no train service, and 79 per cent. have no community transport service. For most people living in the country, the car is a necessity, not a luxury. Young people looking for jobs, and pensioners, suffer the most. How does one travel to work or to get training without a car? How does one get to the doctor or pick up one's pension or visit the hospital without a car?

Sadly, the Government's rural bus partnership fund has been a major disappointment. I hope that the White Paper will reassess that grandiose but unsuccessful scheme, so that the resources can be channelled into routes and vehicles appropriate to local requirements.

I debated the subject of housing with the Minister only a month ago. Many local people can no longer afford to live where they were born. As Bob Prince of the Broadlands housing association put it:

Affordable housing is a big issue, particularly in hot spots like Cromer and Sheringham, where young families are being squeezed out of the market by second homes and high house prices.

I have two proposals for the White Paper. First, I believe that owners of second homes should pay the full council tax, not 50 per cent. as at present. That should be at the discretion of the local council, and the additional tax raised should be ring fenced and made available for low-cost, affordable housing. That would be fair and would remove any resentment. It would be levied only in districts where there is a concentration of second homes, and the proceeds would help local people on low incomes or with special needs who wish to live locally.

Secondly, district councils should be able to negotiate between 25 and 30 per cent. of social rented housing in new housing developments. Those houses should be made available to local people. However, I do not believe that weakening the existing planning regulations is the right way forward, and I hope that there will be no such relaxation in the White Paper.

I turn last to the health of the rural community. I am indebted to a fascinating booklet by my constituent Alice Dennes, which is called "A Look at Neatishead". It describes the history of that village in north Norfolk over the past 200 or so years. She reminded me that villages used to be self-supporting, and that people had a range of trades. There were saddlers, butchers, bakers, tailors and people in many other trades that sadly have died out over the years, while forges, schools, brick kilns, chapels and churches were common throughout the countryside.

In the Countryside Agency's annual report this year, the chairman stated:

There is an unsettling fear that villages and market towns are losing their sense of community… Many rural services are closing, posing particular problems for the less well off trying to get basic services if the post office, the doctor's surgery or village shop had disappeared.

I hope that the Government will bring forward concrete proposals to help local services such as post offices, rural pubs, rural garages or village shops. Specifically, I want there to be greater relief from business rates for rural businesses and activities. I want the Government to reverse their policy of paying directly into bank accounts benefits and pensions that hitherto have been going through post offices.

I hope that the Government will do that in part by giving more resources to parish and town councils. The last thing that the White Paper should do is put any more power into the hands of regional government. This country needs less central control, and less of bureaucratic central government. What it wants is more solid, decent, feet-on-the-ground common sense from local people. Parish councils and town councils have a vital part to play in local government.

What I shall call the metropolitan view sees the countryside through rose-tinted spectacles. It regards the countryside as a place to visit at the weekend and as a theme park where the sun always shines. The reality often is not like that. For many people, the countryside can be a lonely place. Travelling around the countryside can be difficult, as can finding a job. Old people who live in the countryside can find it difficult to look after themselves. Moreover, farming—such a crucial part of rural life—is going through a period of profound and radical structural change.

I hope that the White Paper will recognise those problems and that it will make concrete proposals that will help the great transition through which agriculture is going; that it will provide greater financial support for local services by recognising the greater cost of delivery; and that it will accept that rural deprivation exists and that it must be addressed. I hope that it will begin the regeneration of our village communities and market towns.

The hon. Member for North Norfolk (Mr. Prior) made an interesting speech. It contained some tangible proposals on many matters that will be given consideration in the rural White Paper. The hon. Gentleman has picked a good day for this debate, as I believe that the report on the rural White Paper from the Select Committee on the Environment, Transport and Regional Affairs is published today.

Before I deal in detail with some of the issues that have been raised, I shall make one or two comments about what the hon. Member said and about the general tone of his speech. People listening to him might be forgiven for thinking that all the problems of the countryside—which I acknowledge exist—began on 1 May 1997. They might not know, if they confined themselves to what he said, that many of the policies pursued by the previous Conservative Government exacerbated the problems rather than helped solve them. The previous Government's social policies widened the gulf between the fortunate and the less fortunate, and problems of the sort that the hon. Gentleman outlined are the inevitable result.

I note that much of the hon. Gentleman's speech consisted of calls for more subsidies. That comes ill from a member of a party that is for ever going on about the need to reduce public spending. When the Conservatives were in office, cutting public spending was exactly what they did—year by year, and on many of the matters for which the hon. Gentleman now calls for greater subsidies.

The Conservative party is willing to organise mass hysteria at the drop of a hat when there is any suggestion of a tax increase, but money for greater public spending on public services has to be raised from somewhere. I think that it is about time that the hon. Gentleman and his party paid more attention to that point, as we could then have a realistic debate.

However, one of the lessons that the Government have learned over recent years is that problems cannot be solved merely by chucking money at them. I think that the hon. Gentleman, in a sober moment, would agree with that. He mentioned agriculture subsidies, but if problems really could be solved by chucking money at them, the farming industry would have been sorted out years ago. Enormous sums of public money have been poured into agriculture. Often, the result has been increased production of products for which there is no market. It does not make sense to go on doing that, and the Government are facing up to the problem—indeed, the previous Government, in their latter days, were beginning to do the same.

The hon. Gentleman mentioned the Government's high fuel tax policy. I thought that that was particularly cheeky. I see that the hon. Gentleman is grinning, so it is clear that he acknowledges the point that I am about to make. He knows as well as I do that the fuel tax escalator was introduced by the previous Conservative Government, and that its operations were suspended by this Government.

With regard to affordable housing, I repeat the point that I made earlier: a lot of affordable housing disappeared during the 18 years in which the Conservatives were in office. I accept that the hon. Gentleman makes a serious point about a serious problem, and I shall come to some of the details in a moment. However, it ill behoves a Conservative Member to complain about the lack of affordable housing, given that the previous Conservative Government presided over a huge redistribution of wealth in favour of the fortunate and away from the less fortunate.

I turn now to the substance of the debate. First, I want to state that thriving rural communities are an integral part of the Government's vision of a fair and decent society. I know that the hon. Member does not like the word "vision", and I, too, have my suspicions about it. The Government's manifesto included specific pledges on the countryside—to recognise the special needs of rural areas, not to allow rural transport and other public services to deteriorate, and to give greater protection to wildlife, even at the expense of a bit of production. In addition, we are taking a series of measures to help farming through its current crisis, the seriousness of which I readily acknowledge.

Secondly, although there are problems specific to the countryside, it would be wrong to look at rural areas in isolation. People who live in the country will benefit as much as those who live in the cities from the huge amount of extra money that we are putting into health and education. The new deal programme has lead to a huge fall in long-term youth unemployment, and young unemployed people in both rural areas and the cities have benefited.

However, the Government recognise that country areas have distinctive problems that require distinct solutions. That is why we are in the process of producing a rural White Paper. It is being prepared in tandem with the urban White Paper, and both White Papers share a common set of themes.

The first aim is to achieve sustainable—I know that the hon. Gentleman does not like that word, but the Government are in favour of sustainable economic growth—with a better balance between regions, in regions and in individual cities and rural areas. Secondly, we must tackle social exclusion and ensure that everybody has the opportunity to fulfil their potential. Thirdly, we want to ensure that we meet the need for more homes in the most sustainable—that word again—way. Fourthly, we must ensure that everybody has access to the services that they need. Finally, we must strive both to ensure that everyone has a reasonable quality of life wherever they live, and to protect and enhance the environment.

We expect the rural White Paper to focus on sustainable growth and regeneration in rural areas, new directions for agriculture, access to services in rural areas, social exclusion, conservation and recreation, and ensuring that the whole of government is aware of the rural dimension.

I shall now address one or two specific issues that the hon. Member raised. First, let us consider crime in rural areas. At the outset, I want to emphasise that it is important to keep a sense of proportion. We should not pretend, on the basis of one or two well-publicised incidents, that people in the countryside are somehow "under siege". I saw those very words in a recent Sunday newspaper headline. It is simply not true. There is significantly less crime in rural areas than in cities, especially inner cities. Crime in Norfolk in most of the main categories—robbery, burglary, sexual offences, car theft—is well below the average for England and Wales. There is less crime in the part of Norfolk where the hon. Member lives than there is elsewhere in Norfolk. I say that to put his remarks in context, not because there is cause for complacency.

There is no cause for complacency. The Government are anxious to encourage rural bids for some of the money that we are making available to fund 5,000 extra police officers. We also want more closed circuit television cameras in rural areas. Policing in rural areas will be one of the issues that the White Paper tackles.

The White Paper will also consider how to ensure that rural communities have access to the services and quality of life that they can reasonably expect. That will cover local facilities such as shops and post offices, health, education, transport and affordable housing. The Government have already taken action in a variety of ways to support rural communities and services.

One scheme, already in operation, is the mandatory rate relief for village shops and post offices. That means that the sole shop or post office, with a rateable value of less than £6,000 in a settlement of fewer than 3,000 people, is eligible for 50 per cent. rate relief. That can be increased to 100 per cent. for any rural business with a rateable value of less than £12,000, if the local authority believes that that would benefit the community.

The Government also recognise the importance of access to financial services in rural areas. As the hon. Member pointed out, we debated that recently. We are committed to maintaining a nationwide network of post offices, which increasingly give bank customers convenient access to their accounts. That is an area of potential expansion for the Post Office.

The hon. Gentleman suggested that it was Government policy to do away with rural post offices. Nothing could be further from the truth, but we have to face the reality that more and more people choose to have their benefits and pensions paid directly into a bank account. There will therefore be a decline in that aspect of post office business. It happened under the previous Government, and it will happen under ours. Post offices must build up alternative services. They can expand into banking services, especially when banks are progressively withdrawing from rural areas.

The Government have invested almost £500 million in supporting the Horizon programme to automate every post office in the country by next year. That will enable the Post Office to offer improved services under agency agreements with banks and building societies. Some post offices already do that.

Let us consider transport. The hon. Member expressed disappointment, but Norfolk has not fared badly from the extra subsidies that we provided for rural bus services. Overall, we have provided an additional £170 million in the three years since 1998, including new support for rural bus services and encouragement for community transport initiatives. We have also extended the rural bus subsidy grant for three more years until at least 2004, and provided an extra £5 million for the rural bus challenge. That makes a total of £20 million this year. Norfolk has received £1.5 million each year through the rural bus subsidy. That has already supported 66 new and improved services in Norfolk.

The Government recognise the need for a good supply of affordable, good-quality housing in rural areas, especially to enable people to live near their work, and young people to live where they were born and bred.

We have taken steps to improve the quality and increase the supply of affordable rented housing. We have also introduced measures to help people who want to buy their own homes, through the low-cost home ownership scheme in rural communities.

The Housing Corporation continues to have a significant role in providing new housing. We set a rural housing target each year to ensure that sufficient priority is given to the needs of small communities. The current target is for 3.4 per cent. of new homes to be in villages with populations of fewer than 3,000. Since 1989, when the programme began, it has provided an additional 16,000 homes in rural areas.

The planning system also has a part to play. Where there is evidence of need for affordable housing—low cost and subsidised—local planning authorities can require the inclusion of an element of such housing as part of a wider residential development of suitable sites.

The rural development regulation, which is worth £1.6 billion over seven years, signifies a substantial boost to agriculture. That is part of an ambitious plan for a major switch in farm spending from simply increasing production to advancing environmentally beneficial farming practices, modernising and restructuring.

To bridge the gap until the rural development regulation comes into effect, the Prime Minister announced in March £200 million extra funding, including some £26 million for the restructuring of the pig industry, in which the hon. Member for North Norfolk has an interest. Our programme covers all parts of the agri-food chain, from the farm to the supermarket shelf, and is aimed squarely at helping to chart a way out of the current crisis, helping farmers to find new and better ways to make their businesses more resilient, efficient and responsive to demand.

I hope I have said enough to demonstrate that, like the hon. Gentleman, we take rural issues seriously. That will be apparent when he reads the rural White Paper. I hope that he will address some of the issues a little more generously when we next debate them.

We can move to the next debate a little early as the hon. Member for Ilford, South (Mr. Gapes), who has initiated it, and the Minister are in their places.

The proliferation of ballistic missiles is a matter of growing concern, especially because they are capable of delivering weapons of mass destruction—nuclear, biological and chemical. The United States has identified North Korea, Iraq and Iran as states which, within a few years, could deploy ballistic missiles capable of reaching US territory. We can argue about how quickly that will happen, but we can assume that, before too long, several states will be able to reach US territory with weapons of mass destruction. There will also be a similar concern in Europe.

How do we respond? It is worth remembering that, for 50 years, Europe and the United States have been within range of Russian or Soviet ballistic missiles. We have relied on a policy of deterrence to counter that threat, without the need for national missile defences. Why does the prospect of much smaller quantities of ballistic missiles in less militarily significant states cause such alarm in the United States, and why does it appear to be placing in question the basis of the deterrence policy that has been in existence for many years?

In July last year, President Clinton signed into law the Missile Defence Act, which declared a policy to deploy a national missile defence

as soon as technologically possible.

Perhaps the Minister will inform us whether the Government believe, as the United States appears to believe, that the traditional policy of deterrence is no longer adequate to deter states such as Iraq.

If a rogue state wished to kill large numbers of Americans, it would be far more likely to choose methods of delivery other than ballistic missiles. A light aircraft spraying anthrax over New York, a suitcase bomb or some other means of delivery would be easier, cheaper and probably more effective.

National missile defence is aimed at tackling one means by which a state might deliver a weapon of mass destruction. However, that means is probably one of the least likely. Such a defence could not work against a spray tank or a nuclear bomb on the back of a truck or in a suitcase.

Furthermore, one must question whether it is technically feasible to hit a bullet with a bullet, which is what we are discussing. It is easy to deploy countermeasures to a national missile defence, such as dummy warheads and chaff. Therefore, we not only have to hit a bullet with a bullet: we have to hit the right bullet with a bullet. Nor is it sufficient to deploy a national missile defence on the basis of a handful of tests. The defence must be the weapon that works perfectly at the time of the enemy's choosing and the first time that it is used for real. Otherwise, it will have failed. How many weapon systems have achieved that standard of success?

There is widespread concern throughout the world as well as in parts of the United States that the American Congress and Administration are rushing ahead with this technology before it is properly tested and that there is a political and commercial momentum behind the project, which is becoming so strong that all the unfavourable technical shortcomings and practical arguments are being ignored or glossed over. Let us remember that if a single nuclear warhead landed on any American city, it would represent a massive failure of security policy.

Of course, such a defence will be massively expensive. The Pentagon estimates that to deploy and maintain a single site with 20 launchers in Alaska would cost $26.6 billion. I wonder whether that money could be better spent on conflict prevention, non-proliferation strategies and conventional capabilities that are already proven, rather than on this fanciful technological fix.

We can question whether the system is necessary to deal with rogue states, whether it will work as required and whether it is appropriate. It is certainly not a solution to the threat of the delivery of weapons of mass destruction. My main concern, however, is about the implications of the programme for the future of arms control.

Under the first stage of national missile defence, the United States wants to deploy 100 interceptors in Alaska and to upgrade its early warning radars, including that at Fylingdales in Yorkshire. Even that limited deployment would require an amendment to the 1972 anti-ballistic missile treaty. It would require the elimination of the article I ban on nationwide defences and the revision of article III, which places limits on the allowed deployment areas. Article IX of the treaty prevents the deployment of ABM systems or components outside of national territory, which suggests that an upgrade of Fylingdales would require that article to be amended. Perhaps the Government could clarify or confirm whether that is the case.

Even the first stage of a national missile defence requires some serious amendments to the treaty. Amending article I, which forbids the deployment of missile defences to defend the territory of a country, would break the very principle on which the treaty is based. If we then moved to the second stage of national missile defence deployment, which would involve 250 missiles at each of two sites, along with further radars, further amendments to the ABM treaty would be required.

Let us be clear. The ABM treaty is intended to prohibit national missile defence. It permits only 100 launchers to defend a single site. Therefore, what the United States proposes is fundamentally at odds with the entire purpose of the treaty. If we amend the treaty to permit, rather than prohibit, national missile defence and then seek a further expansion of those defences, at some point it will cease to be an arms control treaty; it will become an arms expansion treaty.

Last month, in a welcome development, the Russian Duma voted by 288 votes to 131 to ratify the START 2—strategic arms reduction talks—treaty, seven years after it was signed and four years after its ratification by the US Senate. That was a welcome achievement by the newly elected President Putin—it was something that his predecessor President Yeltsin, had been unable to obtain.

At the non-proliferation treaty review conference earlier this month, the five nuclear weapons states, including the United Kingdom, said that they were

looking forward to the conclusion of START III as soon as possible while preserving and strengthening the ABM Treaty as a cornerstone of strategic stability and as a basis for further reductions of strategic offensive weapons.

Can the Minister confirm whether that means that the Government support the ABM treaty as it is constituted, or do they support an amendment to the treaty? How do the Government envisage strengthening the ABM treaty? Strengthening a treaty that forbids national missile defence should not mean amending it to allow such defence. Do the Government share that view or is their interpretation different?

The Americans are trying to persuade the Russians to accept the amendment of the ABM treaty in return for more favourable terms under a possible future START 3 agreement, although so far Russia is refusing. Indeed, when Russia recently decided to ratify START 2, article 2 of the Duma resolution stated that the Russian Federation would feel bound by the treaty only if the ABM treaty remained intact. In an address to the Duma, President Putin said:

If the United States withdraws from the ABM treaty following ratification of START-2 and 1997 agreements, Russia will pull out of the entire system of agreements on strategic nuclear forces as well as START-2 and will carry out its own nuclear deterrence policy.

That is a strong statement and there is no reason to believe that President Putin was playing to the gallery when he made it. Indeed, I believe that it reflects Russia's national position.

At the end of last month, George W. Bush, the Republican candidate for the United States presidency, said that, if he became President, he would reserve the right to proceed to a much more extensive missile defence programme than any currently under discussion in Washington. From a Russian perspective, that surely adds further to anxiety about national missile defence. Why should Russia do a deal which may well be torn up next year by an incoming American President?

The Russians object to national missile defence for the same reason that the United Kingdom wants missile defences to be restricted, and believe that national missile defence preserves the credibility of their deterrent forces. If the Russians start to think that national missile defence can shoot down their warheads, they will want more of those warheads to overwhelm those defences. That is what the previous Conservative Government argued when they deployed more warheads on Trident than were deployed on Polaris, saying that that was necessary to overwhelm Soviet missile defences around Moscow.

Will the Foreign Office ask the Ministry of Defence how it will respond if Russia starts to deploy its own national missile defence? Will the MOD be forced to consider reversing the Government's welcome cuts in warhead numbers announced as part of the strategic defence review?

Another response to national missile defence could be to rely increasingly on launch on warning, or, in other words, launching a retaliatory strike on detecting an attack, rather than waiting for incoming missiles to land. That is the hair-trigger posture, which, as anyone who knows anything about strategic nuclear matters is aware, is inherently dangerous because it heightens the risk of accidental nuclear war. Indeed, for many years, people have been trying to find ways of moving away from those hair-trigger dangers.

Incredibly, documents published in the most recent edition of the useful American publication The Bulletin of the Atomic Scientists suggest that the United States is encouraging Russia to maintain a hair-trigger alert to allay Russian fears about national missile defence. The Americans say that they plan only a limited national missile defence which cannot challenge the credibility of Russian nuclear forces. However, Russia believes that that limited national missile defence is only the thin end of the wedge and that, at some later date, it will be expanded to provide a capability that will be effective against its nuclear forces as well as those of so-called rogue states.

Let us imagine that the United States deploys its national missile defence. What happens when, at a later date, scientists say that they are able to do more, and ask for missiles, radars and satellites so that they can work to achieve invulnerability against Russia as well as Korea. Is it credible that an American President in those circumstances would refuse to do that? He would be denounced and people would cry, "Why do we insist on invulnerability against North Korea, but accept vulnerability to Russia?" The argument about the thin end of the wedge is therefore persuasive.

If Russia does not compromise and the US proceeds with unilateral deployment of national missile defence, thereby abrogating the ABM treaty, what happens then? Russia has made clear that the START process would stop. It might not be able to afford to re-arm, but it would not feel bound by the START treaties. Verifiable reductions in Russian nuclear weapons would be a thing of the past and Russia's launch-on-warning posture would be strengthened, as it would fear that it would lose weapons if it did not use them. China will expand its nuclear forces, taking further cuts in global nuclear weapons off the agenda.

The comprehensive test ban treaty would be threatened because Russia and China in particular might insist on developing and testing new warheads that are more capable of penetrating the new missile defences. Agreeing the fissile material cut-off treaty would be more difficult, as China has already said that national missile defence will oblige it to continue producing fissile material for more weapons. Therefore, there would be no ABM treaty, the START process would reverse, the comprehensive test ban would unwind and there would be no progress on the fissile material cut-off treaty. The future of the nonproliferation treaty itself would appear uncertain. The nuclear weapon states committed themselves in article VI to act in good faith in disarmament measures. However, they would be seen to have reneged on that and, as a result, more states might consider nuclear weapons of their own and the whole non-proliferation regime would be under threat. Indeed, India and Pakistan might be even less likely to join the non-proliferation treaty.

There is still time for the United States and Russia to do a deal, but, given the forthcoming US elections, the prospects are not good. We must therefore start to consider what will happen if there is no deal and the US withdraws from the ABM treaty. Under those circumstances, would the Government co-operate with whatever the Americans ask for on radar upgrades and so on? Are we prepared passively to accept the new reality because it appears inevitable, even though we may not like it? Do we just sit and watch all the arms control treaties unravel, our own security situation worsen slowly and our relations with Russia deteriorate, damaging European security?

The issue has the potential to become the most divisive in NATO for 20 years. I do not want to go back to the situation in the 1980s, as those of us involved in the debate at that time know how damaging it was to the cohesion of the NATO alliance. The United States says that it will consult its allies before deciding to proceed. It is time for all NATO allies forcefully to make our views known. Do we share the views of Javier Solana, the EU High Representative, who states that national missile defence could be decoupling? Do we believe that it is worth jeopardising the future of the NATO alliance, European security, strategic arms control and security on the planet in the hope of, or aspiration to, some misguided technological fix? Clearly, we must say no to that and convince the United States that it must not go ahead with abrogating the ABM treaty.

I am grateful to my hon. Friend the Member for Ilford, South (Mr. Gapes) for giving us the opportunity to debate this important issue. I pay tribute to his long-standing involvement in international affairs, to his close interest in nuclear issues and to the passionate and eloquent way in which he presented his case.

I know that the United States interest in the possible deployment of a national missile defence system has engaged the close interest of many hon. Members over the past few weeks and months. The Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Neath (Mr. Hain) responded in some detail to concerns raised on the issue during a debate in Westminster Hall on 3 May on the non-proliferation treaty review conference. My right hon. Friend the Secretary of State for Defence also set out the Government's views on the matter in some detail in the House during the defence debate on 4 May. I know that the Select Committee on Foreign Affairs is also examining the issue in some detail, as part of its on-going inquiry into weapons of mass destruction.

I think that it is fair to say, therefore, that there has been no shortage of recent debate and discussion on the issue. For that reason, I apologise in advance if anything that I have to say is familiar to hon. Members who have followed the issue closely. I have no dramatic statements to make in response to my hon. Friend's initiative. He will not be surprised to hear that the Government's approach to the issue has not changed during the past fortnight. As my fellow Minister of State said on 3 May, and in his speech in New York to the NPT review conference, we recognise that United States interest in national missile defence raises some complex issues. As has been evident from the debate, these of course go wider than the potential impact on the anti-ballistic missile treaty.

First, I shall focus on that question, which has been the starting point for this afternoon's debate. In expressing views on the ABM treaty, we have been careful to emphasise that it is primarily a matter for the parties to that treaty. As my hon. Friend knows, we are not such a party; that is an important distinction in international law, and one that we need to keep firmly in mind when debating this issue. It explains why we have not been, and will not be, directly involved in negotiations on the future of the treaty. It explains also why we have not offered proposals of our own on whether or how the treaty might be amended to accommodate the limited national missile defence system that the United States Administration has discussed with Russia.

Some hon. Members have asked, not only today but on previous occasions, whether, in the Government's view, the sort of NMD system that the US is considering would be compatible with the present terms of the ABM treaty. The US is not arguing that the system would be compatible; indeed, it has acknowledged that if it were to decide to proceed with the deployment of the sort of system that it currently envisages, amendments to the present terms of the treaty would be required. That is why the US has sought negotiations with Russia to that end.

Presidents Clinton and Yeltsin agreed at Cologne in June 1999 that the US and Russia should hold discussions on the ABM treaty and on further reductions in their respective nuclear arsenals. We welcomed that move. A number of rounds of such discussions have since taken place. It is no secret that these discussions have not been easy. However, it is not for us to attempt to intrude on them in an effort to be helpful. We have no intention of further complicating what are already highly complex and sensitive discussions. Neither the US nor Russia, nor anyone else, would thank us for that.

We have stressed consistently at the highest level that if the US decides to proceed with the deployment of a national missile defence system, we strongly hope that it will be in the context of agreement with Russia. We have made clear to both sides the importance that we continue to attach to the ABM treaty, and our wish to see it preserved. My right hon. Friend the Prime Minister spelt that out clearly in his meeting last month in London with President Putin. He also made it clear that we hope that Russia will engage in earnest in negotiations with the US on this issue.

Russia cannot have failed to appreciate the strength of concerns in the US about the acquisition of long-range ballistic missiles by countries of concern. As both my right hon. Friend the Secretary of State for Defence and my hon. Friend the Minister of State, Foreign and Commonwealth Office have said, we understand these concerns. We do not believe that any responsible Government, including the Russian Government, can afford to ignore that threat. At the same time, we continue to value the strategic stability which the ABMT provides.

We believe that it is in Russia's interest, too, to see that stability is preserved. The Russians have made it clear that they wish to see significant cuts in US and Russian nuclear arsenals. So we believe that it is strongly in Russia's own interests to engage seriously with the US over its concerns about the long-range missile threat, and at the same time over the START 3 treaty.

The US Administration have said publicly that the President would have to decide whether to withdraw from the ABM treaty if the US decided to proceed with the deployment of a limited NMD system but had been unable to persuade Russia to agree modifications to the treaty to permit it.

A second question raised by hon. Members over the past few weeks has concerned potential UK involvement in any US NMD system. Let me be clear about the present position. The US has not taken a decision to deploy such a system. It will not do so until later in the year, at the earliest. Only if and when that decision has been taken might the US Administration put any request to us in relation to the possible use of facilities in this country for NMD purposes.

Reports that we have already agreed to host elements of the system are simply untrue. We cannot reasonably be expected to say now how we might respond to such a request, if and when it comes, as we cannot know now in what circumstances such a request might be put to us. All that we can sensibly say is that we would naturally give any such request careful consideration, in the light of the circumstances at that time.

My hon. Friend talked about deterrence. Neither we nor the United States are about to give up our long-standing policy of deterrence, notwithstanding my hon. Friend's eloquence and passion. However, the question of so-called rogue states is more complex. Many are concerned in the United States that they themselves may in future be deterred from intervening in support of their allies by rogue states possessing long-range missiles and weapons of mass destruction. That concern requires consideration going far beyond long-standing thinking about traditional defence and deterrence. However, it does not mean giving up that fundamental tenet of our policy.

It has been suggested during debates over the recent past that there have been significant differences in the views expressed by Ministers and Departments. I am happy to have the opportunity to put the record straight. No such differences exist. I hope that what I have said will have made that position absolutely clear.

I reaffirm that progress on arms control remains one of the Government's highest priorities. As we have been discussing the issue, our officials have been working hard in New York for a successful outcome to the five-yearly non-proliferation treaty review conference. I am sure that the House will join me in expressing the hope that their efforts will meet with success.