I am grateful for the opportunity to have such a debate, but I am not happy that we are having to hold it at the end of this summer term. Given the short time that is allowed for response to a Home Secretary's statement, it is however timely to have a more considered view of the events of the past few months, hence this debate on community relations and unrest in our urban communities. I hope that it encourages support for leaders in urban Britain as well as encouraging us to listen to each other and hear the messages that come from towns and cities where, all too sadly in recent weeks and months, there has been local unrest.

Later today, the Conservative party will choose the two people who will go forward to its wider membership for its leadership election. That causes me to reflect on the fact that it matters to people in urban communities—indeed, in all our communities—not so much who the political leaders are, but what they do. During the 18 Tory years when many of us were critical of some of that party's policies, many of which did not work, it would be fair to say that some of its statements of intent would, however, apply equally well today. One of the most widely quoted, but often ridiculed, statements by Lady Thatcher, when she was Prime Minister, related to our urban communities. When she quoted the prayer of St. Francis of Assisi, many people reacted as though they did not believe that that really was what she aspired to achieve. The prayer's core message was about bringing harmony and unity out of discord. I want this debate to achieve that, too.

My political background is appropriate to this debate in two respects. I was born and brought up in the northwest, on the outskirts of Manchester in what is now the borough of Stockport—the constituency that was recently won back for the Liberal Democrats by my hon. Friend the Member for Cheadle (Patsy Calton). In those days, not long after the end of the war, the regeneration of Britain was a key issue in Manchester. When I came to London after having been a student, I settled in the constituency that I am now proud to represent. I was driven into active party politics more by a sense of urban dereliction, decay and frustration than anything else. I was a youth leader. Young people and their families felt so frustrated by their powerlessness within the system that they had little hope for the future. Those facts led me to make the contribution that I have made as a Member of Parliament. I feel very strongly about these issues.

Recent written commentary in many newspapers—the think pieces—have often been helpful. Some television and radio commentaries have not. Immediately after the events in Burnley, Bradford, Oldham and elsewhere, the press fell into the easy trap of exaggerating the disorder, trouble and problems and looking for people with extreme views to make the position seem worse, which is positively unhelpful. In contrast, over the following weekends, some helpful and perceptive comments were made, including one reported in The Observer by someone clearly of Asian background, called Faisal Islam, who said:

"Racism makes matters far worse. But the essential problems facing all the communities of these northern towns are the same: lack of jobs and prosperity.

The cream … will head to the south-east for the high paid jobs … Those that are left, white or Asian, do not have an exciting menu of career options. Some drift into the general pattern common to disaffected British males: crime, drugs, and assorted forms of yobbery.

These threads of commonality should be the starting-point for concerted action across estates of this kind. Regeneration is required on a regional scale. The racist agitators who have been stirring up trouble offer no solutions to the long-term problems of de-industrialisation."

Around the Chamber are colleagues from places such as Stoke-on-Trent, Sheffield, Keighley and so on who, like me, live in such communities all the time and will speak with possibly just as much understanding and experience as I do.

A perceptive analysis of what is often over-simplified as a racial divide was also provided by Yasmin Alibhai Brown last week in The Independent, who referred to the identity crisis of both many Asian youths and many white youths. Asian men are not accepted as British by this country's white culture but are chastised as too British by their own families. I have experience of young Asians in exactly that position—not fully accepted by the white community and rejected by their own community. Many white youths feel equally detached and alienated from the society for which they are supposedly standing up against foreign cultures. Yasmin Alibhai Brown writes:

"Both groups feel like aliens in the knowledge economy, which is passing them by, and in a society where you are what you own. Pimping and drugs offer prospects of control and money, which is why so many of these white and Asian rioters are involved in such activities. Police racism and violence provoke understandable hostility but some of the anti-police anger stems from irritation that the law intervenes in their business activities … The young men who are burning cars today remember this lesson well. People in power ignore you until you make them fearful. White voters who supported the BNP think the same."

I do not pretend that that is an entire analysis, but it is a perceptive one of some of the issues involved.

When we debated the Home Secretary's last statement, my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) sidled up to me and said that we must not paint a picture that suggests that burning cars happens only in big cities such as Bradford, Leeds or Manchester. He said that in a constituency such as his, which has only small, ex-mining towns as well as a rural community, such activity is equally common at weekends in the rundown estates.

Two years ago we had our own party leadership election, and those of us involved went around the country to meet our members. I visited an estate on the outskirts of Rotherham that was God's neglected territory. It was absolutely grim. Every property seemed to have been damaged in some way. Every fence had been pulled down, and cars and rubbish littered the street. No sense of community pride was possible. I drew the tragic conclusion that I have had to draw regularly and that the year's events confirm: in many places in north and south Britain, north and south England and the midlands, especially in inner-city and outer estates, people believe that opportunity and accessibility to a decent life are passing them by. The places are sometimes reservoirs of almost entire hopelessness, and escape is the only way for people to better themselves. I am sad that that is still the case in our rich country, and I have a sense of anger and urgency that unless we deal with the matter more effectively, we will lay out for ourselves not treasures on earth but major problems such as those we have seen over recent weeks.

This summer, part of my community, which is just two or three miles from here, has also been on the edge of severe community difficulties. Happily, a combination of factors has kept things quiet. However, a lack of belief in the fairness of the housing allocation system, a lack of belief in the opportunities offered, a lack of belief in the fairness of the police, lack of respect for other people, intolerance of one's neighbour, or a small community dispute can turn a community that has lived adequately but tensely into a place where suddenly cameras and newspapers report civil unrest.

We must clearly and publicly pay tribute to our colleagues of all parties in public office who seek to lead communities in cities such as Bradford and Stoke-on-Trent, and towns such as Burnley and Oldham. We must remember that many people do an extremely good job seeking to lead and to bring communities together. Before the difficulties of this summer, all those places had commissioned reports on how better to go forward. That was the case in Bradford with the well-publicised report by Lord Herman Ouseley, and also in places such as Oldham and Burnley. I am grateful to all the colleagues to whom I have spoken in those places, and in Leeds, for their wise advice and intelligent analysis of what is needed.

Councillor Richard Knowles, the leader of Oldham metropolitan borough council, makes it clear that there are no instant solutions and that the increase in sporadic acts of violence was not necessarily racially motivated. The root cause is the high degree of segregation and deprivation, and the fact that much of Oldham is economically depressed with a low-wage economy. There is a major housing problem. Most of the Asian families live in privately owned housing and have not benefited from regeneration funds in the same way as estates that are predominantly occupied by white residents. There has been huge segregation over the years, and the community leaders in the places that we are discussing say similar things, although each place has local issues. There has been increased segregation in education because some schools are almost entirely white and others are almost entirely Asian. That repeats on itself and encourages people to reinforce it when they apply for school places.

I talked to Councillor Gordon Birtwistle, who is the Liberal Democrat leader in Burnley. He said that many of the larger problems escalated from individual small criminal acts. Funding has been used in geographically defined areas meaning that people who live in other areas feel that they have not shared the benefit. If one racial group predominantly inhabits the areas where the funding has been used, that produces a sense of alienation and marginalisation, which, in time, is fertile ground for agitation. If Government interest is generated as a response to disorder but people feel that the Government are not consistently interested, the feeling will grow that there is support only with publicity, and that support recedes without it.

My colleague, Councillor Jeanette Sutherland, who leads the Liberal Democrat group in Bradford, where there is no overall control on the city council, makes it clear how much we must be careful not to undermine all the good work that is continuing. We must not make it sound as if Bradford is a city that is entirely full of hopelessness, agitation, community difficulty and despair. The message is the same—"Please don't generalise. Please look at our particular problems. Please keep a continuing interest."

I therefore want to suggest what might be the right response. Clearly, we must say together that criminal activity is unacceptable. Unless we say that, we are immediately in difficulty. It may be understandable sometimes, but it is clearly unacceptable. Together, we must seek to dissuade those who are motivated to act in that way from doing so again. The issues become slightly more complex beyond the debate about criminality.

First, we must reinforce the idea that, in every case, solutions will be arrived at best at local community level. Building blocks must be established at that level, and local people must own and participate in community regeneration. As far as possible, initiatives should be bottom, up not top down. We must be careful to remember that communities can be cheek by jowl yet entirely different. In my constituency, some rich communities are next to some of the poorest communities. To state the obvious, that does not help.

One positive move by the Government would be to facilitate the creation in all our urban areas—in the metropolitan areas, unitary authorities and London boroughs—of the parish and community council network. That happens throughout the rest of the country—it is the building block of our society throughout rural England. As a result, people know more clearly that they can share in the running of a particular place, whereas in urban areas that does not happen. I believe strongly that if we allowed parish and community councils to exist where people who were able to stand for election could speak with authority as the representatives of that community, we would have a much more accepted, acceptable and participatory democratic structure, and a much more organised way of distributing funds and the like.

We need to understand that the crime and disorder partnerships and the local strategic partnerships that the Government created a couple of years ago are extremely good vehicles, although it is early days to see how they are working. However, we must also make sure—a similar message came from all my colleagues—that the funding that comes from central Government does not get split in Whitehall and sent in pockets to different places, depending on who bids best, who knows how to bid best, and who gets their act together most quickly. It must be distributed so that the democratically elected local council, together with the other partners in its local strategic partnerships and in its crime and disorder partnership, can decide, on advice from the community, how best to allocate the funds. There must be much more coherent management of the financial mechanisms for renewal, and I hope that we can move to much less ring-fenced and much more community-led distribution of local finance.

Funding in those areas, whether for economic regeneration, housing renovation or something else, is too often largely reactive and applicant-led. It should be much more proactive, responding to the vision of the community put forward at local level. In an area such as mine, the major issue is the need for more affordable housing, of which we are desperately short, whereas in the north, where housing is in much greater supply, much renovation is needed, as is economic regeneration. It is therefore necessary for design and promotion to be done locally.

We must be honest and admit that regional policy is not working. There is a pull to the south-east, because unemployment is low there in most parts whereas it is high in much of the rest of the country. The south-east economy is overheating. We need more strong strategic levers to encourage business, enterprise, building and development in the areas that most need and can best benefit from that prosperity. I agree with the Prime Minister—it is not simply that the north is less prosperous than the south. There is huge prosperity in the middle of Newcastle, Leeds, Sheffield or Manchester. However, a mile away from the centre of Manchester are some of the worst estates in the whole of Greater Manchester.

We must examine the problem in the context of what the old Department of the Environment called the local urban parishes, the Z scores and so forth. We must identify areas of great deprivation, but understand that a regional policy that encourages regional development away from the south-east is also important.

Nationally, it is coincidental that figures came out last week showing how the Government are doing in achieving their poverty targets. They are not achieving them. Child poverty is still enormous and by the Government's indicators the poverty total is still approximately 14 million people. Where there is great poverty, there is often great inequality. My noble Friend Earl Russell asked a question in the House of Lords the other day about black males under the age of 25. The Minister answered:

"Only 31 per cent, of ethnic minority men and women between the ages of 16 and 24 in Bradford, for example, are in work. Nationally, for ethnic minority young people the figure is 40 per cent. For the country as a whole, including people of all communities, the figure is 65 per cent. In other words, the figure in Bradford is less than half the national average."—[Official Report, House of Lords, 10 July 2001; Vol. 626, c. 1008.]

If one lives in a community in which the prospect of a job for a certain type of person is half what it is elsewhere, such people are bound to feel thoroughly disadvantaged and disaffected.

We must face the fact that, at local level, the political system is often not working. The current electoral system militates in favour of division and segregation, and against co-operation and participation. Until we learn the lessons learned in other places, we are highly unlikely to increase participation and a sense of empowerment in the political process. We need a properly representative electoral system in which every vote counts. People must have a chance to change the local party in power. Young people must be able to he elected on a ticket of young people's issues and others on one of local or regional issues. Unless people think that they can make a difference politically, they may not even try.

If young people are involved, they are more likely to be positive and work with the grain of the community rather than against it. To achieve that requires many things that we do better in some places than in others, although in many places such things are not done at all well. We need more young people to participate in youth forums and youth parliaments. Some primary schools have mock elections to encourage young people—I participated in one in my borough the other day in which the whole school elected their school council, year by year, in a system much like a parliamentary election.

In addition, other countries offer many more extra-curricular activities than we do. For young people whose prospect of energetic work is reduced, unless we offer the chance of outward bound courses, cadet forces, more sports such as swimming at school, or an active youth service that offers alternatives, they do something of their own choice—they make their own fun. Let us be honest, setting a car alight or smashing a window—as Matthew Parris argued in an article over the weekend—is fun for that age group.

Let us not run away from that self-evident truth. We should work with the grain of the Government Connexions programme for mentoring and careers but also put someone into the top-year primary schools to find out what motivates each child so that they can be supported in that interest. We must go back into secondary schools to find out which pupils are interested in judo, cricket, dance or computers, so that those interests can be developed. We should make the ridiculously neglected and belated change of putting the youth service on a statutory footing.

I put it to the Home Secretary that, welcome though the new Minister is in his co-ordination role—I am absolutely convinced of his integrity and commitment—if we have a Secretary of State responsible for rural policy, we should have one for urban policy, as we did when Michael Heseltine was in the job. Some 80 per cent, of people in this country live in urban and suburban communities, and it is nonsense that we do not have a co-ordinating role at that level for one of the key Departments of State. I hope that that will soon change.

In addition, we need to consider the thorny issues of education admissions policy and new school creation. I understand that the White Paper on education has been delayed until the autumn, not least because of the difficulties created by those issues. I would rather it was deferred and right than rushed through hastily and wrong. My area, unlike that of my hon. Friend the Member for Sheffield, Hallam (Mr. Allan), does not have a co-ordinated school admissions system, so parents run around from school to school rather than choosing a school using a system like that for university entrance. The reality is that bright, motivated parents will do far better for their child than less motivated ones.

Some faith schools do well, but if one allows Christian schools one must allow Sikh or Muslim schools, and such schools may be 90 per cent. Asian. Is that what we want? If it is, as my colleagues in Oldham make clear, we must have many better links between schools and more combined activities in sport, drama and educational activity, so that young people grow up among different faiths, colours, creeds, backgrounds and communities. In that way, pupils from different backgrounds will not be separated from each other when they leave school, but will be integrated and together.

My last substantive point relates to the apparent increased activity of far right organisations. It would be wrong not to pay attention to that. The Government have an equality Act on their agenda, which I urge them to introduce as soon as possible, as it would ensure equal treatment for all people in this country. We must also consider how we might, by policy changes, undermine any agitation by the far right that preys on disaffection and offers simplistic solutions. I am not one of those who believe in proscribing people if I do not agree with their views—down that road is a dangerous outcome. However, scope exists for a sensible collective look at whether, in those places where organisations keep on marching, there may be grounds for giving further powers to alter the day, the route, the time or the frequency of marches, when they cause severe community disruption.

The police arrest and charge people for incitement to racial hatred far too infrequently. I have asked for figures in my recent parliamentary questions, but my sense is that the police almost never take action. I understand why that may be so sometimes, but the number of occasions on which people walk around saying "Pakis out" or "This area for whites" and no action is taken add up to a collective disgrace. I urge the Director of Public Prosecutions and the police to be absolutely clear that that sort of behaviour is incitement to racial hatred and should be dealt with accordingly.

In many of our urban areas there is far too much prejudice. As someone said to me when I was preparing for the debate, and as the Bradford report makes clear, we need to replace communities of prejudice with communities of pride. That means replacing people of prejudice with people of pride. Someone with pride in their possibilities in life, attainment, culture, work and family prospects is far less likely to be prejudiced against their neighbour or the person or community down the road. We can continue to build Britain well together, but the current policies are not sufficient. We must do more and listen to the voices appealing for help every day in some of the most disadvantaged parts of the country.

I associate myself with all the comments made by the hon. Member for Southwark, North and Bermondsey (Simon Hughes). Clearly, I could not put things better myself because I do not know his area, but his speech also applies to the situations in Bradford and my constituency. Most of my comments will relate to the riots on 7 July in Bradford, which took place within a few miles of my home.

I welcome the report that was published on 11 July by the team led by Lord Ouseley: "Community Pride not Prejudice, making diversity work in Bradford". I should like to place on record my appreciation for Lord Ouseley's work. He has delved into areas of Bradford that had previously been untouched, and I hope that his work has inspired many discussions there. My comments follow 30 years of work and friendship with the Asian community in Keighley, which constitutes a fifth of the Bradford district.

Since I was elected in 1997, I have had many anxieties about the under-achievement of the Bangladeshi and Pakistani communities in my constituency. Last year, Warwick university published a report confirming my worst fears: the Sikh and Hindu communities are doing extremely well, but the indigenous population is not doing so well and the Bangladeshi and Pakistani communities are massively underachieving, both academically and economically. The time has come to ask why.

After lengthy discussions, my view is that the riots were led by a criminal minority responding to fascist taunts. The criminals were supported by hundreds of young Asian men hellbent on causing havoc, mainly for their own community. It is always their own community that suffers. Those young men were also determined to punish police officers and prevent them from carrying out their legitimate duties.

We need to examine why those young Asian men were so keen to join in the criminal activity. Was it because they had little to lose, little else to do and therefore felt that such activity was a way of making their presence felt, as they had not impressed the world or Bradford with anything else? Do they and many other young Asian males in Bradford feel that they have little, if any, stake in the United Kingdom's growing prosperity, which was created by the Government I support? Do those young men feel disaffected, disenfranchised and let down by their country of birth? Do they ask why all the qualifications, good jobs, nice houses and powerful cars seem to go to the whites? That is a rough guide to the attitudes that I have encountered over many years.

Let us consider the causes. There is little point in blaming the situation simply on racism and Islamophobia. We must instead consider in detail what causes the under-achievement that I have mentioned. The main cause is the lack of a good level of English, which stems directly from the established tradition of bringing wives and husbands from the sub-continent who have often had no education and have no English. As a result, the vast majority of Keighley households have only one parent with any English and children go to school speaking only Punjabi or Bangla. That frequently gets children off to a slow start, which can damage their progress and mean that they leave school with few, if any, qualifications. Many cannot get paid work or find only poorly paid jobs.

I should like to suggest some remedies, which I know will be regarded as controversial by many of the self-styled Asian leaders in Bradford. Asian parents should consider arranging marriages for their children with Asian Muslims brought up and educated in the United Kingdom. That would avoid the present importation of poverty into their families and the problems that I mentioned for the next generation when the children go to school, and would also stop the increasing number of cases of young men and women having extremely unhappy and difficult marriages with spouses from the sub-continent with whom they have nothing in common. I have dealt with such cases, and they are a growing problem in Keighley.

Months off school for extended holidays in the subcontinent should be avoided. At the moment, there seems to be little regard for the problems that this can cause. Instead, people in the Asian community could add a week before and after the long summer holiday, because I would be the last person to suggest that they sever their links with the sub-continent.

When possible, English should be used and encouraged in the home in addition to Punjabi and Bangla. Much more should be provided in further education colleges and community centres for non-English speakers by way of high-quality teaching of English as a second language. That should include crèche provision, with the funding coming from both central and local government. Such projects would be much better than channelling finance towards extra policing, as we have seen over the past few weekends. Sponsors should be encouraged to enrol husbands and wives who enter from the sub-continent in full-time English courses.

My most controversial point is one that I have made previously. It has not gone down terribly well, although I have had support from hon. Members. I will repeat what I said, so that I place on record precisely what I mean. If, after possibly five years, we are no nearer to achieving the solutions and ambitions, and the deprivation, with all that flows from it, continues, the Government should consider having an element of English as an entry clearance requirement for husbands and wives who seek permanent settlement. There should be a further requirement for them to take a full-time English course to reach a reasonable level. The conditions should apply to all applicants outside the European Union. My proposals are in line with immigration requirements in many countries, including the United States of America, Canada and the Netherlands.

I should like to examine the "Community Pride not Prejudice" report by Lord Ouseley. I am pleased that he has written that report, which is excellent. Many of his recommendations dovetail into my previous comments, including, for example, his remarks on pages 13 and 14 about other education concerns. Although many of us who have worked with the Asian community over the past 30 years may claim that he says nothing new, it is good to see the comments in print. I hope that it will enlighten debate, particularly for those who have not had the good fortune of a good relationship with our Pakistani and Bangladeshi constituents during the years as I have.

Lord Ouseley's report remarks on the need for understanding between communities, and the fact that everyone must take on board the advantages of integration, for the Asian community in particular. That will be easier to achieve when all members of the Asian community have some grasp of English and when whites and Asians recognise that there can be gain only from all sides living together in peace and understanding. The alternative is a Belfast-like situation in which we will all be the losers, including whites. I have been encouraged to express my views by Lord Ouseley's comments on the

"fear of talking openly and honestly about problems".

He has helped me to overcome my fear of verbal abuse from the so-called leaders among the Asian community and the politically correct whites. Following my experiences in the past few days, I can say that the thought police are alive and well in Bradford.

I should like to finish on a silver lining. The Asian women and children's group in my constituency is doing wonderful things for the women and children of Keighley. Many women who worked with that group are now taking a leading part in their community, and not before time. The sure start experiment is working so well with whites and Asians, especially at Guardhouse in Keighley, to bring together white and Asian children and young mothers—fathers, too. Unfortunately, too little effort is being made in the Bradford district to get whites and Asians to work together.

I visited Greenhead comprehensive school—formerly Greenhead grammar school—in my constituency just before the election, where I met many young, capable Asian women who were completing their A-level courses. They were going on to universities with their parents' approval and enthusiasm.

I mention those aspects of the silver lining, because, as the hon. Member for Southwark, North and Bermondsey said, it is not all doom and gloom. We are moving in the right direction, especially in respect of the projects that I mentioned in Keighley. I apologise for being so parochial, but I only know about the situation in Keighley and, to a certain extent, in Bradford. There is a south-north divide on these issues, with difficulties especially in West Yorkshire.

I shall not detain the House for long. In view of events in Stoke-on-Trent at the weekend, I felt that it was important to listen to the debate.

I very much appreciated the important contribution of the hon. Member for Southwark, North and Bermondsey (Simon Hughes) and I thank him for the thoughtful way in which he introduced the debate. My only sadness is about the events that prompted the debate, which should have been held long ago, and that relates to the way in which Parliament operates.

Parliament may seem to be proactive and Back Benchers may have the opportunity in Westminster Hall to listen to a statement or to debate an event that has taken place, but there are few opportunities for hon. Members to shape the debate and perhaps to influence policy and to see that action follows vision. We want Government and Parliament to show the way forward.

I want to put the disturbances in Stoke-on-Trent at the weekend into perspective. There were no serious injuries and the police did an absolutely wonderful job in ensuring that the situation did not escalate. My hon. Friend the Minister will be aware that at the time the Staffordshire police were also responsible for policing the Northern Ireland peace talks in Staffordshire. I thank the police for doing such a good job, in the country as a whole and in individual constituencies.

That brings me to my next point, about how public services are financed. In whatever town or city we live, we all have a vision of people working together for urban regeneration, but to make that vision a reality adequate funding is needed across the board. Throwing money at the problem is not the only answer, but without adequate funding there will be less progress than there could be.

I take this opportunity to ask my hon. Friend the Minister to review the way in which almost 17 per cent. of Staffordshire police funding is spent on police pensions and to look for a means of ironing out through the funding formula the inequalities in the system that are the result of decisions about police funding many years ago.

I was pleased to attend the annual meeting of the North Staffordshire Race Relations Council on Thursday night last week. The many people who attended that wonderful event reflected all strands of society. It was clear that the statutory agencies, the voluntary sector, community leaders and business representatives in our community all have a vision of how we can work together to take the agenda forward. We must look at the mechanisms for doing that. I was interested in the hon. Member for Southwark, North and Bermondsey's comments about mechanisms. Perhaps we do have a new approach to local government and more opportunities for partnership funding. However, if we do not ensure that there are enough people on the ground with the expertise, skills and commitment to deliver the policies and see them through, we run the risk of seeing a piecemeal and fragmented approach with an initiative here and an initiative there.

I hope that my hon. Friend, in his Home Office coordination role and in the working group that I believe he chairs, will bring together the means to implement the new Government policies. If the Government do not deal with the thorny issue of local government finance, the success of the new partnerships will be limited. I know that there is a consultation paper and that the Government will be dealing with the issue from September onwards, but I urge my hon. Friend the Minister to consider the example of Stoke-on-Trent, which may have lost as much as £5 million in education funding. That loss reduces the ability of community workers to work with young people outside school hours and reduces the opportunities to open schools for wider community purposes once school is out for the day. It is critical that we look at local government finance and ensure that, whatever else we might want to add to an area, we have a baseline of services so that we are able to employ teachers and provide the education that is the foundation on which we build society.

The Race Relations (Amendment) Act 2000 is a wonderful tool to bring about the equality that we want, and I am confident that my hon. Friend will look at ways to ensure that the provisions of the Act are properly introduced and monitored.

We have the Rogers report on urban regeneration, the regional development agencies and the extra money coming in to many of our most deprived areas for neighbourhood renewal. We have the skeleton of a system that can deliver the services that are needed. If we do not have the mechanisms for delivering the services, the money stays in the pot and is not unlocked; it does not go where it is needed. Members of Parliament have a role in ensuring that all the different agencies, businesses and local partners at community level are properly coordinated so that needs are met in the areas concerned. We are in touch with our people and do not need focus groups to tell us what needs to be changed. Given the Cabinet co-ordination that now exists, I hope that we can look at urban regeneration from the angle of community relations to ensure that we develop a genuinely joined-up approach.

My final point concerns citizenship. I have introduced a citizenship award in some schools in my constituency. During the long years of Thatcherism and the last Conservative Government when there was no such thing as community, we did not home grow community leaders for the future. We must use citizenship to bring about a can-do culture, where people, whatever their age and colour can say, "This needs doing. This is how we can do it. This is our vision. This is how we can change our communities."

I want support from the Government for the citizenship project that I have introduced. It is already supported by Britannia building society and the local newspaper. We have a vision. We have the whole issue of neighbourhood renewal, not just for certain communities, but for all our people. We have to find a way of delivering. The Prime Minister is right: it is about delivery—but if we cannot deliver at community level, we cannot bring about the changes that we want to see.

The Minister has a wonderful opportunity in his work at the Home Office to bring all those strands together. I know that the Home Office no longer has responsibility for electoral change but we will receive the report from the Electoral Commission before the end of July. I hope that he will look at that and at the democratic deficit that clearly exists in some parts of the country and see whether we could have some pilot projects, perhaps in an area such as Stoke-on-Trent. It is not about voting in supermarkets, but about building citizens for the future. I hope that he will look at all my suggestions and get back to me in a positive light.

rose

Order. I think it appropriate to remind all hon. Members that it is normal practice in Westminster Hall to commence the closing Front Bench comments no later than 30 minutes before the termination of the debate. I hope that everyone will bear that in mind.

Having made my maiden speech on Friday, I hope that I am in accord with the procedures of the House if I speak today. I apologise for arriving late as I was detained at another meeting. I want to participate in the debate because it is on an important issue.

The disturbances that have taken place in our communities recently are a serious matter, particularly for those of us who represent integrated communities, as I do in Birmingham. It is not just a matter of funding. We must look at how we build up the moral fabric of our societies. Those are the issues that I want to address. Youth service is a particularly important area that needs to be looked at. If the health authorities, the education authorities and the youth services could work together, they could play a vital role. As my hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) pointed out, Members of Parliament need to play an active role in their constituencies. They have their eyes on the local issues and represent the people of those areas, as do local councillors and representatives on neighbourhood and community forums.

It is important that we do not overlook the issue of the community as a whole. We should consider integration. My hon. Friend the Member for Keighley (Mrs. Cryer) mentioned assimilation as opposed to integration, an issue that I want to pick up, although perhaps not as blatantly as some of the self-styled community leaders in Keighley.

I came to this country when I was nine and my first language was not English. I was educated at local primary schools and the local comprehensive, and I then ended up in this place. My experience of going through that structure shows that the opportunities are there for all of us.

As my hon. Friend said, the backgrounds of different groups of people are important. The majority come from rural areas—my father came from a rural area in Kashmir. Parental education, particularly that of mothers, is as crucial as education for the children. Further education has a tremendous role to play and the sure start scheme offers a good beginning. Local colleges and the learning and skills councils established by the Government need to play a more active role in reaching into the community. Further education for parents and young adults in problem areas can help to close the gap

I disagree with my hon. Friend's comments about visits to the country of origin. It is important for children to have a feeling for their own identity and culture, but it must happen in a more positive and integrated way. Schools should assist by suggesting projects for children when they go back to their parents' place of origin. Projects should be focused on cultural differences and cultural richness and the trip should be more constructive than simply allowing children to go away for a month's holiday. They should come back with a project and share it with others. That is what integration is all about.

The hon. Member for Southwark, North and Bermondsey (Simon Hughes) spoke about the electoral system. It may engage the wrong sort of people as much as the right sort of people. People on the far right have equal claims and the same influences on the environment. We need to engage the whole community and encourage participation in the current political process. That is the important challenge before us.

I agree with the hon. Gentleman about racial incitement charges and with my hon. Friend the Member for Stoke-on-Trent, North about the Race Relations (Amendment) Act 2000. It should be applied to all people—the ethnic minorities and the far right—who use racist abuse. All should be treated severely. We are here to integrate and work together. Any form of division from any side is deplorable and should not be tolerated by the police.

I accept the point about the low academic achievement of Pakistani and Bengali children. It also applies to the Afro-Caribbean children in my constituency. We need to think about how best to deal with the problem. Involving the parents could be the answer.

I hope that I have not taken up too much time in my first contribution to Westminster Hall, but I felt it necessary to say a few words on this important subject.

I am grateful to have an opportunity to pick up some of the threads of the debate. I congratulate my hon. Friend the Member for Southwark, North and Bermondsey (Simon Hughes) on securing this debate in such a timely fashion.

I want to discuss the wider context of the debate. It is important at the outset to recognise that the far right have poisoned the debate. They complain that they are deprived of free speech—I do not think that they are but they often deprive the rest of us of free speech. They twist what is said in ways that are unhelpful to the debate. Those of us who fiercely oppose them often end up constrained in what we can say because we know that they will pick up what we have said, twist it and use it against people in wholly destructive ways. Their responsibility in stirring things up should not be forgotten. It is not the most important element but it is a significant factor. It is no coincidence that they have been present at places where fighting has broken out. Other community relations problems are factors in the riots, but elements of the far right have been present at almost every such riot.

I therefore do not agree with the comments of the hon. Member for Keighley (Mrs. Cryer). That is partly because of my fear that the far right will take such comments and say to people, "If you cannot speak English properly you should not be in this country." I know that that is not what the hon. Lady means and I wish that the fear of the far right twisting our remarks did not make it so difficult to have an open debate. I hope that we can have a debate without it being poisoned by those who will twist our words. We visualise that happening and we all fear it.

We need to move beyond thinking about community relations issues purely as ones of race. Anthropologists and sociologists have done much work on that—people such as Claude Lèvi-Strauss spoke as far back as the 1950s and 60s about the way in which people identify themselves within communities. Ethnicity can be an element of community relations, as can religion, but they are not essential elements and are not necessarily part of the equation. We see many incidents in the United Kingdom in which ethnicity is not a factor. In Sheffield, for example, we have inter-area gang warfare. It has gone on for years in most cities. It is not a question of race or religion, but is about self-identification and "us against the rest". People express the belief that "Them lot are out to get us and we need to defend ourselves." That dynamic is as old as the hills. Understanding it is important, rather than simply seeing the problem as one of ethnicity or religion.

There are some important elements to consider in terms of how we fight the forces that pull people apart. We should not play into the hands of the far right and over-play the difficulty of the situation. There are problems that need to be managed but we need to be clear and consistent across the political spectrum in expressing our belief that there is an imperative political will to manage them. We need to be clear that we believe positively in a diverse and multicultural society and that we wish to defend that and make it work. At no stage must we give in to those forces that have said, "That is impossible; it cannot happen. The only solution is to separate the communities."

British people are people who live in Britain. It is important to make the lives of British people as positive and beneficial as possible and to make us all into good neighbours who look after each other. We should not define one group as British and another as less than British because of where their parents or relatives came from—or, indeed, where they came from if they married into or joined a British family here, claiming British citizenship and identity. It is important not to give in to the forces of darkness, as it were, but to understand the dynamics and deal with them.

Early intervention is vital. The problems that resulted in the recent riots were trailed long in advance. We could see them coming yet have been like rabbits trapped in the glare of headlights, seeing the problem, being frightened of it but not taking any action until the car hits us. The same was true of the riots of the early 1980s. We see trouble building, read the reports and know that tension is increasing, yet seem incapable of intervening early in a way that could effectively prevent it.

In some cases, the police start to intervene once trouble has started. I was pleased to hear from the hon. Member for Stoke-on-Trent, North (Ms Walley) that that happened in her area. She also made an important point about the intervention of local authorities. During the summer riots of the early 1980s, when I was a teenager in Sheffield, Sheffield city council put on concerts and a series of youth events as a deliberate way of diverting people from trouble. It worked. People did not riot in Sheffield. Empowering local authorities with sufficient financial discretion, thereby enabling them to say, "We can see it coming. Let us do something about it." would be important. I want councils such as Bradford and Oldham to be confident that, whenever they see signs of trouble, they can intervene, often by spending money, and find ways in which to divert people away from unrest.

The Rogers report on urban structural regeneration is important, but there have been no signs that such information has been picked up. The police should be congratulated, and we all felt for them when we saw what they were being dropped into, as it were. I do not want to force the police into such situations. I want councils to have the ability to intervene early enough so that problems do not result in hundreds of youths and policemen being involved in pitched battles.

I come now to community consultation. We are all aware of the same faces turning up in consultation exercises. Such matters are not confined to ethnic minorities, but involve business and other communities. Consultation exercises draw out committee people and we somehow think that that is enough. We do not make contact with the important people—young people and those from harder to reach communities. We must be serious about such matters and break down language and style barriers. The method of communication used whereby people in suits and ties talk about regeneration budgets and objective 1 or objective 2 status is thought of as rubbish by communities.

Too often we settle for the fact that, if someone from the ethnic minorities is a member of the committee, it is a true partnership and matters must okay. The same pattern occurs in the business community. I hope that the Minister can deal with the community consultation issue and support the broadening out of such matters. I congratulate my hon. Friend the Member for Southwark, North and Bermondsey on securing the debate. I look forward to hearing the Minister's response to his substantive points as well as to others that have been raised in the debate.

I congratulate the hon. Member for Southwark, North and Bermondsey (Simon Hughes) on securing the debate and on his thoughtful and constructive introduction. I agree that the problems are national. I disagree with the hon. Member for Keighley (Mrs. Cryer), however, when she said that the north had far greater problems than the south. I am the first to acknowledge that northern cities probably have more acute social and racial problems than urban communities in the south, but as the hon. Member for Southwark, North and Bermondsey and others know, various London districts have had their troubles in recent years.

A few years ago, there were riots in the Blackbird Leys estate in Oxford. Whether one is thinking of Aylesbury, High Wycombe or Reading, many communities in the south of England have had equivalent problems. It may be that, because of the general prosperity of such areas and the smaller size of the towns, problems will be present but in a less acute and more manageable form than in Bradford, Oldham and Burnley.

My thoughts have been informed by the experience of my constituency, by the visit that I made to Bradford for a day last week and by my conversations with police officers and community leaders in the two years that I have held this brief on behalf of the Conservative party. I want to refer first to police and disorder. If streets are unsafe or if law-abiding people believe that the streets are unsafe, we will have problems and there will be an opportunity for criminal gangs and political extremists to thrive.

The police service in many of our urban areas is badly overstretched. Police officers of all ranks say that there are too many target and performance indicators. They have referred to problems of recruitment and retention, which we have debated in the House many times. There is also doubt among a worryingly large number of officers about what is expected of them when it comes to policing ethnically diverse areas. They often feel beleaguered. I remember one police constable in London saying to me after the publication of the McPherson report, "All my career, I have worked on the basis that I should police impartially and treat everyone alike, regardless of their colour, religion or ethnic origin. Now, suddenly, I am told that that approach is all wrong, and I have to do things differently." We need to understand those uncertainties and address them.

While the police feel beleaguered, it is also the ease—I certainly got the impression that this was true in Manningham—that many local people feel that the police service has been slow to respond to their calls for assistance. Too often, low-level disorder, drug dealing, racist abuse and harassment have been allowed to go unchecked. It is only when criminal activity has got more serious that the police have been prepared to crack down in force. People feel the lack of neighbourhood police officers whom they know and trust, and to whom they feel that they can impart confidential information about what is going on in their area. I spoke last week to people in Manningham who said that they only see the police patrolling in vehicles, and that the police seem to have no connection with the neighbourhood. The police officers were horrified at the impression that had grown up, but there was an undoubted gulf of understanding between the service and a large number of residents—by no means just disaffected youths or criminals.

The hon. Member for Southwark, North and Bermondsey referred to social problems, to which the hon. Members for Keighley, for Stoke-on-Trent, North (Ms Walley), for Sheffield, Hallam (Mr. Allan) and for Birmingham, Perry Barr (Mr. Mahmood) also referred. All Members should be concerned when they reflect on the fact that a large number of young men have gone through 11 years or more of full-time education in this country's tax-funded schools and still come out unable to communicate effectively in written or spoken English and lacking the skills to make them employable.

In Bradford and other cities, a fair number of young men are coming out of school unskilled, and can make far more money by carrying heroin round the corner for the local drug dealer than they could hope to earn from any legitimate unskilled occupation. That is not a problem that affects ethnic minorities alone. As other hon. Members have said, it is a problem that is found in estates and cities throughout this country, and it affects people from all ethnic backgrounds. Certainly, recent events have been aggravated by the racial element. It was summed up well in Lord Ouseley's report from Bradford, which states:

"The current Bradford scenario is one in which many white people feel their needs are neglected because they regard the minority ethnic communities as being prioritised for more favourable public assistance. Some people assert that the Muslims, and in particular the Pakistanis, get everything at their expense.

Simultaneously, the Asian communities, particularly the Muslims, are concerned that racism and Islamophobia continue to blight their lives, resulting in harassment, discrimination and exclusion. They argue that they do not receive favourable or equal treatment and their needs are marginalised by decision-makers and public-service bodies."

While there are good things going on at the Bradford Mela and various local initiatives, to which the hon. Member for Keighley referred, there are also big problems. In February this year, the Home Office published its report on race equality in public services. That made it clear that under-achievement among British Pakistanis and Bangladeshis is a serious challenge. Whereas British Indians seem to be succeeding in formal education, that is not the case with people of Pakistani or Bangladeshi origin. Those problems are also true of far too many poor young white men. Those experiences make those groups ready and attractive prey for political extremists of whichever wing.

We all understand the argument about educational under-achievement, but does the hon. Gentleman accept that all the evidence shows that even where Afro-Caribbean and Asian young people have exactly the same formal education as young white people, their chances of getting a job are much worse?

There is evidence to support the hon. Lady's contention, but it is a mistake to classify people as either white or from an ethnic minority, because the experiences of people from various ethnic communities are different. In addition, a young white man growing up in a rough area with no family experience of or support for higher education and professional achievement has a hugely different experience from a young white man growing up in a supportive home with role models to demonstrate that he can achieve something in life.

One challenge that we face in integrating young men of Pakistani origin is that although many do not feel at home in their parents' traditionalist culture, they are not welcomed into mainstream British culture either. Hon. Members have spoken about that. I find that feeling among my constituents and I suspect that it is common in most British Pakistani communities. I agree with those who said that the British National party and the National Front—I would add elements of the ultra-left—are only too willing to exploit those real social tensions.

What are the solutions? There are no panaceas or magic wands, but I shall make a number of suggestions. We must ensure that there is effective policing, particularly neighbourhood policing, which means more officers. It also means giving a greater national priority to intelligent patrolling and rigorous consideration of police functions. For example, the booking of suspects into custody could be carried out by a different agency, freeing police officers to go back on duty. We need to cut back on centrally imposed targets and performance indicators.

We must give priority to the teaching of both spoken and written English in our schools. I agree with the hon. Member for Birmingham, Perry Barr about the importance of helping with the education of mothers from the Pakistani and Bangladeshi communities. We do not hear much about the views of British Asian women in such debates.

The hon. Member for Keighley's heart is in the right place, but perhaps the key to achieving her objective is to present opportunities in the English language as just that—opportunities for new Pakistani or Bangladeshi immigrants to play their full part in British society and to allow their children to do the same. They should certainly be encouraged to take part. I agree with the hon. Lady about the problems caused by long absences from school for overseas visits. Local education authorities and head teachers need to tackle that problem.

We need to consider Government spending programmes. Under Governments of both parties and local authorities run by all three parties, we have been spending millions of pounds on what was called section 11 funding but is now called ethnic minority grants. When we find that too many children from ethnic minorities leave school without an adequate command of English and the skills that make them attractive to employers, we must ask ourselves about the effectiveness of some of that spending. Similar questions could be asked about the single regeneration budget. I was told that a lot of money has been spent in Manningham, which caused resentment in areas such as Keighley, but that the people living there did not feel that they had ownership of the projects. They felt that the projects had been imposed from on high.

I agree with the hon. Member for Southwark, North and Bermondsey in his call for greater decentralisation. We must find ways of tackling the problems at a local level, whether that is the policing of urban areas or sustained action to encourage social and economic regeneration. That will mean a loss of power for Whitehall, but it is only through the empowerment of local people that we will achieve solutions to the deep-seated problems.

I congratulate the hon. Member for Southwark, North and Bermondsey (Simon Hughes) on initiating the debate, and thank the hon. Members for Sheffield, Hallam (Mr. Allan) and for Aylesbury (Mr. Lidington) and my hon. Friends the Members for Stoke-on-Trent, North (Ms Walley), for Birmingham, Perry Barr (Mr. Mahmood) and for Keighley (Mrs. Cryer) for their contributions.

Hon. Members will appreciate that I have limited time to reply to the many issues that have been raised. I hope that that does not matter, because none of us can say that we have a monopoly of wisdom on or all the answers to the issue. The opportunity to have such a debate in which we have wide-ranging, measured and uniformly constructive discussions is enormously helpful, and I will reflect after the debate on the more detailed issues that hon. Members have raised.

I start by placing on record our unequivocal view on the disorders. There can be no excuse for the destruction and violence that we have seen in Burnley, Oldham, Bradford and, albeit on a lesser scale as my hon. Friend the Member for Stoke-on-Trent, North said, Stoke. The communities from which those who are responsible come suffer deep-seated problems, and I will speak about how we can address those. However, throwing stones and petrol bombs at police officers, burning down businesses that are part of the local community and putting people in fear of their lives cannot be justified in any circumstance.

I pay tribute to the work of the police in Greater Manchester, Lancashire, West Yorkshire, Staffordshire and other places for their response to the events. Officers from throughout the north of England have been involved in Bradford and were on the receiving end of attacks that they should not have had to suffer. I repeat my thanks to them and to the other emergency services that handled the difficult problems.

Having said that, I do not want to minimise the malign influence of racism in the events. The work of the far right to inflame and make political capital out of community tensions is wrong. Those who work to set one community against another are attempting to exploit prejudice for their own political interests. It is important that, in addition to the necessary police response to those activities, democratic political parties must ensure that they consistently resist the temptation, not only in Parliament but at every level at which they operate, to give sustenance to those who are involved in those far right activities.

We have heard a lot of talk about the involvement of Asian youths. However, to use the term "Asian" in a broad and loose way causes offence particularly to those members of communities who have not participated in certain recent events. We know that, especially in Bradford, those involved in the disorder included a substantial number of young white males. We must always be careful about our language.

This is not just a matter of addressing problems faced by part or all of the Asian community or of tackling the systematic racism that they undoubtedly face. We must recognise that the people who peddle racist views, whether in an organised or an unco-ordinated way, often find their audiences among an equally alienated group of young white people who also feel excluded from many of the things enjoyed by the rest of society. Whatever else we say, we must agree that the solutions we seek must work for all communities and that all communities must be part of the solution in the months and years ahead.

I should like to touch briefly on a few important areas. First, there is a broader police response than the response to disorder itself. The massive programme of change in the police service set in train by the Stephen Lawrence inquiry is under way and is as necessary as ever. The police are working consistently to build on their response to the needs of policing a diverse community. The Association of Chief Police Officers recently wrote to chief constables all over the country reminding them of the guidance of good practice in policing diverse communities that has been produced over the last couple of years.

We all accept that we must address our response far more widely than just the towns and cities that may have suffered from disorder. There are good reasons not to simply tailor a response to those areas and ignore the needs of others. That would send all the wrong messages. There are many other areas that have much in common with those where there has been disorder. They have high levels of deprivation, pockets of high unemployment, de facto segregation and subsections of the community involved in crime and hard drugs. We will need to look at all those issues.

My right hon. Friend the Home Secretary told the House last week that a group of Ministers has been established across Government. I chair the group and it has met on three occasions. Our task is to look at the practical help that the Government can give to local communities both in the short and long term. Like other hon. Members, I emphasise that we must help local communities to find their own solutions. Solutions that are imposed from the top will not work. We want to collaborate with local government and other statutory agencies, but also to involve other less formal structures, whether they are neighbourhood forums, faith organisations or other places where local people who are concerned about their communities come forward to demand or take action. We must invest in the capacity of those communities to tackle some of the problems.

While I would not put it forward as the solution, over the summer we are expanding the range of activities that are available for young people, particularly those that bring young people together from different communities. That is an important and immediate response to the needs of many communities across the country. We will be working through the Government offices for the regions to do that. We also need to look at ways to assist local communities and local authorities to promote dialogue and to strengthen democracy. As hon. Members, including my hon. Friend the Member for Stoke-on-Trent, North have said, a lead from local government will be important in leading the way to local solutions.

We are working closely with the Local Government Association, drawing on its knowledge of best practice and what has worked in different parts of the country to strengthen that programme of work. We need to find ways to enable the voices of those who have the least say to be heard. It has often been said that traditional structures in some of the ethnic minority communities do not work as they did in the past. Elders do not automatically represent the younger people. It is equally true that talking to the tenants association on many predominantly white council estates does not automatically put one in touch with the local 16 or 17-year-olds. We have to find voices for all communities, ensuring that young people's voices can be heard.

I acknowledge the need to examine the substantial programme of single regeneration, new deal, community and neighbourhood renewal and other such investment to ensure that we overcome the problems identified by hon. Members today. Those concerns will certainly be included within the work programme of the ministerial group.

The full title of the debate, which I am delighted to have secured, is the rather prosaic "Implications of the Private Finance Initiative". If I were to provide a subtitle, it would be "Myths, Sorcery and Other Accounting Devices". As a public sector accountant—I declare an interest to that extent—I must confess dismay and astonishment at the readiness of my Government to prod and coerce public agencies down the PFI and public-private partnership route using a rationale that is frequently dubious, shot through with subjectivity and based on figures of doubtful authenticity to demonstrate the desirability of projects that, in the medium term, are costly, inflexible and will depress the quality of public services, accelerate privatisation and divert taxpayers' hard-earned cash into the pockets of multinational companies that view the ethos of public service and the existence of the public sector only as a barrier to trade and an obstacle to profit.

I referred at the outset to myths. One of the most persistent myths is that PFI somehow squares the circle of bringing in new money while reducing the need for scarce public finance that otherwise could not be afforded. That is financial illiteracy raised to an art form. Every penny raised for PFI schools, hospitals and the prisons to which tomorrow's electorates will no doubt commit today's responsible Ministers is paid for by the public purse, plus interest, plus profits. Stretching over half a century, in some cases, PFI does not lever in private finance; it merely allows private shareholders to dip their large ladles into an increasing stream of tax revenue.

Independent research shows quite unambiguously that the Government could have paid for the whole programme of PFI projects without breaching the sustainable and golden fiscal rules articulated by the Chancellor. The Major Government lost control of public borrowing. In a frenzy of creative accounting, they conceived public-private partnerships and involuntarily bequeathed that poisoned chalice to Labour on 1 May 1997.

It is a sadness that the Government have been so seduced by the flawed and feeble justification for this abandonment of prudence that they have conveyed the firm impression that PFI is the only show in town. Local government and health authorities have trudged down this rocky path with increasingly heavy hearts and increasingly lighter purses.

Let me deal more thoroughly with value for money. PFI projects cost much more than conventionally funded projects, not least because the private sector borrows at higher rates than the public sector, which is underpinned by the lowest-risk borrower of all: the Government. The extra costs are boosted by lengthy negotiations with expensive City lawyers, consultants and fine wines employed by both sides. The escalation of costs is accelerated, notwithstanding the low risks, by the large returns demanded and the ballooning of scale.

The Birmingham schools PR is a good example. It started in 1996 at £20 million for eight schools and presently stands at £80 million for 13 schools. The higher levels of finance unsurprisingly lead to an affordability problem for the client authority, which often responds by reducing service and capacity, drives down labour rates and drains subsidies from other budget heads to bridge the PFI gap. PFI hospitals are another example. They have worse staffing levels and, typically, 30 per cent. fewer beds.

At the heart of the judgment as to whether PFI provides better value for money than its public sector comparator is the allocation of risks between the public client and the private deliverer. At this point we enter the seedy world of accountancy massage parlours, where figures are pummelled and distorted into unrealistic shapes. Research for Unison by Professor Allyson Pollock into the transferred risks that allegedly made schools and hospital projects value for money showed that calculations of risk are arbitrary and unreliable; what a surprise. A specific example is that the average cost overrun for national health service capital projects in the 1990s of 7 per cent. can be almost doubled in typical transferred risk calculations to upwards of 12.5 per cent. No wonder that the first PFI hospital at Dartford failed to make projected savings.

Despite frequent assertions by Front Benchers of both main parties, there is little or no evidence that private sector management, with its hallowed status as a third way icon, is more efficient at delivering quality services than workers in the public sector. As PFI projects come on-stream, the anticipated quality standards and adherence to cost and time scale are not delivered as frequently as their advocates suggest.

There is insufficient time to examine the litany of failures. Three will suffice: the fiasco at the Passport Agency, when Siemens paid only £2 million of the £13 million bill; Andersen Consulting's national insurance recording system, which needed to provide £35 million compensation to pensioners; and PFI's own big daddy—the channel tunnel rail link, bailed out by a Government bond guarantee that, at a stroke, took back the project's risks.

The belief in the natural superiority of the more creative, innovative and risk-taking private firm over the poor old public authority is seriously flawed. In practice, the private sector relies on the expertise of public sector professionals to run their newly acquired services. It shies away from too-intensive competition, through takeovers and mergers that have led to a handful of mega-multinationals dominating the sector. Such touching faith in private management flies at the speed of sound into the face of the evidence experienced on a daily basis by those who must endure some contracted-out services in the public sector. Most notoriously, Britain's filthiest hospitals are cleaned, if that is the right word, by private contractors.

My party and my leader seem to take it as read that innovation and the efficiencies of the private sector can be straightforwardly harnessed to deliver public health priorities and goals. However, the fragmentation caused by the PFI approach will divert resources and miss more goals than a Chris Waddle penalty. A key component shoring up the whole PFI edifice is the lowered pay and conditions of staff engaged. High-quality public services need high-quality employment and although transferred staff receive some protection, new ones tend to have poorer pay, weaker conditions and little in the way of occupational pensions. Women, the crucial and under-valued resource in the public services, take the biggest hit. As PFI contracts last for decades, the original tier of staff is steadily replaced by an entire class of women working under weakened conditions and terms. PFI depends on the exploitation of staff. There is a strong link between poor employment practices and poor quality services.

The Government state that value for money is the sole issue when PFI projects are assessed against the cost of traditional procurement. That appraisal is heavily shaped by the discounting of future cash flows at 6 per cent. Payments from taxpayers for the capital elements of PFI schemes are typically made later than is the case under conventional procurement. The higher the discount rate used, the better value the PFI project will look in comparison with the public sector option. Such discounting to a net present cost is flawed in two key ways. First, it does not acknowledge that public sector purchasing now tends to spread costs over time through borrowing, and the formulaic approach tends to assume a clumping of expenditure in the early years of public sector projects.

Secondly, the real costs of public borrowing have reduced and the arbitrary 6 per cent. discount rate used by the Treasury can no longer be justified. Reducing the rate to 5 per cent. would make a typical PFI project in this cost area 5 per cent. more expensive over its lifetime than its public sector comparator. That difference is enough to level the spreadsheet in favour of public purchasing for a raft of projects that have been forced down the PFI route. This is not some arcane discussion between sad accountants who should get out more; it really does matter.

The recent Sharman report reviewing accountability for public expenditure showed the difficulty of accounting for public funds when the private sector is the provider of public services. In the brave new PFI world, it is not clear that the Government have sufficiently strong and flexible mechanisms to guarantee the probity of public expenditure. Politically, PFI and the wider use of PPP restrict the operational terrain for politicians and inhibit our ability to make a difference. Services are supplied increasingly by private bodies that are not accountable in any way that people can recognise. That may lead to a lack of responsiveness by service providers to users, a blame culture between different public bodies and widespread electoral disenchantment.

I am reluctant to interrupt my hon. Friend's excellent speech, but I want to comment on the issue of transparency as regards elected Members of Parliament. In my borough of Hackney, in common with many other inner-city boroughs, the housing benefit service was privatised and the service promptly collapsed. As a Member of Parliament, I found it almost impossible to get information from the private service contractors. There was no transparency whatsoever in that case.

I am pleased to be given further evidence of the flaws of private sector management, which, in my experience as a senior public sector manager, are as frequent as in the public sector. At the very least, in an improved world, taxpayers, citizens and consumers have a right to expect that grievance procedures and effective sanctions will give them the prospect of redress when service failures occur.

In responding to today's debate and to the stream of criticism about PPP that will no doubt characterise this Parliament, the Minister and the Government may be tempted to pray in aid the recent publication from the Institute for Public Policy Research entitled "Building Better Partnerships". The commission that produced the report was critical of how some PFI and PPP projects operated in the past, but endorsed the Government's view that expansion of private sector involvement into the heart of public sector provision should be pursued energetically.

Even that stacked commission felt moved to say that the link between private provision of public services and cost-cutting would have to end, and that partnership should not be seen as privatisation by stealth. It, too, asked that PFI proposals be subjected to a sensitivity analysis to examine whether different assumptions on risk allocation would lead to different value for money conclusions. Even that commission comprehensively demolished the fatuous theory, so frequently articulated in this place by people who should know better, that PFI allows Governments to undertake more projects than would otherwise be the case. It does not, cannot and never will.

The IPPR is to be congratulated on initiating what appeared to be a rational and measured debate on this most provocative of topics, the interface between the private and public sectors and the possible takeover of the latter by the former. However, we must set that report in context. The commission carried out its inquiry in private, with an unprecedented coalition of big business and Government movers and shakers. Sponsors of the commission can in no way be described as politically neutral; they have a direct interest in the expansion of the PFI market and in tapping into public funds for education and health. They have been quick to recognise the possibility of positioning themselves to benefit from the dismantling of the barriers that previously protected the public sector from the warm embrace of private firms.

As the Catalyst Trust said, the IPPR makes the case for extending PFI by setting aside or downplaying the fact that almost all analysis of the potential of PPP acknowledges the inability to improve efficiency, concentrating instead on the benefits of alleged risk transfer. I referred earlier to the lack of objectivity in risk calculation, but the position is worse than that. The methodology used does not take into account the additional risk presented by outsourcing services when the most vulnerable people in our society are the ones who will suffer most if essential services falter or fail and, to quote the intellectual mother of PFI, "there is no alternative". Even when risk has been transferred, it has frequently proved impossible to enforce that contract in a practical way. PFI apologists will say that these are just teething problems. My view is that the private sector seems to talk up the risks in contract negotiations but talk them down when raising capital finance from the market.

"Does it matter whether public services are delivered by the private sector?" say the commission, the official Opposition and some of those at the heart of Government. Of course it matters. The public sector's motivation is social responsibility, while commercial firms have a responsibility to their owners and shareholders, with obligations to clients and customers some way behind. In countries such as Australia and the United States of America in which health privatisation—by PFI and other means—is further advanced, evidence strongly points towards poorer services with a lower quality of care, more bureaucracy and more inappropriate and less effective treatment. In short, services are down to a price, not up to a standard.

Our party should be the last to stand aside when the necessary modernisation of public services on which millions of our people depend is accompanied by the unnecessary collateral damage inflicted by the PFI: the inflexibility and rigidity of service provision, reduced access, decreased diversity and, ultimately, the failure to meet public need. We should resist the PFI-inspired erosion of the foundations of our public services that usher in the expansion of user charges and show the door to the principle of the public funding of services that are free at the point of delivery.

My comments have drawn on research from a range of organisations and the early evidence of the effect of PFI contracts on a number of public services, not least the NHS, which has experienced significant changes whenever PFI has been utilised. The express concerns of health professionals encapsulate the serious flaws inherent in PFI and render it incapable of being a longterm strategy for increasing capital investment.

The British Medical Association is concerned that the planning of PFI hospitals presumes increased output because of reduced bed numbers, with attendant implications for clinical services in the hospital as well as for primary care and social services in the community that do not have provision in the contracts. The BMA also points out that an implicit assumption of long-term contracts is that there will be a continued demand for the services of a particular hospital. That pre-empts revenue decisions to be made by local health authorities and primary care trusts for the foreseeable future.

Naturally, the BMA points out that PFI funding is effectively hypothecated and forces resource constraints to focus on staffing. That may lead to unplanned changes in work force configuration. The non-NHS owners of PFI hospitals will employ former NHS staff, but there has not been guidance to back up the welcome assurance from the top of our party that clinical staff will remain in the NHS. I am unconvinced that that is possible in a PFI context.

I realise that the hon. Gentleman is reaching the end of his speech, which I have enjoyed. He is speaking rationally and clearly. So that others do not try to misrepresent his remarks, does he think that there will ever be a role for the private sector in the delivery of public services?

Of course there is. The private sector has always been involved in the delivery of public services; the debate is about scale and location. In the recent election campaign we were told by the electorate to invest or lose. In yesterday's speech, the Prime Minister told us to reform or bust. Today, we should robustly say that public provision, not privatisation, is the way ahead.

It may be clear that I am opposed to the PFI on accounting, economic, social and political grounds. I remain convinced that public finance and provision remain the most effective, efficient and equitable way in which to modernise our hospitals, schools and other public services. The route that we are pursuing will take us more steeply into a private sector swamp that is populated by those who set the price of everything but who rate the value of public services as low.

A former Prime Minister criticised a later Administration for selling off the family silver. We run the risk of a house clearance of that on which our national family depends. When my children ask me in 2020—if I am still alive—what I did in Parliament to prevent the disaster of the PFI that will, no doubt, beset them at that time, I shall point to the text of this debate and, I hope, future debates. The PFI is prohibitive in cost, flawed in concept and intolerable in consequences for the taxpayers, citizens and workers who put us in this place and look to us to defend their interests.

rose

Order. I remind right hon. and hon. Members that it is normal procedure in such debates to commence Front-Bench Members' closing statements 30 minutes before the termination of the debate, which in this instance is 12 noon. It is not necessary to be a great mathematician to work out that with eight Members trying to catch my eye, 40 minutes does not allow much time for anyone. I hope that right hon. and hon. Members will bear that in mind and make their contributions pertinent, proper and brief.

I shall make two broad points on PFI in health; one on risk, and the other on value for money. We all face the risk of ill health, and health care will always be in demand. As the private sector realises only too well, under this Government—as with the previous one—the market for health care is good. PFI projects in health are a rock-solid investment for the private sector. Demand is infinite, and the Government are the guarantor; not the final one, but the first and only one necessary. It is right to ask how the obscene profits that have already been reported are justified. PFIs are a licence to print money; money that the NHS can ill afford.

On value for money, people see through the "Buy now, pay through the nose for 30 years" scam. My constituents have campaigned long and hard for a hospital at Porthmadog. One may now be on offer, but on the basis of PFI, if a private investor can be tempted. What are my constituents to say about that? Should they say, "No thanks, PFI is a con we'll do without. We prefer to travel up to 50 miles to the local district general hospital up in Bangor"? They have no choice but to take a bad deal, as no other deal is on offer. The market is good for the seller, if not for the buyer.

The hon. Member for North-West Leicestershire (David Taylor) referred to a distinguished critic of the previous Administration, who said that they had sold off the family silver. It is a case not of selling off the old family silver but of gambling in silver futures. Imprudent gamblers often burn their fingers in the futures market. For example, according to yesterday's Welsh edition of the Daily Post, a kilo of silver that cost £125 in 1975 can now be had for £106—much-devalued pounds. By the end of 30 years of a PFI contract, the taxpayer will be left not with some devalued pounds but with precisely nothing—quite an example of value for money.

Before I came to this place, I ran my own business. Had I done so in the way I have described, I would be not here but in the poorhouse. It is not this Government who will pay the price in 30 years' time. They will be long gone. It will be our children and, I fear, our children's children who will have to face the results of the Government's actions.

However much we in Wales might object to PFI, the National Assembly in Cardiff has no choice in the matter. That is one more reason why the so-called devolution settlement is untenable in its present form. We in Plaid Cymru call for proper investment in a reconstructed public sector that has faith in its capacities, is publicly accountable and whose activities are not shrouded because of alleged commercial sensitivity. New Labour may not have an ideological objection to putting shareholders before hospitals and profit before patients, but Plaid Cymru most emphatically does.

I congratulate my hon. Friend the Member for North-West Leicestershire (David Taylor) on initiating this important debate and on his magnificent introductory speech. His was a root and branch demolition of any case that might have been made for PFI. Many Labour Members believe that PFI is irrational nonsense, and it is also extremely unpopular with the public. An opinion poll for The Guardian suggests that only one in ten thinks that bringing the private sector into the public services is a good idea. That means that privatisation and PFI are less popular than the poll tax, and the Government ought to take careful note of that. The poll tax destroyed a previous Prime Minister. If Labour Members are not careful, we could find ourselves in political trouble. I want to avoid that above all, because it is vital for the future of the country that our party remains in government and continues to do its best for the great mass of ordinary people, and not for big business and those who make money.

Popularity is not everything, of course. Sometimes I am slightly unpopular with my Whips, but I do not necessarily take that as conclusive evidence that I am wrong. On the other hand, popularity is important in politics. We should bear it in mind that, although we have won two elections with big majorities, the public are watching us. We should note that they do not like privatisation and one day they may judge us more harshly than they have so far.

My hon. Friend the Member for North-West Leicestershire talked about the costs of privatisation and the rates of return. The rate of return required on private investment is vastly higher than on public investment. The typical rate in the old days of the Public Works Loan Board was, perhaps, bank rate plus 2 per cent. Current examples of required rates of return are 18 per cent. for the Skye bridge and 19.4 per cent. for Bridgend prison—vast sums of money—and, of course, the assets still belong to the private sector. I will not dwell on escalation, which my hon. Friend has already mentioned.

The illogicality of insisting on expensive private investment instead of cheap public investment defeats me. We have been told that it is about the importance of containing the public sector borrowing requirement. However, there are two types of borrowing: borrowing to finance the poor and unemployed during a recession, which is cyclical borrowing, and borrowing for long-term investment in assets, which is different. The risk involved in the provision of public hospitals and schools is not high. It is not a risk at all, because there will always be a demand for such facilities. It is just pushing extra cash into the pockets of the private sector rather than paying more cheaply to get things done in the public sector.

The hon. Member for Caernarfon (Hywel Williams) gave a somewhat different view in his criticism of the PFI. He said that, for the companies involved, PFI was a gamble; they could have their fingers burned. Does not all the research from people such as Professor Allyson Pollock prove that the risk is virtually minimal? It is a sure way for a few multinational companies to make a lot of money.

Of course I totally agree. The channel tunnel is one of many examples. It was a type of public-private arrangement that effectively was underwritten by Government. It made vast losses, which have been financed by the public sector. I do not mind paying from the public purse for those things that are valuable and essential for public use or a vital part of our infrastructure. However, let us not pretend that things must be bought in either the private or the public sectors. Indeed, the public sector could have built the channel tunnel—I would have preferred that—and it would have been built more cheaply, more effectively and, I suspect, more quickly. However, that is neither here nor there.

The important point is about public borrowing. On the continent of Europe, much of the public borrowing that we include in the PSBR is not included. Those Governments rightly look at the public borrowing level in relation to the state of the economy. Those countries are concerned with cyclical borrowing and not longterm borrowing for risk-free investment in necessary public services. We have introduced a new ethos into the public sector, which is deeply worrying. If we pursue it in the long term, a situation may develop in which some of the values that now drive people who work in the public services may be lost for ever. That would cause terrible damage to our society.

Many outside the Government take a critical view of privatisation and the PFI. I end with a quotation from Will Hutton, the director of the Industrial Society and former editor of The Observer. He said:

"For the NHS is no longer governed principally by considerations of public health, clinical need and patient care. Its overriding values are cost reduction, operational efficiency and the need to reproduce the managerial culture of a privately-owned PLC. Patients' interests have become secondary to those of ideological public-accounting principles and the enthronement of market values in public provision. A policy begun by the Conservatives, which the nation voted to change, has been continued largely uninterrupted by new Labour."

It is time we changed that and reverted to the view that the Labour party has traditionally taken—that public provision should be provided by public investment.

I congratulate the hon. Member for North-West Leicestershire (David Taylor) on his demolition of the arguments for the private finance initiative. I was delighted to hear so much understanding of it and its iniquities. All he missed out was the devastating fact that the first call on a trust's money, before anything goes into patient care, is paying off the PFI debt.

I shall briefly mention two concerns, illustrated by local events in Worcestershire. First, everyone knows that most PFI hospitals have far fewer beds than the hospitals that they replaced. To our amazement, the Worcestershire health authority has tacitly admitted that fact, by agreeing to provide an extra 112 beds, over and above those in the PFI hospital, in existing buildings that were to be decommissioned. As beds represent money, that must immediately put the cost of the PFI above the hallowed public sector comparator.

Secondly, I shall give a characteristic example of the spin that has been used. When the previous Secretary of State went to Worcester to cut the first sod for the marvellous new PFI hospital, the press release—of which I have a copy—from the Department of Health heralded it as costing £116 million. When Professor Allyson Pollock conducted the survey last year, she was kind and said that the cost was £108 million; she excluded the cost of equipment and of money that would be obtained from land sales. The health authority pilloried her for getting the sums wrong, although they were taken from health authority figures, and claimed that the cost was only £91 million, despite the figure of £116 million given in the press release.

Now, the health authority has at long last admitted that the true cost is £109 million. The difference between £91 million and £109 million is the cost of raising the finance to provide the building—which cements the arguments of the hon. Member for North-West Leicestershire that the initiative will damage the health service in the long term. In a comment column just before the election, The Guardian, described the PFI as "bleeding the hospitals".

I welcome the debate and the contribution of the hon. Member for Wyre Forest (Dr. Taylor). I had hoped that he would tell us the rate of return on the £109 million capital invested in the new hospital in Kidderminster and the comparative figures if it had been built by traditional public sector finance methods, which would, I suspect, be much cheaper.

I can compare it in another way. The cost to a trust of capital charges, which were the previous way of paying for one's premises and equipment, is approximately 8 per cent. of a trust's income. The cost under the PFI is approximately 13 per cent. of income. While the 8 per cent. is recycled within the NHS, the 13 per cent. goes into the private pocket. That is as close as I can get to the answer.

I thank the hon. Gentleman for his comments. A report by Professor Allyson Pollock compares the cost of repayments for several hospitals, pre and post PFI: for Norfolk and Norwich hospital, it was 0.7 per cent. pre PFI and 18.9 per cent. post PFI, for Swindon and Marlborough trust, it was 3.3 per cent. and 14.3 per cent. respectively, and for Calderdale Healthcare, 3 per cent. and 11.3 per cent., and so forth.

I welcome the debate, because it gives us a chance to challenge the ethos that the use of PFI finance in public services is the manna from heaven, money from God-knows-where that will give us the shining new building on the hill. A good, new hospital can be built, apparently at no cost, under PFI. However, the reality is that we are storing up an enormous charge for future generations; if there is a problem in financing those hospitals, the first call, the absolute priority of the debtors, is the private finance, not the patients.

Is it not unfair to ask a local electorate, "Would you like a PFI hospital or no hospital?" Local people could be asked, "Would you like a PFI or a publicly financed hospital?" Which would they choose?

Indeed. As my hon. Friend suggested, it is a ridiculous question, because clearly there is an option. Either projects are financed by the public sector in the normal, traditional, cheaper and more secure way, or the vultures of private enterprise banks are brought in—a rip-off at public expense—and given an absolute guarantee of income.

It is time that those promoting PFI realised that public attitudes have changed. I was brought up on a diet of publicity that told me that public investment in industry and anything that was publicly owned and publicly run was intrinsically dangerous, probably imported from the Soviet Union and a threat to freedom, health and democracy. I remember the campaign, "Say no to nationalisation". Those who are even older than I am will remember Mr. Cube.

On a cold morning in March, I was outside Euston station in the company of the general secretaries of RMT, ASLEF and the Transport Salaried Staffs Association—very nice people, fine folk—handing out leaflets saying, "Bring back the track. Take Railtrack into public ownership". The leaflets pointed out that Railtrack had been given away to its shareholders by the Conservative Government at much less than the capital value of the land it owned, never mind all the infrastructure. Is that a rip-off or what? We were collecting signatures from people who wanted Railtrack to be brought back into public ownership. That is nationalisation if you like—a word that people do not like to use these days. There was a queue across the concourse to sign the petition and the staff asked us if there was anything we could do about it. I told them there was nothing I could do about it because people wanted to sign the petition to secure the jobs of staff and to ensure that Railtrack was properly run. We must think again about the ethos of privatisation.

My hon. Friend the Member for Hackney, North and Stoke Newington (Ms Abbott) described what happens when public services are put out to private contractors. I have wearied the House before on that subject, so I shall speak briefly about housing benefit in my borough, which used to be run by the local authority. The system was not wonderful, but people could get answers and solutions to problems at the neighbourhood offices. The system was centralised by the local authority and it got worse. The local authority was then denied the capital allowance from central Government to invest in the new computer systems that were necessary and along came the wonderful company from Birmingham known as IT Net, which said that it would run the scheme for the local authority.

A short time later, 20,000 people were awaiting answers to their queries about housing benefit, private sector tenants were being evicted, people were having breakdowns and families were breaking up. There were horrendous problems because of the sheer incompetence of the company, which seemed to have the local authority in an armlock. That company was being paid—the directors were even getting bonuses. My right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) and I have been tearing out what remains of our hair to ensure that the company does its job properly. We were reduced to having a meeting with two directors of IT Net to ask them to improve the service.

Public money paid through a local authority should be providing a service to local people, but we have been reduced to talking to two directors who are answerable to shareholders, who have no interest whatever in the needs of the people of Islington. It is a negation of democracy that we hand our services over to the private sector.

The privatisation of housing benefit caused the collapse of the service and there was a total lack of transparency. One could not discover anything from the private firms about internal targets, or any other information. Those were not the only bad aspects of the privatisation, however. When it was clear to my local authority that the housing benefit service in Hackney was collapsing, it delayed a long time before removing the contract. People in the authority said, "In practice, Diane, we cannot remove the contract once we've handed it over to them, because there is no genuine in-house competitor or capacity."

My hon. Friend is right. On Thursday, the Liberal Democrat-run council in the London borough of Islington will have a chance to remove that contract from IT Net. As I understand it, however, the Liberal Democrats propose to continue with the contract. I trust that when the Liberal Democrat spokesman speaks, he will give us some good news after his promise to intervene with the local authority leadership on that matter.

Finally, I am a former official of the National Union of Public Employees, I later became part of Unison and I am acutely aware of the enormous commitment that public sector workers make to the public sector. They resent the fact that their jobs are sold to the lowest bidder every few years, even under Transfer of Undertakings (Protection of Employment) Regulations 1981 by which they may receive a guarantee that their employment will continue if the transfer takes place. If we want good-quality public services, we should remember to respect and support the people who work in the public sector and give them decent conditions. We must invest properly and cheaply and get ourselves better, democratically accountable public services rather than handing them over to those who have proved that they cannot provide them.

We are all in debt to the hon. Member for North-West Leicestershire (David Taylor) for this debate, because PFI is an important part of the debate on public services that will, I am sure, play a huge role in this Parliament. I apologise to him, to the Minister and to you, Mr. Cook, for having to leave before the end of the debate to attend a memorial service for the late Reg Prentice in St. Mary's Undercroft.

I want to contribute briefly to the debate because I was responsible for the PFI in the Department of Health in the last Conservative Government. I am sure that the Minister will point out that PFI has at least enabled a lot of new hospitals to get under way since the beginning of the last Parliament. That is to the credit of PFI.

At the same time, there are severe problems with PFI, which I want briefly to adumbrate. First, as the hon. Member for North-West Leicestershire said, every penny of PFI comes from the public purse and the taxpayer. It amounts to spending now and paying later, which builds up a huge problem for the future. In the March Budget it was revealed that £79 billion of PFI project finance would have to be financed in the future. Later figures suggest that another £16 billion have been added to that sum. That money will have to be provided by our children and our children's children in 30 or 40 years.

Even those costs understate the true impact because of the asset and land sales to which the hon. Member for Wyre Forest (Dr. Taylor) referred, which tend to be invisible in the equation advanced by advocates of PFI.

I take the hon. Gentleman's point.

With PFI, one is over a barrel with the finance houses, which are in a position to exact a hard deal. Governments under the pressure of public opinion are naturally anxious to get a move on with building hospitals, and so on. Therefore, one is always a demandeur—as it were—and the finance houses, companies and consortiums that finance the PFI can sit and wait until they get what they want. One must eliminate as much risk as they want, and it goes on from there. That is a problem.

I agree, too, with the hon. Member for Hackney, North and Stoke Newington (Ms Abbott) about transparency. I hope that the Public Accounts Committee will investigate the matter thoroughly, because we still do not have the facts on PFI in anything like the detail that the House should have before it commits itself to further billion-pound deals.

We should take the point that the Prime Minister always makes in Question Time—there are always huge overruns with traditionally financed public sector projects such as the Jubilee line extension. That is true, and it is equally true that, because of the responsibilities of the PFI contractor, projects finish within budget. Contractors are responsible if projects are not finished on time or within budget. The difficulty is that one tends to get cheap, short-cut solutions when projects run up against budget. One can end up with poorly finished hospitals such as those in Carlisle and Dartford—of which I have personal knowledge—and that is a tragedy. We may therefore have to face the fact that some large infrastructure projects are not easy to finance or estimate costs for. We must either finance them traditionally from the public sector and finish them properly or suffer the results of an inferior product.

The existence of PFI causes huge problems for the management of large infrastructure projects, especially hospitals, which I am interested in. Such projects are extremely complex to negotiate. The piles of documents are enormous, as is the amount of time that senior executives of the hospital have to put in to negotiate them. During that period, their eyes are inevitably off the ball when it comes to running the hospital. I frequently found such examples when I ran the PFI in the Department of Health. The standard of service deteriorated during the two or three years in which senior executives were negotiating the PFI, even though they had a contract team to deal with the matter, but it is enormously complex. One or two people had heart attacks and their health seriously deteriorated during the time that they were involved.

The end results of such projects are also extremely inflexible. The hon. Member for Wyre Forest (Dr. Taylor) made that point about beds. One may have fewer beds in a new PFI hospital and one may find oneself in the situation that we face in Bromley, where rising house prices have resulted in developers converting nursing homes. There are fewer nursing spaces in the area and fewer beds. The budgets of the local authority and the social services department are under pressure and the result is that far fewer people can find nursing care, which is a real problem for the local authority.

To get public services on their feet Governments of all persuasions—this is a non-political point—should give primacy not to financial considerations but to the management of the resulting utility and its employees. The hon. Member for North-West Leicestershire rightly said that one cannot have a satisfactory public service without motivated employees who can come only from properly structured management. Wherever possible, one should not get involved in complicated financing deals. One should keep the management—whether public or private sector, which I support in many cases—simple and uncomplicated so that it can do the job that it is meant to do.

I declare an interest in being the founding chair of the Public Private Partnerships Programme Ltd., which is a PFI local government company. I remain an unremunerated director, appointed by the Local Government Association.

When I became a local authority leader in 1991, I was appalled by the public squalor that I saw around me; the result of approximately 50 years of under-investment. I was pleased that my right hon. Friend the Deputy Prime Minister, listened to a number of people, including myself and, as a party, we adopted the policy of PFI in 1992. It is a Labour party policy alternative to privatisation.

My experience is not in the health service but in local government, dealing with schools, social services, housing, police, the fire brigade and transport. In each case, PFI has been the result of a choice—one in five of the investments made since 1987 have been PFI—made by local politicians. Unions are consulted and there is full TUPE and pension transfer. It works: the finance is almost as cheap as Government borrowing, buildings are built on time or earlier and long-term maintenance costs are agreed so that no future local authority leader inherits the squalor that I inherited. 'The staff will remain in comparable pension arrangements and significant savings to the public purse—from 5 to 12 per cent.—are made on schools alone. I was surprised that the IPPR report did not fully analyse what was happening in local government. In each case, because local politicians are involved, PFI must be proven to be better value than running the project under any other basis.

I am not an expert on the national health service, but I believe that it can learn from local government. My constituency has one of three trials in which facilities management stays with the NHS. The trial is at Queen Mary's hospital, and I await developments, because I understand that all other PFI arrangements for the NHS are waiting for the completion of those trial projects before they go any further.

Will the hon. Gentleman give way?

No, I shall not give way because I am short of time.

I understand that the maximum delay is about six months, so we should deal with the protection of workers' rights, which to me is the nub of the implications of PFI. PFI provides much better value than other arrangements, but the key is the protection of workers. I suggest three alternative ways forward for the NHS. First, if there is staff transfer, there should be full TUPE rights including full pension entitlement for existing staff. That is what happens in local government. Any new staff should be recruited on the same basis as those transferring, and there should not be two-tier pay and conditions. The Minister should examine how Lincolnshire county council has dealt with PFI—it balloted its staff three times—and Middlesbrough council's work on the matter.

The alternative is that if staff stay in the NHS, the operational side of PFI should remain in the public sector. When I first set up the Public Private Partnerships Programme in 1996, I met the right hon. Member for Fylde (Mr. Jack), who agreed that direct service organisations could act as the operational section of the design, build, finance and operate contracts, which are in PFI. That has been done by Cornwall county council, where the catering staff remain council employees, and by Cumbria county council, where the architecture department is part of the council.

The third option is for staff to stay fully in NHS employment. It is interesting to note what happened yesterday in Liverpool, where a joint venture has been set up with British Telecom for the corporate services. Some 900 members of staff have been seconded to BT but remain employees of Liverpool city council. Those different projects are all worth examining.

The phrase "build and disappear" was used by Digby Jacks at the launch of the IPPR report in terms of the situation, which he describes as the bad old days. All public infrastructures have been built by the private sector for a profit. It built them and disappeared, creating the squalor that I inherited. On the other side, we must protect workers' rights. Last weekend, I saw the excellent film by Ken Loach called "Bread and Roses". In fact, I saw it twice because I was so moved by it. We must ensure that justice for janitors—what that film is about—also means justice for public sector workers as they move forward with any new arrangements.

I want to join colleagues in congratulating my hon. Friend the Member for North-West Leicestershire (David Taylor) both on securing the debate and on giving such a brilliant demolition job on PFI.

PFI has been analysed extensively in the past 45 minutes and I want to make only a few points. In the first part of the Labour Administration, our slogan was "what works", and that is still the slogan of Labour Back Benchers. However, people are regarding with increasing horror the doctrinaire belief that the private sector has a magic answer to the problems of the public sector.

Will my hon. Friend give way?

I am sorry but I must make progress.

Nobody on the Labour Benches is opposed to any private sector involvement in the public sector; there has always been private sector involvement. Indeed, some public sector projects, such as toll bridges, are suitable for a PFI. Any public sector project with a natural revenue stream is probably a suitable candidate for PFI. However, once we move away from such projects, PFI becomes much more problematic, and hon. Members have explained some of the issues.

Ministers in previous Governments and the current Government have extolled the virtues of private sector management and talked about how it can achieve value for money. The truth is that it achieves value for money in highly labour-intensive public sector operations such as hospitals and schools mainly by bearing down on employees' wages and conditions.

As my hon. Friend the Member for North-West Leicestershire said, most of those employees, particularly in the health service, are women. In the inner city, many are working-class white, black and Asian women who are the sole wage earners in their families. If my right hon. Friend the Minister is still uncertain about what working under private sector contractors is like for those women, he can go to Harlesden with me any day of the week and talk to them about their experiences in cleaning, catering and other areas.

As a Member of Parliament for an inner-city area, I have seen what happens to employees when they have to work for private sector contractors. An important issue of PFI schemes is what happens to staff and at whose expense the savings are really extracted. I make no apologies for repeating that point, made earlier by my hon. Friend the Member for North-West Leicestershire.

All too often, private sector contractors obtain supposed increased efficiency, savings and output by the simple rigging of the public sector comparator that is used. We have tried to debate the virtues of the PPP proposals for the London underground with Ministers, but for a long time they would not reveal the public sector comparator, because they knew that if they did so, we would see how rigged it was. The improvements and savings that the private sector is supposed to produce are often the result of rigged comparators and management's bearing down on wages and conditions.

All that Labour Members want is to return to the Government's earlier mantra—"what works". Time and again, we can point to PFI schemes that have not worked and have produced a worse service and worse conditions for workers. These include a host of schemes for hospitals and the administration of housing benefit in local authorities that have not produced the outcome that the public wanted. If PFI schemes were so wonderful, we would not be sitting in this Chamber with the independent hon. Member for Wyre Forest (Dr. Taylor).

I congratulate all hon. Members who have spoken. I urge the Government to move away from an excessively ideological approach to the so-called magic of the private sector and to adopt a more pragmatic approach, building on experiences with PFI schemes and listening to the informed contributions that we have heard this morning.

I apologise in advance for having to leave before the end of the debate.

Recently, there has been a big debate about privatisation or the role that private companies will play in public services. Some people give the impression that that is a new debate about a third way, but we all know that that is not the case. The United States went down the road of privatising public services many years ago. I was reminded of that and the role of money for companies when I read a book about the so-called privatisation of public services in the USA. It mentioned that the chair of Kentucky Fried Chicken had decided to resign his position to join the new Hospital Corporation of America because the growth potential in hospitals was enormous; even greater than Kentucky Fried Chicken. I do not know how many hon. Members have tasted Kentucky Fried Chicken's product; those who have will be justifiably concerned that the quality of that product will be transferred and affect the quality of our public services.

That is already happening. As Professor Allyson Pollock pointed out, four out of the five trusts that control 10 hospitals are the same trusts that are responsible for the dirtiest hospitals in the United Kingdom. Even some in my own party tell us that there is no reason to worry, that the Government have announced a pause to privatisation and that as long as we retain a Labour Government, we shall avoid privatisation of the public services. Almost in the same breath and the same sentence, such commentators proceed to extol the virtues of PFI and are willing to debate with former representatives of the Tory Government who implemented the most PFI projects in the shortest period.

If we are to believe the Government, there is no contradiction between opposing privatisation and supporting PFI. We are told that they are totally different creatures. As a party, we certainly did not hold that view a few years ago. In 1995, a Labour party document stated that PFI was "creeping privatisation". The Solicitor-General, my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman), proclaimed that when the private sector builds, owns, runs and manages a hospital, it has been privatised. I agree, and so does the Trades Union Congress, which instructed its council to campaign for the end of PFI.

The public services are an integral part of my socialism. Whatever the leadership has dumped from the party's past, our constitution still commits us to democratic socialism. I am supporting the party constitution in opposing PFI; those who support PFI are opposing the constitution. Some people have a lot to learn from the 1945 Labour Government, who developed a pact with the people to expand the public services, which were to be owned by and accountable to the people.

If we go down the road of privatising services and implementing PFI, our pact, some 50 years later, will no longer be with the people, but with the multinational companies that are making so much money from these initiatives. For them, the public services are simply another opportunity to make a profit. A financial analyst estimated that expanding trade in the public services could yield the private sector £30 billion extra revenue a year. Those companies will end up controlling not just the expenditure but the policy.

For the vast majority of people, public services are not about profit, but provide an opportunity to make life more decent and dignified. Without public services, many opportunities would be absent. We must respond to need, not to private profit. We must view people other than according to how much money they have in their pockets as consumers.

I have the privilege of representing the constituency of Blaenau Gwent, the birthplace of the national health service, which is the jewel in our crown and the finest piece of socialist legislation of the past 100 years. When Nye set up the national health service, he intended it to respond to people's health needs. He was not concerned with how much money those involved had in their pockets.

Sadly, another hospital has been built through PFI in the neighbouring constituency of Chepstow. We were told that it would cost between £13 million and £14 million. The sale of the land brought in £12 million, so the hospital could almost have been self-financing. Instead, the people in authority opted for PFI, which has proved incredibly expensive. The hospital could have been built by taking money from current taxation or by borrowing. Governments can borrow money at a far lower rate than the private sector. We know that Governments pay the money back in the end and so the interest rate is that much lower. The project can be produced far more cheaply.

We have obviously run out of time but, unlike in 1945, there is no shortage of money. If Nye Bevan were alive today, he would remind the Government that their current account in 2001–02 was in surplus to the tune of £23 billion, while PFI capital investment deals signed between 1997 and 2001 amounted to £14 billion. There is £9 billion to spare for further investment. It is an act of madness to go down the road of PFI. People who want to do so should have the courage to admit that they are going down the road of privatisation. My constituents and I could never accept that and one of my predecessors certainly never accepted it when he introduced the NHS.

I congratulate the hon. Member for North-West Leicestershire (David Taylor) both on securing the debate and on his initial remarks. He has done the House a service. We have heard today a great deal of hostility to PFI; much of it understandable, most of it well made. The key problem with PFI is that, in too many cases, it has been the only game in town. The capital could not be obtained from other sources in other ways. The decision to go down the PFI route has not been made for value for money considerations—the real test that should apply—but because it is the only way for the hospital to get its improvement. That is a poor way of making capital decisions, whether in the private or public sector.

We should now decide, across parties and across Government, that the PFI is not a way to find new money. The accounting analysis that the hon. Member for North-West Leicestershire gave us in his opening remarks makes that clear. The public sector still has to pay the annual unitary payments for privately financed projects. Unitary payments to the private contractor are equivalent to interest payments on the debt that the public sector will have taken. There is no real difference in accounting or economic terms, so the PFI should never be considered as bringing new money into the game to provide better public services. That is a false argument that should be dismissed for good.

What the PFI can do—here I may disagree with some hon. Members—is produce better efficiency in certain circumstances. That is where the Government's value for money test should be applied. Indeed, it should not be called the private finance initiative but the private management initiative. PFI brings in private sector know-how and may well provide a service to the public. There may be private sector managers who can provide us all with a good service. There may not be enough public sector managers, or they may not have the qualifications or experience to manage a project efficiently. By bringing in private sector know-how, we can perhaps improve efficiency and get a better result for the taxpayer and our constituents, but a much tighter test would apply.

The question that Ministers must ask is how they can improve the quality of public sector managers as well. If the whole argument behind the PFI were about private sector management know-how, surely we should say to ourselves, "Let's see if we can also improve the competences within the public sector." Much can be done in that regard.

The Liberal Democrat approach to the issue comprises several key principles. First, there should he a level playing field. The public sector, whether at local government or national Government level, should be able to contest those tenders with the same financial framework behind it, as should not-for-profit companies and the voluntary sector. That would increase competition and diversity, which would in turn lead to great innovation. A level playing field gives the best of both worlds. To create it, we have to improve public sector competences.

The development of resource accounting of budgeting will give public sector managers the information and the accounting techniques to put forward bids that can equate with ones from the private sector. We should consider giving local government borrowing powers that are equivalent to those of national Departments. We also need to ensure that PFI has tougher tests applied to it.

The public sector comparators that the hon. Member for North-West Leicestershire mentioned are our highest objective. However, we need much greater openness in terms of the information that goes into them. The PFI contracts that we specify need to be more output-based so that the contracts tendered to public and private sector suppliers are based on quality of service delivery. That is often easier to specify than an input-based contract. We need to ensure that if the provider of the contract makes windfall gains, there is a clawback. The clawback and penalties that have existed in PFI contracts have been lamentably lacking in bite.

We need to consider alternatives to the way in which PFI has been developed. A proposal that has much merit and should at least be piloted is open book procurement. That would allow a private sector company to provide the service, using the money raised by the public sector. The open book would be the key to ensuring accountability. The managers and the public sector auditors would have full access to the information, ensuring that the private sector provider is properly monitored. Such a system might enable us to gain the benefits of extra private sector know-how and the potentially better competences of the private sector, while ensuring cheaper capital costs, a better deal for the taxpayer and accountability.

I have talked about a level playing field, but accountability is key to the way in which we should approach the question. In so many PFI deals we have seen a complete lack of accountability. There has not been a full analysis, in the House or in Whitehall, of the deals before they have been signed. The deals have been pushed through with political drive and the issue of whether they are good for the taxpayer and the user of that service has been neglected. We need to build accountability before the deals are signed, while they are going on and afterwards; that would involve a radical change in the way in which Whitehall and some of the private sector contractors approach the issue, in regard primarily to openness of information. We must ensure that as we explore new ways of providing public services, information, financial planning and management are available. That might cause problems within private sector companies, but they must meet the tests of openness and transparency if they want to get involved.

I congratulate the hon. Member for North-West Leicestershire (David Taylor) on obtaining the debate at an important time. It is important to look back over the 10 years in which PFI has developed to learn from the mistakes and successes, and it is also important to look forward. This is an occasion when the Government could set out their PFI intentions with regard to the health service. I believe that most citizens do not understand them; nor do I. I have been advised that certain NHS trusts have been notified of a new policy that all non-medical arrangements in PFI-financed hospitals must be PFI-subcontracted. Is that the case or not? People want to know.

The problems with PFI were well commented on by my hon. Friend the Member for Orpington (Mr. Horam), who has been involved with it from day one. There has been a lack of accountability; there have often been cost discrepancies and overruns; there have been problems such as poor cleaning services in hospitals and so on. In my constituency, the results of subcontracting the street lighting maintenance have been appalling. However, the hon. Member for Putney (Mr. Colman) made a good point about why PFI developed. It would be disingenuous for anyone to claim that the record of capital investment, management of capital investment and, in many cases, general management of the public sector was so wonderful that we did not need PFI.

I was particularly struck by the inefficiencies of the operational side when, as a young man of 17, I worked as a hospital porter for three months one summer. I was one of two students who basically ran the hospital for three months, while 10 extremely nice porters sat and enjoyed themselves. They were good people, but they subscribed to an ethos that was not about doing the job efficiently but about doing the minimum work for maximum money. As has been mentioned, efficiency and accountability are crucial.

If PFI is to work properly, first, there must be good contracts. Woolly contracts have been a problem; the public sector has not been good at contracting. Secondly, there must be an adequate and competitive supply of subcontractors and investors. That situation did not always exist as PFI developed, and sometimes profitability was too great for that reason. The National Audit Office pointed out that no provision existed for refinancing. The public were not able to share the benefits when interest rates fell and sometimes PFI profitability was excessive.

There is a crucial difference between PFI, which is about subcontracting the operating risks to the private sector, and many public-private partnership deals, which are about trying to pull in public money but leaving the risk with the poor old taxpayer. That is my concern about the London and Continental deal and the potential arrangements for the London tube. Without that discipline, the public are likely to be ripped off.

The subject of bond issues that are not implicitly or explicitly Government guaranteed has not come up. However, from the experience in the United States, non-recourse bond issues for projects within the public sector have brought some of the disciplines of the private sector. A chief executive or politician whose bond defaults is dead; there is no escaping it. A situation in which Government debt is shrinking and the marginal cost of potential public sector bond issues above gilts is not nearly as great as it was should be considered.

There has been criticism of the unsatisfactory results of PFI in technical work for the Passport Agency and social services. The main problem in both cases was that the contracts were inadequate. In the private sector itself, there have been few computerisation programmes that have not been subject to glitches. A major problem in the national health service is that patient records are not computerised; it still uses an incredibly archaic system of cards, which get lost and delay operations. That is not good public management. When I speak to friends at the sharp end of NHS management, they say that such problems are the real practical issues, and that there are restrictive practices in many parts that are not being addressed. Whether the system of reform is called PFI or something else, it is those issues that need to be tackled.

Finally, I repeat that we are at a crucial point. The Government have made noises about their intentions for PFI in the health service, but it is time to find out what their policies are. There must be a thorough appraisal of the policies in the light of the failures, as well as the successes, of PFI to date.

This has been a good debate, with passion and commitment, and one for which we owe my hon. Friend the Member for North-West Leicestershire (David Taylor) a debt of gratitude. There was passion and commitment on both sides of the argument. One side was ably put by my hon. Friend the Member for Putney (Mr. Colman), who brought a considerable body of experience as a local government leader; the other was put by my hon. Friend the Member for North-West Leicestershire, who brought his experience as a trade unionist and public accountant.

We have a duty as a Government and party to reverse the record of decades of decline and under-investment in and undervaluing of our public services and our nation's infrastructure. That was seen under the Government who were supported by the hon. Member for Arundel and South Downs (Mr. Flight). Our recently refreshed mandate will allow us to reverse that record of decline and deliver to people better public services and value for money. That is a task in which we are entitled to take pride. As my right hon. Friend the Prime Minister said yesterday:

"There can be no greater crusade for a centre-left government than to invest in and reform our public services. We should embrace it and build it with every bit as much zeal and commitment as the Attlee government built the welfare state".

Several of my hon. Friends referred to that post-war Labour Administration and have done so with approbation, commending them for their zeal and passion. I am here to show that this Government have an equal zeal and passion.

In our first term, our first task—on which we delivered—was to deliver economic stability and strong public finances. Having secured the fundamentals of our economy, we can now make the sustained investment in our public services and infrastructure that we on the Labour Benches all want and for which we have all campaigned throughout our political lives. We will deliver that in the context of public-private partnerships, which as my hon. Friend the Member for Putney said, originated during our long period in opposition. It is important that my hon. Friends and hon. Members understand that PFI is but one part of public-private partnerships. They, too, must be seen within the overall context of increased investment in our public services, because PPP is but one part of the wider investment in our public services.

We must get the debate in proportion, and understand the extent to which we are investing in our public services. There is an additional £4 billion of capital spending this year and a doubling of net investment by the public sector over the next three years to £19 billion in 2003–04. The scale of the investment in infrastructure that we plan dwarfs the investment of recent years. Total investment has increased from £24.4 billion in 1996–97 to nearly £35 billion this year, and that will rise to £41.9 billion in 2003–04.

We are carrying forward a major programme of hospital building, which is the biggest in the history of the NHS. In England, 68 major hospital developments worth over £7.3 billion have been given the go-ahead since 1997. The hon. Member for Orpington (Mr. Horam) shared his experience of PFI, but he did not deliver a single hospital under PFI. That was the Conservative party's record, but we are in the business of delivering on our commitment to the NHS. However, the matter does not end there. We are carrying forward a £180 billion 10-year modernisation of our transport infrastructure, and the replacement or refurbishment of 650 schools.

Public sector investment is growing rapidly, and we must show that the public sector can spend money well and efficiently to create the infrastructure and services that people want and value and that are delivered on time, at best value and to budget. Public-private partnerships, including PFI, are one of several tools that will allow us to deliver our ambitious programme of investment, and the PFI should be seen in the wider context of a Government strategy to revitalise the nation's infrastructure and to deliver quality services.

Our approach is not dogmatic or ideological, but pragmatic. We want public-private partnerships to be used only when they offer value for money. It may be appropriate where projects are complex or long term, or where on-going maintenance and upgrade requirements are significant. The rationale for using PFI is straightforward: it is to ensure that there is a clear discipline on the public sector stating its output requirements, and to build on incentives for the private sector to deliver specified services on time and to the right standard, otherwise it does not get paid. Risk is transferred to the private sector, and its management skills are brought to bear to deliver value for money.

Of course, people are important and no one should pretend that we do not recognise that. We have made major improvements to TUPE to safeguard the transferring of employees' terms and conditions. We are prepared to innovate with Partnerships UK, which was set up to develop new approaches to PPPs. We are piloting new approaches in NHS-PFI deals with ancillary staff remaining in the public sector but being managed by private sector partners.

We are not saying for one moment, "Private is good, public is bad." However. neither are we saying that public is good and private is all bad. We must recognise that the responsibility that we have to the public is to deliver value for money and to ensure that we make the necessary investment to build infrastructure and to deliver higher-quality services. The PFI should not be seen simply as a device to bring about more investment. We are always concerned to improve the quality of investment, and we want better investment when it is appropriate and delivers value for money.

This has been an important debate and we can all learn from the points that have been made. We make a commitment to the public to deliver better public services and better value for money, with PFI and private-public partnerships being but one aspect of that mission.

I am pleased to have the opportunity to raise a subject of particular interest to my constituents, as it is to the constituents of my hon. Friend the Member for Hertford and Stortford (Mr. Prisk), who will say a few words after I have spoken. A recent public opinion survey in the borough of Hertsmere revealed that the maintenance of law and order was the No. 1 concern of local residents. As my constituents have made clear to me and others many times, they regard that as being linked intimately to the provision of sufficient numbers of police officers to provide a visible police presence in the borough, to respond to crimes and emergencies and to be available in police stations when the public need them.

The Hertfordshire police force has had particular difficulty in attracting the number of new recruits that it needs. Before I refer to those recruitment difficulties, I wish to make it clear that I do not intend any criticism of the Hertfordshire force. My feelings are quite the opposite. I hold the Hertfordshire police force and its leadership in high regard. Its recruitment difficulties are not of its making. It has done its best to overcome such problems and to recruit as many new members as it can, and to overcome the consequences of not having sufficient police numbers. For example, it has done as much as it possibly can to put police officers on the front line when they can be of assistance to members of the public.

However, the Hertfordshire police force is not attracting the number of recruits that it needs. An apparent increase in police numbers in Hertfordshire in the past year has to be put in the context of an extension of the boundaries of the Hertfordshire force and the secondment of Metropolitan force officers to areas such as Hertsmere, which were policed formerly by the Metropolitan police. Hertfordshire is falling behind its target for recruiting enough officers to police the county. The recruitment target per year for the Hertfordshire force is 250 recruits. That is made up of 25 recruits in each of the five-weekly intakes of new recruits. Until recently, the number of recruits coming forward has been about half of that target—about 13 new recruits in each intake—whereas 25 recruits were needed to meet the force's target.

In response to that deficiency, the Hertfordshire force launched a recruitment drive last February. That was a sensible decision, but it has cost £250,000. As a result, recruitment has increased to about 18 in the most recent intake, but that is still well below the number needed. Overall, the force is about 145 officers short of its establishment target of 2,049 officers, excluding the crime fighting fund.

Such matters have serious consequences for Hertfordshire constituencies. Following changes in the governance of London, Hertsmere was transferred from the Metropolitan force to the Hertfordshire force on 1 April 2000. The Metropolitan officers who served Hertsmere were temporarily seconded to the Hertfordshire force. However, the secondment began to come to an end at the beginning of this year. Since 1 April, Metropolitan police officers have been returning to the Met from Hertfordshire at the rate of between eight and 12 a month. I understand that 31 have already returned and the remaining officers will return between now and March 2002.

Metropolitan officers who return to the Metropolitan force from Hertsmere are replaced by Hertfordshire officers, which is why the recruitment difficulties of the Hertfordshire force are of such direct relevance to my constituents. The Hertfordshire force has made it clear that the problems caused by the shortfall in recruitment will be shared throughout the force area. Hertsmere will not suffer alone. Nevertheless, Hertsmere's share of the recruitment problem will have consequences for policing the borough.

The number of police officers in Hertsmere is already below strength. The target for the Hertsmere division is 105 officers. The number in place is 95 and it may fall even further as Metropolitan force secondees continue to return to that force.

In Hertsmere, there is a widespread perception among local residents that the thin blue line is getting increasingly thinner and that, through no fault of its own, the Hertfordshire force cannot always provide the visible policing or response to crime that the public want. With some justice, Hertsmere residents feel that there are simply not enough police officers in Hertsmere. At the same time, there is also a perception that in various parts of Hertsmere there is a rising tide of antisocial behaviour, especially on the part of youths—it is low level in some cases, but local residents should not have to put up with it. Examples include gangs of youths in Grosvenor road in Borehamwood terrorising residents; a particularly unpleasant attack by vandals on the Threeways community and old people's day centre in Borehamwood, resulting in graffiti and damage; and harassment of shopkeepers, mess and vandalism by youths in the Harcourt road area of Bushey. Those are just some examples of the antisocial activities perceived to be taking place.

Sadly, in several instances the police have been unable to respond promptly to criminal activity, despite their best efforts. A recent and well publicised local example involved the theft of belongings from the clothes of participants during the installation of a new incumbent clergyman in the parish of Elstree, conducted by the Bishop of St. Albans. According to reports of the incident, on the evening of 11 June thieves entered a room in which members of the visiting clergy had left their clothes, and stole jackets, handbags, wallets, cash, credit cards, keys, diaries and personal documents belonging to about 12 clergy, while the new clergyman was being installed in the church nearby. The police could not attend that evening, as they were dealing with other calls and simply did not have enough officers. I understand that the police subsequently attended, but no one has yet been arrested in connection with the incident, and they could not respond on the evening that the offence took place. That is just one of several cases that have come to my attention.

Against that background of wide-ranging anxiety about the number of police officers available to police Hertsmere I met the Minister then responsible, the hon. Member for Norwich, South (Mr. Clarke), on 3 April and representatives of the three major political parties from Hertsmere. On 22 June, the present Minister for Police, Courts and Drugs wrote to me following that meeting. In that letter, the Minister drew attention to some of the measures that had already been taken to deal with Hertfordshire's recruitment problems, but he could not offer anything new to deal with the recruitment circumstances that I described. More needs to be done. As far as Hertsmere is concerned, the situation is unsatisfactory and could get worse. Residents of Hertsmere, local councillors and I are not prepared to allow that to happen without doing more.

I invite the Minister to look into three issues that may help. First, I invite him to consider reducing the pay differential between the Hertfordshire and the Metropolitan forces. It is true that the recommendation of the Police Negotiating Board for a £2,000 allowance for Hertfordshire officers was implemented on 1 April this year. However, Metropolitan force officers had already received an even bigger allowance in the previous year. Therefore, in recent times, the pay differential between the Hertfordshire and the Metropolitan forces has widened. A young person considering a police career in my constituency can make the short journey to London, join the Met and receive £4,000 more than if he or she had joined the Hertfordshire force. That is a substantial differential in terms of a police officer's salary.

Secondly, will the Minister consider the arrangements for concessionary travel for Hertfordshire officers, to bring them into line with those enjoyed by Metropolitan police officers? The latter enjoy free rail travel within a 70-mile radius of London. I believe, and the Minister may be able to confirm, that some Home Office funding has gone into that. Hertfordshire officers have some free rail travel as a result of agreements negotiated locally, but it is not as extensive as the travel arrangements enjoyed by Metropolitan officers, which are much more extensive and advantageous.

Thirdly, will the Minister consider the rate of return of Metropolitan force secondees from Hertsmere back to the Met? Any slowing in that rate could help Hertfordshire tackle the consequences of its recruitment difficulties. If the return of secondees continues at its present rate, Hertsmere and other parts of Hertfordshire could be left with fewer officers than are needed to give residents the service that they want.

More generally, I invite the Minister to consider the position of counties such as Hertfordshire in the overall framework of police pay and conditions. Will the Minister also take on board the fact that what is needed to recruit and retain officers in a high cost of living area such as Hertfordshire may be different from elsewhere. What provides a good standard of living in, say, the west midlands or the north of England, may not necessarily do so in Hertfordshire.

Those are matters of real concern to my constituents. It is not sufficient to say, as some sometimes do, that Hertfordshire is a relatively safe place with a low level of crime relative to other areas. There is a growing problem in Hertfordshire. Hertfordshire residents pay their taxes, both local and national, and look for a police service to be provided for them. Currently, through no fault of the Hertfordshire police force, it is difficult to provide that service to my constituents. They should not have to put up with not having the number of police on the streets, the police response to incidents and emergencies, and the general level of policing that they would want in their borough. I am sure that the same goes for residents in the rest of Hertfordshire.

Today, we are looking for constructive help and I am anxious to hear, after my hon. Friend the Member for Hertford and Stortford has spoken, what the Minister has to say.

I begin by congratulating my hon. Friend the Member for Hertsmere (Mr. Clappison) on taking the initiative in this debate. Like his constituents, my constituents regard this matter as one of the critical issues affecting the quality of life in Hertford and Stortford. We face the daunting prospect that by Christmas the number of police officers may have declined to 250 fewer than the establishment level that the chief constable has advised me is required for full and effective policing.

My constituency differs slightly from that of my hon. Friend, as it encompasses four market towns and several attractive villages, and has no real centre. It is true to say that some districts in my constituency have some of the lowest historical levels of crime in England and Wales. Nevertheless, in recent years there has been a consistent and growing level of violent crime. Coupled with that is a strong recognition by all my constituents that the profile of police officers has declined year on year.

To see the consequences of that, I took the opportunity, earlier this year to go on patrol with officers and gain experience of the practical issues. It was a Friday evening shift in Bishop's Stortford. It showed me that a town such as Bishop's Stortford, which has 32,000 people, is often served by a shift of approximately seven officers. Clearly, that is inadequate and will lead to further problems in the town. I was also struck by the quality of the professionalism and commitment of the officers in Hertfordshire, to which my hon. Friend referred. I want to put on record my respect for the commitment of Inspector Radwell and his team in Bishop's Stortford and the officers in the rest of my constituency. The truth is, however, that those officers are overstretched and overworked.

The recruitment crisis in Hertfordshire is generating problems with retention because, inevitably, experienced officers who are stretched beyond their limit tend to leave earlier and earlier. Of course, that compounds the problem.

As my hon. Friend emphasised, the root of the issue is that the Government's attempts to solve the problems of the Metropolitan force and improve the situation in London—by changing the pay, and so on—have led to a worse situation in Hertfordshire and other home counties. That financial gap of £4,000 is clearly significant to new recruits, let alone existing officers, and it has led to a ridiculous situation whereby police officers resident in Hertfordshire towns almost invariably work for the Metropolitan police, because Hertfordshire police officers cannot afford to live in the communities that they are responsible for protecting. That is why I endorse my hon. Friend's recommendations and analysis and look forward to hearing what the Minister says in response.

I congratulate the hon. Member for Hertsmere (Mr. Clappison) on obtaining the debate, as it gives us a useful opportunity to air some concerns that have been raised about police recruitment in Hertfordshire and to set out the Government's actions in helping that recruitment. I hope that my response will deal with the issues raised by the hon. Gentleman.

Police strength in Hertfordshire increased by eight between March 1997 and March 2000. That strength grew by a further 155 between March 2000 and March 2001, to a total of 1,922. The force has set a target strength of 2,049, which is 127 officers higher than the force strength at March 2001. As the hon. Gentleman said, the growth in strength in 2000–01 was as a result of boundary changes with the Metropolitan police in April 2000. Following those boundary changes, more than 180 Metropolitan police officers were seconded to Hertfordshire. Some 170 Metropolitan police secondees remain with Hertfordshire at March 2001, but all are due to return to the Metropolitan police force by March 2002, as that force will naturally need those officers back.

Hertfordshire police are therefore faced with the triple challenge of recruiting to cover natural wastage, to replace the departing secondees and to reach target strength. It would be unrealistic to expect the force to achieve that within a single year and the strength of Hertfordshire constabulary may fall this year before starting to rise when the exceptional drain created by the returning Metropolitan secondees is over.

Hertfordshire constabulary recruited 110 officers in 2000–01—fewer than the number recruited before, but well up on each of the two years before that. To counter the difficulties experienced in attracting recruits, the force has made a substantial investment in recruitment advertising. That is reflected in the forecasts provided to monitor the crime fighting fund, in which the force suggested that it would take on 214 officers this year, excluding appointments on transfer.

I have been advised by the Hertfordshire constabulary that the measures taken by the force to boost recruitment include setting up a recruitment website—it has received more than 9,500 visitors since it went live in February—and making other innovative uses of high-tech advertising, for example, the distribution of CD-ROMs in the form of business cards to enable potential recruits to connect to the website. There is a widespread poster campaign, as well as cinema advertisements and open days for potential recruits. The Hertfordshire constabulary is trying to ensure that its recruitment is targeted at the whole population by reflecting the make-up of the area so that it does not miss out on potential applications.

The Government are supporting police recruitment, including recruitment in Hertfordshire, in several ways. The crime fighting fund is enabling forces in England and Wales to recruit 9,000 officers over and above their previous plans in the three years to March 2003. With the help of the CFF, forces in England and Wales recruited 7,415 officers—64 per cent. more than in the previous year. The increase in police strength of 1,349 was the largest annual increase since 1988–89. We expect police strength to reach record numbers by March 2003 and to have 130,000 officers by March 2004. My right hon. Friend the Home Secretary said that when police strength reaches that number he will set a new target to take police force strengths higher.

Hertfordshire has been allocated 107 CFF recruits in the three years of the scheme. The force was unable to recruit any of the 40 CFF recruits allocated to it in 2000–01. In recognition of the difficulties that the force has had in attracting recruits, we have allowed it to carry over the 2000–01 allocation to next year. Hertfordshire will be able to recruit up to 70 CFF-funded officers in this financial year. Monitoring returns submitted by the force show that it expects to take up the full allocation of the crime fighting fund recruits. If the force recruits as planned it will qualify for just over £1 million from the CFF this year.

I am grateful to the Minister for giving way, as the matter concerns many people involved in policing in Hertfordshire. If, for the sake of argument, one accepts that the money is available to fund new police recruits in Hertfordshire, even so, new recruits may not come forward because the pay and conditions in Hertfordshire are not attractive enough. Will the Minister take those sentiments on board?

The hon. Gentleman should be patient and allow me to move on to that point. If he does not interrupt me too often, I shall get there.

In August last year, to help forces to achieve the extra recruitment enabled by the crime fighting fund, the Government launched the first ever national recruitment advertising campaign for the police service. There were more than 150,000 responses to the campaign and 32,000 expressions of interest have been forwarded to forces. The next phase of the campaign will begin in August and will have a regional element. We shall focus some of the advertising in areas where forces are in need of greater support, including Hertfordshire.

Officers in Hertfordshire may benefit from the starter home initiative under which £250 million will be made available in the next three years to help key workers to purchase homes. A bid from Ridgehill housing association, targeted particularly on police officers in Hertfordshire, has gone forward to the second phase of the bidding process. We are reviewing entry requirements and standards for police recruitment with a view to ensuring that unnecessary barriers to recruitment are removed. The review is exploring a range of criteria, including age, nationality, medical, eyesight and fitness requirements as well as the police initial recruitment test. We intend to develop new recruitment standards and requirements that are job related and non-discriminatory, and they will be applied nationally. That should help to ensure that potential recruits are not unnecessarily excluded and help all forces to recruit. We are also considering the way in which candidates can apply for the police service, so that potential recruits might be directed to apply to those forces with the greatest need rather than have them wait until there are vacancies in their local area.

The pay and allowances available to officers in the Hertfordshire constabulary have a bearing on the force's ability to recruit. Officers in the constabulary who were appointed after 1 September 1994 and are not in receipt of a housing allowance are, since 1 April this year, entitled to an additional £2,000. My right hon. Friend the previous Home Secretary approved that new allowance, following a joint recommendation by the official and the staff sides of the Police Negotiating Board on 8 February, in recognition of the special recruitment and retention difficulties associated with the high cost of living in Hertfordshire. The hon. Gentleman said that that is not good enough, although when his party was in government, it did not take any such action. He claimed that there is a major problem with the Met living next door, a matter that I am more than happy to look at with him.

However, my figures show no evidence of a drain of police from Hertfordshire to the Met. In the past two years, the figures—I am happy to make them available to the hon. Gentleman—show that there has been movement in the opposite direction. In the year 2000–01, 15 Met officers moved to Hertfordshire and so far this year there have been five, whereas 10 officers moved in the opposite direction last year and five officers moved this year. My figures do not support the evidence that there is a great drain of police constables from Hertfordshire to the Met.

I was pleased to hear the hon. Gentleman say that Hertfordshire was not a high crime area. However, he said that after considerable comment along the lines of "The thin blue line is getting thinner and thinner" when he gave details of crime problems in the area. It is true that Hertfordshire is a low crime area. It does not do his argument any good to paint the picture in the way that he does. Let us consider violent crimes per 1,000 people. There are five violent crimes per 1,000 people in Hertfordshire compared with 11.6 crimes throughout the national scene. The clear-up rate of violent crimes in Hertfordshire is 69 per cent. compared with 45 per cent. throughout the country.

Thus, Hertfordshire is a low crime, pleasant area in which to live, which is different from the picture that the hon. Gentleman tried to paint. If he is not willing to accept my argument, I refer him to the annual report of the local force, the salient point of which is:

"Despite the increase in territorial size, overall crime is down by two per cent. and violent crime has also fallen."

The situation is Hertfordshire is a lot better than that in many other parts of the country.

It is an historical fact that Hertfordshire has a relatively low crime rate. If the Minister is saying that residents should be expected to put up with a lower level of policing and police response, an insufficient number of police officers and recruitment problems, I shall take issue with him as will many people in Hertfordshire.

I was not attempting to say that at all. In the majority of his speech, the hon. Gentleman painted a picture of a rising tide of disorder, which led me to think that we were talking about the more serious problems in one of our inner-city areas and not one of the more pleasant parts of country, in which there are relatively low levels of crime. There are recruitment difficulties that are caused partly by the Hertfordshire police force trying to replace the metropolitan secondees at a time of substantial recruitment elsewhere. I do not underestimate those difficulties and I am happy to talk about the situation.

There is a lot of excellent housing in Birmingham but that is not what I intend to talk about today. The Minister and I were supposed to have attended a reception organised by the National Housing Federation, formerly called the National Federation of Housing Associations, to launch its housing checklist. I now have the chance to bring forward my checklist for investment in housing in Birmingham.

A few weeks ago, there was a debate on housing in London. In replying to that debate, my hon. Friend the Under-Secretary of State for Transport, Local Government and the Regions admitted that, as leader of Southwark council, she was responsible for some of the worst housing in the country. Therefore, I know that she feels deeply about some of the issues that I shall raise today.

Between 1984 and 1987, I was chair of housing in Birmingham and I, too, was responsible for some poor housing. Throughout that time, I was passionate about campaigning for additional investment in housing stock and a more responsive service to tenants, to get away from some of the paternalistic attitudes of the past.

In the 1985 stock condition survey, each local authority had to report the condition of its housing stock to the Department responsible. Birmingham's submission was independently audited and it was concluded that approximately £750 million worth of repair work was needed to secure the condition of council housing stock. There was also a problem in the private sector, but my main purpose today is to discuss council housing stock.

Despite that conclusion, during the years that I was chair, the amount allocated under the housing investment programme averaged £56 million a year compared with our bids of approximately £160 million a year—the amount that we knew was needed. I still have the officer's calculations, which I requested, that compare what would have happened had the investment in Birmingham's housing stock been maintained at the levels set by the previous Labour Government for 1979 and 1980. Had those levels been maintained, an additional £300 million of resources would have been invested in Birmingham's housing stock.

At the same time as we fought to improve investment, we realised that we needed a more responsive housing service. Therefore, the council created new devolved services and opened neighbourhood offices. All housing services were devolved from the central housing department to local offices, and the housing department was streamlined, with housing managers at constituency level given authority and responsibility for devolved budgets.

I was proud of my work and sad to see it turned upside down almost overnight, when new people came in and, in my opinion, returned to the previous failed system. I had inherited a system in which few responsive repairs were carried out. Planned maintenance took place, but in between that tenants could not get work done. The new regime introduced responsive repairs and a reduction in planned maintenance. We never seem to get a happy medium, but go round in circles.

At the same time that we did not get investment in our housing, social trends meant that the poorest and most disadvantaged people were concentrated in particular neighbourhoods. Those were mainly council estates and inner-city older housing stock where the tenure was owner-occupation, but by very poor people, mainly from ethnic minorities.

The stock continued to deteriorate. In 1993, Birmingham's house condition survey showed the need for investment of £1.3 billion in council housing and £700 million in the private sector. It found that there were 47,000 unfit private dwellings, with 80,000 other houses in the private sector on the borderline of being unfit. There were 27,000 privately rented homes, of which 6,500 were unfit.

The council's 1995 housing investment programme submission made the case for an annual investment of £220 million per year, with £83 million of that going to the private sector. That was not forthcoming, and a meagre £38.6 million—even less than I received during my tenure as chair of housing in Birmingham—was allocated. Things went from bad to worse and in 1997–98 the housing investment programme allocation was down to £28.4 million. I emphasise that that was not money given by the Government, but the council had permission to raise the resources to meet the costs through the housing revenue account.

At the same time, a new subsidy system meant a net loss to Birmingham of £17 million of revenue per year. Birmingham's housing revenue account—the council housing account—has paid more in rent rebates than it receives in rent rebate subsidy. In other words, council tenants paid to subsidise the social security benefits expenditure, which should be paid by the Government. In other tenures, housing benefit is fully covered by the Government. Over that time, council housing was subsidising social security to the tune of £34 million. The lack of investment in housing and the sheer daylight robbery of resources from council tenants' rents demonstrate the previous Government's discrimination against council housing and council tenants. Sadly, this Government have only now changed the system: over the past four years we have lost £34 million.

The dire situation includes deterioration of the housing stock and the increased dissatisfaction of tenants, as well as massive problems in the private sector that need to be dealt with. However, local authorities are blamed for the inadequacies of the services that they have been able to provide to their tenants and other people in need. The situation is so bad that the latest stock conditions survey, which was carried out by FPDSavills on behalf of the council, indicates a maintenance liability of £3.75 billion over 30 years in council housing stock alone. It says that £1.5 billion will be needed in years one to five, yet the council projects that only £315 million will be available during those years. In year one, the investment gap is £187 million.

Faced with that hopeless position, the council is now considering transferring its stock to registered social landlords under the Government's stock transfer programme, and the Government have held out a place for Birmingham. Ministers' letters say that additional investment is possible because registered social landlords can raise private finance outside the borrowing constraints to which local authorities are subject, but why are local authorities subject to that kind of constraint? The same housing and people are involved, and by and large they will need help in the form of housing benefit in paying their rents. That is not fair, and is yet further demonstration of the discrimination against council housing.

What is now proposed? Apparently, the Government are prepared to write off £650 million of overhanging debt. The new registered social landlords will be released from borrowing constraints. That will enable them to invest more money, and the money that would have gone into debt payments will be released for new investment. However, we must ask whether that is a good way to get a better deal for council tenants. The overhanging debt may be paid off, but the council will face early redemption penalties of £240 million, the cost of carrying out the transfer is £38 million and, on top of that, the improvement work will be subject to VAT.

Why do we have a system under which £240 million will be spent to pay off the moneylenders, but not a penny of that will go into bricks and mortar or improving housing? A total of £38 million will go into the pockets of well-paid consultants for their advice. I remember a time when local authority housing officers in Birmingham were invited by august bodies to provide advice. For example, the deputy city housing officer worked with the Audit Commission and the previous city housing officer sat on the Duke of Edinburgh's inquiry into housing. It now seems that we have to hire consultants at a rate of £1,000 a day to tell us how we should deal with our housing stock.

It is clear for all to see that the problem is a lack of investment. Even if that situation improves, the resources released will be woefully inadequate for the task in hand. As I mentioned, we need £1.5 billion over the next five years. It is unlikely that that level of resources will be released. It is something like a third of what will be required after the stock transfer.

A comparison already exists with one small stock transfer in Birmingham, when 2,636 properties were transferred to the Optima housing association. Funding to finance improvements in that housing equated to £89.9 million over five years. If that was scaled up for the whole of Birmingham's council housing, some £3 billion would be needed for the whole stock.

Ironically, one of the beneficial aspects of the proposals is that the management of the stock will be devolved to 10 registered social landlords, which will be locally based under the aegis of one citywide trust. Those proposals are similar to the kind of devolution that I was trying to bring about back in the mid 1980s. That demonstrates that it is not necessary to have stock transfer to have responsive management. I share the Government's desire to empower tenants so that they have more control over the day-to-day decisions that affect their lives, but I question whether stock transfer will achieve that.

Elections have been held in Birmingham for the shadow board for the proposed new landlords. Sadly, many tenants' representatives were elected unopposed. I have not yet been able to find out the turnout from the council. I wrote to the council in May and sent a reminder in June, but have still received no response. My guess is that it would be rather low considering how little information was given to tenants about the candidates. There have already been two resignations of successful representatives who objected to having to sign what they regarded as a gagging order. The feeling in Birmingham is that the council is not being open about what is going on.

The council has set up housing liaison boards that are, unfortunately, often poorly attended and have not galvanised tenants to participate. However, there is an active leaseholders board, to which I was invited to speak about stock transfer and the Government's proposals for the reform of leaseholder laws. The council no longer seems prepared to allow the board to use council facilities for meetings with an elected Member of Parliament. The chair of the board says that the council's attitude is obstructive.

If we genuinely want to empower tenants, they need to deal with officials who are themselves empowered. One of the problems with the involvement of the housing department is that there are so few clear lines of accountability. Officers on the ground have little power to determine the sort of services that their tenants want.

For example, I recently received a letter from the local neighbourhood housing manager in response to correspondence about the repairs complaints of a constituent who has been waiting several years for a chronically blocked drain to be cleared. Although a promise was made that work would be carried out, the department did not get round to doing the work before it transferred its direct labour organisation to a private organisation known as Accord. The housing officer tells me that Accord is now solely responsible for the inspection and issue of that work and has apparently decided that it will not be carried out because of the cost. Ultimately, Accord controls the work and the budgets, and the housing officer has no authority to insist that it carries out the work.

Housing officials who have to deal with tenants have no say in the repairs that are carried out, and such decisions are made by private contractors who owe no allegiance to the tenants whom they are supposed to serve. I do not believe that that is how to achieve tenant empowerment. If we genuinely want to empower tenants, we need to re-examine the housing benefit system. How can tenants be genuinely empowered if they cannot pay the rent themselves? Many have the rent paid direct, and no customer service contract is involved. If we genuinely want to empower tenants, we should consider that.

The Government, and no doubt the Minister, will tell us that resources for housing have substantially increased. That is true, but such matters are relative, and we must consider the low base from which we started in 1997. In comparison with total investment over the seven years to 1997 under the previous Administration, the average is about £3.3 million a year. The projected average for the first seven years of this Government—the first seven of many to come, I hope—is £2.6 billion. We inherited £1.7 billion; to the Government's credit, it has gone up to £3 billion but it is still woefully inadequate.

The Government are committed to ensuring that all social housing is brought up to a decent standard by 2010, and a third to that standard by 2004. The question Birmingham council tenants will ask is, "Will the necessary resources be made available, whether or not we vote for stock transfer?"

First, I congratulate my hon. Friend the Member for Birmingham, Selly Oak (Lynne Jones) on securing the debate. I am well aware that she has had a close interest in housing issues in Birmingham for a long time.

I shall deal with the important issues raised in the debate and put them in the context of the Government's wider policies for housing, which were so effectively taken forward by my right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) during his term as Housing Minister. The housing policy statement last December made it clear that the Government are committed to the aim of offering everyone the opportunity of a decent home, thus promoting social cohesion, well-being and self-dependence.

The breadth of our agenda is extensive by any standards and I shall set out just a few points. We have underlined the role of local authorities as strategic housing authorities and they have extra powers in that regard. We will raise the quality of social housing; our target is to bring all social housing up to a decent standard by 2010. We are providing new, affordable housing, and increasing investment through the Housing Corporation to more than £1.2 billion by 2003–04, almost double the level of 2000–01. We want to move towards a fairer system of affordable social rents and we are committed to bringing greater fairness and coherence to the structure of social rents. We are also determined to strengthen the protection available to the homeless, in respect of which our main provisions were set out in the Homelessness Bill.

Against that wider background, I shall turn to the position in Birmingham. It has long been recognised that the city council, as the strategic housing authority, faces problems which, given the size of the city, are inevitably on a massive scale. Chief among those problems is the poor physical condition of housing in all tenures. In the council sector, recent stock condition survey information shows that expenditure of nearly £3.5 billion is needed. Some registered social landlords operating in the city report significant problems with regard to stock condition and obsolescence. The private sector also has an estimated 48,000 unfit properties. Those problems can have a particular impact on black and ethnic minority communities in the inner city.

Another major issue facing Birmingham is the relative unpopularity of some of its council housing—for example, some maisonettes and high-rise flats—and low demand for social housing in some parts of the city. The council also faces the problem of failing neighbourhoods and social exclusion. There is an increasing concentration of social deprivation in particular areas, principally in the inner city, but also on some outlying council estates. There is also a close correlation between social deprivation and the social exclusion of particular groups such as black, ethnic minorities and women.

I am sure that my hon. Friend recognises the importance of housing in the agenda for tackling social exclusion and urban regeneration. She will therefore also recognise that—apart from policies on housing—the work being done through my Department and the neighbourhood renewal programme will be extremely important in dealing with some of the problems and the issues that she identified.

The city council will submit its housing strategy and business plan for 2002–03 at the end of this month. However, the documents provided last year clearly show that the council had already given careful thought to the issues it faces. The city council has gathered information, set out priority issues and explained options for dealing with them.

The city has examined several options for its council housing, including arm's-length companies, securitisation, the private finance initiative, partial and whole stock transfers and retention of stock. The council explained how all the options were assessed against a list of objectives, including the need to secure sufficient investment, to modernise all homes in the least possible time across the whole city and to maintain the improved properties in the long term. It also had to consider how to guarantee affordable rents and increase housing choice for all tenants. Housing management issues and how best to promote community regeneration were also relevant considerations.

The council carried out option appraisals in 1999–2000 and its tenants were consulted throughout. As a result of the process, the council concluded that the whole stock transfer represented the best means of enabling it to secure its objectives for council housing. The council also intends that the new community-based successor landlords will play a major role in wider regeneration initiatives in partnership with other organisations and across all tenures.

My hon. Friend pointed out that over the lifetime of the last Administration the Birmingham housing sector effectively lost £300 million in subsidies for repairs and she will recognise that such figures cannot be made up overnight. Different methods and different sources of financing are needed to make up the shortfall.

I recognise that we need to make up that loss, but I am asking why it cannot be made available from straightforward public sector borrowing and why the council cannot be given the same freedom to borrow as registered social landlords.

I take those points and I will deal with them, but I suspect that we shall be debating this matter for some time. The Government have invested substantial extra money in Birmingham's housing. The housing investment programme allocation for 1999–2000 was £26.5 million; for 2000–01 it was £80.885 million. A drop is projected for 2001–02, but on the basis of a stock transfer. An allocation for major repairs allowance will continue to allow the council to address other housing matters. Even after a stock transfer, the council would still be required to deal with other housing issues.

My hon. Friend asks why the total amount cannot be provided out of public funds. The pressures in Birmingham are replicated across the country because of the lack of investment in infrastructure during the last Conservative Administration. The council has taken decisions to make it possible to pay off the overhanging debt and to secure extra finance based on the rental stream.

I assure my hon. Friend that the Government are committed to ensuring that every council tenant and every tenant of social housing will be able to enjoy a decent home by 2010. It remains up to each local authority—in this case, Birmingham city council—to produce a housing strategy that will secure more say for tenants as well as providing them with good-quality housing. Every local authority should consult widely and decide which investment option it wishes to pursue. Birmingham city council is a forward-looking authority, so I am sure that it will aim to improve the quality of housing as well as its management. We must deliver not just on quantity, but on the quality and choice agenda that is central to the Government's strategy for housing.

I am grateful for this early opportunity in my parliamentary life to raise an issue that blights the lives of many of my constituents in Knutsford, Wilmslow, Mobberley and elsewhere. It is easy for those who do not know what it is like to be woken night after night by the roar of aircraft engines, to be unable to open windows on a hot day and never to be able to sit peacefully either indoors or in the garden, to dismiss aircraft noise as a small price to pay for the great expansion of our airports and aviation industry. For my constituents, however, who experience the daily misery of planes using Manchester airport's second runway, aircraft noise is central to their quality of life.

I spoke to a meeting of several hundred Knutsford residents on Friday night and I have to tell the Minister and, through him, the authorities of Manchester airport, that they feel that their voice and their concerns are often completely ignored. They are angry and bitter and today in this debate I speak for them. I am not asking for the impossible. I know that Manchester airport is crucial to the economic development that I and other hon. Members from the north-west want. It employs, directly and indirectly, several thousand people who live in Tatton and in the constituencies of other hon. Members who are present in the Chamber. I know that whether or not the second runway was necessary—I believe that it was not—it cannot be unbuilt. It exists, it is operational and it will be used. I also know that there is little point in trying to reverse the huge growth in the number of air passengers. We all use aeroplanes more and more in our lives and will go on doing so.

We need to find an acceptable balance between the demands of the aviation industry and its passengers and the impact on the lives of many hundreds of thousands of people who live around airports. In that context I look forward to the Government's promised White Paper on air transport. I also welcome the fact that they have consulted widely on how best to control aircraft noise. I recognise that some of the most important steps needed to reduce the impact of aircraft noise have to be taken at an international level through the International Civil Aviation Organisation and the European Union. I look forward to the phasing out of chapter 2 aircraft next year and I urge the Government to press for further international pressure for quieter engine technology and, for example, the introduction of chapter 4 status for aircraft.

However, I know my limits. Attempting to rewrite global aviation agreements is one of them. Instead I shall focus on three practical steps that would make a huge difference here in Britain and to my constituents. The first and most important step is the enforcement of so-called preferred noise routes, or PNRs. When planes take off from Manchester airport's second runway in an easterly direction they are supposed to follow an agreed track that takes them to the right, skirting around the town of Knutsford, over the Tatton estate after which my constituency is named, and avoiding built-up areas, before turning south towards London. The technology that enables them to do that is straightforward. As a pilot confirmed to me on Friday, there is no reason for any plane taking off from Manchester to fly over Knutsford, yet every day planes do precisely that. Indeed, Manchester airport itself confirms that last year 6,624 aeroplanes did not stick to the agreed noise routes. That is almost 8 per cent. of all departures.

The reason is simply because some pilots cannot be bothered to follow the tracks and some airlines cannot be bothered to insist that they do so. There are some excellent operators, such as British Airways and Continental Airlines, which keep their planes on track, but others, including major airlines such as PIA, Swissair, Cathay Pacific and Iberia, are repeat offenders. It is hardly surprising that that goes on when all that happens when they deviate from the preferred noise route is that they get a letter from the airport ticking them off. Most of the time they do not even reply and the airport does not chase them up.

I shall read a letter that my constituent, Mr. Barry Scott, received on 15 June from the airport, when he complained about an off-track aeroplane over Knutsford. The airport says that

"in the case of extreme track deviations the airlines are corresponded with and offered the opportunity to comment. I must state that unfortunately not all airlines are forthcoming with replies".

The airport says that it does not

"chase around after replies as this is very time consuming and prevents other more proactive development work from taking place."

Clearly, the only way in which to enforce the preferred noise routes and keep departing planes on the tracks that keep them away from people's homes is by changing the law, so that the people responsible, instead of receiving a warning letter that goes straight in the bin, are given a stiff fine that comes straight out of their bank account. Manchester airport, to its credit, is also pressing for the power to levy fines. I welcome that, but I disagree with the airport's opinion that the power should be voluntary and used at the airport's discretion. The fines should be automatic, unless a good excuse is provided on safety grounds, for example. If the law were changed I am sure that every departing plane would stick to the agreed route.

The Minister will no doubt tell me that the last Conservative Government said that they were in favour of new primary legislation to achieve those things that I have outlined, but failed to find the necessary parliamentary time for it over an 18-year period in office. The present Government say that they are in favour of that legislation, but in the last Parliament failed to find parliamentary time and did not accept the necessary amendment. I urge the Minister to find time to introduce the much-needed change to the law.

The second practical step that we can take is to make existing fines for aircraft that break the noise limits much heavier and apply them to planes that are landing as well as to those taking off. At present, the fine for an aircraft that breaks the noise restrictions around Manchester airport is £500, plus £150 for every decibel unit above the limit. That is barely more than the cost of a club class ticket and hardly a powerful incentive for airlines to change their practices and improve their technology.

As with off-track aeroplanes, it is striking how a great proportion of planes breaking the noise limits come from a very small number of operators. Of the 173 infringements reported last year at Manchester airport, more than 100 were caused by planes operated by either Virgin or PIA. If those airlines consistently fail to meet acceptable noise limits and will not respond to heavy fines, they should be banned from using the airport. We would all be presently surprised at how quickly they cleaned up their act, with that threat hanging over them.

The fines and the threat of a ban should also apply to planes that are landing as well as to those taking off. I spoke to the airport on Friday and the excuse that it gave was that pilots could do little to reduce the noise when coming into land. I do not believe that that excuse any longer holds true. Pilots living in my constituency have told me that new technology, piloting techniques and new profiles of flaps and wheels can make a huge impact on noise. Those things should be insisted upon.

The third practical step that could be taken is to ban night flights at Manchester airport. That is perhaps wishful thinking—it is certainly the most difficult of the steps that I propose. However, night flights make up only a small proportion of Manchester airport's daily activity, yet they are the greatest source of misery for people living around airports, as they deny them the basic right of a decent night's sleep. A single noisy aircraft at 4 am can ruin the night for literally tens of thousands of people in Cheshire and Manchester. The track and noise fines that I propose will help, although the simplest solution would be to ban all night flights, as has been done by many major United States airports and in Canada. In the past, night flights often offered the only opportunity for some people to go on holiday abroad. These days, however, cheap flights are available throughout the day, so there is no reason to travel in the middle of the night.

If the Government or Manchester airport will not ban night flights, they should at least extend their night restrictions from 6 am to 7 am, when most people get up—although, as a father of a four-week-old son, that does not apply to me. Many of my constituents find it most irksome that the main daily flights begin at 6 am rather than 7 am. That simple change would make a huge change to many of their lives.

Many other things could be done to reduce the detrimental impact of Manchester airport on the environment around Knutsford, Mobberley, Wilmslow and Handforth. For example, the Government could finish the long-awaited Manchester airport link road, which would stop heavy airport traffic going through Wilmslow and using completely unsuitable country roads in Morley and Styal.

Today, however, I have concentrated on aircraft noise. Instead of demanding changes to international conventions that I have little chance of influencing, or grandstanding about the growth in air traffic, which I cannot alter, I have focused on three practical steps that we could take.

First, we could fine aeroplanes that do not stick to the preferred noise routes. Secondly, we could increase and extend the fines for those that break noise limits. Thirdly, we could stop night flights at Manchester. I should be grateful if the Minister would respond to each of the three proposals, as those small steps would greatly improve the quality of life of the many thousands of people whom I represent.

I congratulate the hon. Member for Tatton (Mr. Osborne) on securing what I believe is his first Adjournment debate and I thank him for allowing me to make a short contribution. Clearly, his constituents have lost little time in making him aware of some of their concerns. It is worth recording, however, that people who live in what the boffins call the 69 LEQ contour in the Woodhouse Park ward in my constituency suffer the highest levels of noise from Manchester airport. That is why I warmly welcomed the airport's announcement more than a year ago that it was introducing an enhanced soundproofing scheme.

I support the hon. Gentleman's call to give the airport greater powers over track keeping. As long ago as 1997, when I came to the House, I was a member of an all-party delegation that included his predecessor, Martin Bell, and the hon. Member for Altrincham and Sale, West (Mr. Brady). We met the then Minister for Transport, my hon. Friend the Member for Hampstead and Highgate (Glenda Jackson), who seemed to indicate that the Government were moving in that direction. Since then, there has been consultation and I hope that the Minister will tell us more today. Greater powers on track keeping would put more pressure on airlines and ultimately reduce noise levels still further.

As a supporter of runway 2 throughout the inquiry, its construction and now that it is in operation, I have never pretended that the development at Manchester airport would have no adverse impact. However, we must always balance any such impact with the benefits and the other arrangements that have been made. The airport signed a section 106 agreement as part of the planning consent, which included many detailed commitments such as a major environmental management plan at the airport and important commitments on noise levels. It is important to record the fact that noise levels from daytime and night flying are now lower than in 1992. The expectation is that they will remain lower.

A myth seems to be going around the airport that there has been more noise from night flying since runway 2 opened. That is hard to understand, as all night flying is done from runway 1. The arrangements for night flying are therefore exactly as they were before runway 2 opened.

Many other benefits flow from the expansion of Manchester airport. New routes are opening up to places such as Kuala Lumpur and Istanbul and there are direct flights to Washington and Chicago. That increases access for north-west passengers and could relieve the great pressure on the London and south-east aviation system. Major improvements in the ground transport system around Manchester airport are being introduced. A new interchange is under construction and we hope that it will not be too long before metrolink trams arrive not only at Manchester airport, but at Wythenshawe hospital and town centre.

The crucial point is the impact of the expansion of Manchester airport on the economy and jobs: 19,000 people work at the airport and 70,000 jobs depend on it and the activity there. That activity and those jobs simply could not exist without aircraft taking off and landing and therefore producing some noise. On balance, the people of the north-west support the expansion of Manchester airport and runway 2, because of the prosperity that it brings to my constituency, that of the hon. Gentleman and the whole region.

I, too, congratulate the hon. Member for Tatton (Mr. Osborne) on securing the debate so early on in his time in the House. We look forward to hearing him speak on many more occasions. While he was making his speech, he was being doughnutted by two of his hon. Friends. I might write a note to the Whips Office to say that he is already keeping bad company.

I thank the hon. Gentleman for the way in which he introduced the debate. I am aware that he had a public meeting on Friday and I am sure that some of the issues that were raised then were repeated today, which is a job that all good Members of Parliament undertake. Unfortunately, he will find out that good Ministers have to explain sometimes why actions supported by hon. Members cannot be undertaken instantly.

I thank my hon. Friend the Member for Wythenshawe and Sale, East (Paul Goggins) for his contribution to the debate, which was somewhat in counterbalance to some of the points made by the hon. Gentleman. My hon. Friend has obviated the need for me to refer to certain matters in my response. I note that my hon. Friend the Member for Manchester, Blackley (Mr. Stringer) is in the Chamber, too, showing an interest in the debate.

Aircraft noise can have an impact on people who live near airports, particularly on departure routes. Many people in the constituency of the hon. Member for Tatton and those of other hon. Members appreciate the prosperity that the airport and the second runway have brought to the north-east region. Manchester estimates that it generates about £1.7 billion for the local economy. By 2015, we expect there to be about 40 million passengers per year and the contribution to the local economy to be about £4 billion, which is not an insubstantial amount.

As the hon. Member for Tatton said, an acceptable balance must be found between the economic benefits and some of the problems that clearly occur in his constituency. There is no doubt that one of the least desirable consequences of airport growth is aircraft noise. It is suffered by far fewer people than the number who share in the prosperity, but that is probably of little consolation to the people of Knutsford and those who attended the meeting on Friday night.

I will try to put the debate into context and then move rapidly to the important points made by the hon. Gentleman. Heathrow, Gatwick and Stansted airports are designated under section 80 of the Civil Aviation Act 1982 for the purposes of section 78. That means that my Department is responsible for setting noise mitigation measures for those airports. Elsewhere, circumstances vary greatly between the large airports and the many small local airfields. The policy of successive Governments has been that aircraft noise is a local issue and is best resolved locally. From time to time, there have been calls for Manchester airport to be designated for the purpose of section 78 of the 1982 Act, most recently in 1995. Each request was carefully considered, but was rejected as unnecessary in view of the noise mitigation arrangements that are in place in Manchester.

On the immediate effect of aircraft noise on the Tatton constituency and on Knutsford, in particular, the new runway at Manchester, which was opened earlier this year, lies closer to Knutsford than the previous runway. As a result, there is no doubt that the town has suffered an increase in noise. The International Civil Aviation Organisation rules for the use of staggered parallel runways state that aircraft should utilise the first available runway. That means that, during the day, when the wind is from the north or east, aircraft on approach will be using the new runway and will be approximately 300 ft lower over the town than when approaching from the original runway. When the wind is from the south or west, aircraft will take off towards Knutsford. There, aircraft will be lower and, on the revised departure routes, they will bring more traffic to the north of town. I regret that that is the case.

The second runway at Manchester was the subject of a public inquiry in 1994–95, which carefully considered the issue of air noise. The inspector recognised adverse impacts on Knutsford, for example. A package of mitigation measures was crucial to the granting of planning permission to build the second runway. The measures are subject to an enforceable agreement with Cheshire county council and Manchester city council under section 106 of the Town and Country Planning Act 1990. I will take the opportunity to explain some of those measures, as they are important for the understanding of the House, and so that the hon. Gentleman can pursue some of the measures on behalf of his constituents.

The airport has undertaken not to use the new runway for night flights other than when it would be unsafe to use the existing runway or when it is undergoing repairs. In the light of what the hon. Gentleman said, he might want to pursue that matter with the appropriate authorities. That obligation and the whole night flight regime at Manchester are to be reviewed in 2005. I dare say that his constituents will want to be part of that review. The current night restrictions at Manchester are based on the Department's night quota—the quota count scheme at Heathrow, Gatwick and Stansted. The airport has a noise points budget, based on the quota count classification. In addition, it has night movement caps. If the hon. Gentleman wants more details on those, I am sure that my Department will be happy to assist him.

Enlarging further on the matter may be beyond the scope of today's debate. Manchester sets noise limits for departing aircraft, which are 92 decibels during the day—2 decibels lower than the new daytime limit at the London airports—and 87 decibels at night. Aircraft that exceed those limits are subject to a surcharge of £500, with an additional £150 for each perceived noise decibel by which the limits are exceeded.

Noise penalties in 2000 totalled £154,300 and the money is used to support community and charitable organisations close to the airport. Manchester has preferred noise routes that keep aircraft as far away as possible from built-up areas. Although that is of little comfort to the people of Knutsford, it benefits other communities in the area. I understand that, during 2000, the total number of track digressions represented 7.8 per cent. of all standard instrument departures.

The Manchester airport noise and track information system is a computerised system that allows the airport to monitor aircraft within 20 km of the airport, up to a height of 12,000 ft. It is interesting that we measure along the ground in metric and upwards in imperial; I have yet to discover why that is the case. The system also enables the airport to identify aircraft that break the noise limits, investigate and record complaints from the community, measure the effectiveness of the noise reduction programme and provide statistical information to allow assessment of effectiveness of new procedures. The airport has operated a noise insulation scheme for many years. Under the present scheme, it contributes between 50 and 80 per cent., depending on the glazing specification, towards the costs of sound insulation and glazing to those properties within the scheme boundary.

Since 1999, an inner zone of almost 1,000 properties has been created, which allows the properties to be eligible for repeat grants, loft insulation and higher-performance double glazing. Manchester airport operates a policy of surcharging the chapter 2 aircraft, to which the hon. Gentleman referred, for use of the airport, in an attempt to encourage the use of the chapter 3 aircraft prior to the phase-out deadline. Daytime engine tests are normally carried out within the engine test bay and there are tight restrictions on the number of night time engine tests.

As part of the Department's air quality monitoring automatic urban network, an air quality monitoring station is located under the main approach flight path. It continuously monitors nitrogen dioxide, sulphur dioxide and ozone. There were no exceedances of the national air quality strategy objectives at the station in 1997, 1998 or 1999.

The airport is continually working to reduce the impact of its operations. It has invested over £100,000 in additional mobile transformers to enable more aircraft to use fixed electrical ground power facilities rather than their own auxiliary power units, which helps to reduce emissions and noise on the ground by providing power for jet aircraft while they are parked. The airport has also developed an airfield infringement fine system that includes a provision to levy fines for vehicles left running while unattended within the airport's boundaries.

Section 38(1) of the Civil Aviation Act 1982 states:

"an aerodrome authority may … fix its charges by reference, among other things, to any fact or matter relevant to—

(a) the amount of noise caused by the aircraft in respect of which the charges are made; or

(b) the extent or nature of any inconvenience resulting from such noise."

The hon. Gentleman may wish to follow that through.

Will the Minister respond to the point that I raised about changing the law to allow airports to fine planes that deviate from tracks? That is a huge problem in Knutsford, and the airport would support such a change. Although we disagree on the extent to which the fines should be used, we all agree that the law should be changed. Will the Government include that in the forthcoming White Paper and the following legislation?

That can certainly be considered. If the hon. Gentleman wishes to make that point during the consultation, I am sure that he—and many others—will do so. We look forward to receiving his comments.

In July 2000, the Department issued a consultation paper entitled "Control of noise from civil aircraft". Paragraph 27 of the paper suggested that

"section 38(1) might be amended to make it clearer that charges could relate. for example, to compliance with 'noise preferential routes'."

Manchester airport has long supported the idea of improved powers to ensure compliance. The consultation has now closed and the responses are being considered.

Manchester airport has a committee that actively consults with four local environmental groups—the Knutsford and Mobberley joint action group, the Heald Green and Long Lane Ratepayers Association, the Styal Action Association and the Wythenshawe Combined Tenants Association—to discuss the concerns of those living around the airport, in addition to the local authority representatives. I welcome the involvement of those groups and trust that local people, particularly those from Knutsford, will make good use of that opportunity to air concerns and possible solutions with the airport management and other interested parties. It may be helpful for the hon. Gentleman to discuss with some of those organisations and the consultative committee the degree of involvement that they may or may not have had on particular matters. That might be a good avenue for making his views known at the local level to those who have some influence over the policy.

The airport is the terminus of one of the new Manchester metrolink extension lines, which will improve access to employment for the large non-car owning section of the population in the Wythenshawe area.

The hon. Gentleman raised several other matters that I wished to cover, but there may not be adequate time. If at some time he draws those matters to my attention, perhaps in a note, I will be happy to write to him. He may wish to follow through on some of the legal detail to form a better understanding of the issue. Perhaps when he has done that, he might come and have a chat with me so that I understand it as well.

I am grateful that the hon. Gentleman raised these important and sensitive matters on behalf of his constituents. I, too, have an airport in my area, and I know that the issues are difficult to resolve. However, as my hon. Friend the Member for Wythenshawe and Sale, East said, sometimes we must balance the problems of our constituents with the wider aspects of economic regeneration, which are also important in our areas.