I am pleased to introduce this important one-and-a-half-hour debate for colleagues with an interest in the future development of post office services, particularly in relation to electronic government and the Government's targets to deliver services using automated credit transfer systems and new banking systems.

I am delighted that the Minister is able to join us. I know that he is particularly busy and that he has had difficulties at home to do with the health of a family member. We are all pleased that it seems that the family difficulties are being resolved. We are particularly grateful that he has joined us this morning while under that sort of pressure.

This is an important debate on the relationship between the Post Office as an institution and central Government, and the services that we are trying to ensure are delivered in the best possible way to our constituents. I shall set out the context in terms of Consignia and the Post Office. One does not have to be an expert to recognise that both are currently under considerable financial strain. Anyone who has studied the recent report of the announcements made by the chief executive to the Select Committee on Trade and Industry will see that the Post Office is under a great deal of financial pressure across its operations. It is facing financial losses and increasing competition, not only internally in the United Kingdom but throughout Europe and the wider world. Base level staff within the Post Office and Consignia are understandably worried—both those who work directly and those, such as sub-postmasters and sub-postmistresses, who work indirectly for the organisation. It would not be proper at this time of year to miss paying tribute—as I am sure all Members would wish—to the dedication and commitment of Post Office staff, particularly the postmen and women who over the next week or so will work themselves into the ground to ensure that our constituents get the delivery services that they have come to expect. Their sacrifice and contribution are acknowledged and recognised by us all.

I shall concentrate on the future facing postmasters and postmistresses and consider two aspects of e-commerce and ACT technology. I want to refer to the universal bank, about which the Minister made a significant announcement in a written answer yesterday. I shall then consider the "Your Guide" system of promoting government general practitioner services in the way suggested in the performance and innovation unit report, published in June 2000.

First, I shall cover some of the background to the current situation regarding sub-postmasters and sub-postmistresses. I vividly remember the television report of the Conservative party conference during which the then Secretary of State for Social Security, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), waved his magnetic stripe card high above his head with gay abandon and an uncharacteristic flourish. In fact, that is not true, because the year after he took to song, which was even worse. It looked like an awful opportunity for a photograph, but that did not cross his mind. The Horizon card scheme ended up hung round his neck like a political albatross, because it was a signal failure. However, it was a signal failure only afterwards.

It will discomfort the Minister to remind him that the right hon. Member for Birkenhead (Mr. Field)—the Minister for Welfare Reform from 1997–98—confirmed at the annual conference of the National Federation of Sub-Postmasters that the Labour Government would continue with the swipe card. The hon. Member for Vauxhall (Kate Hoey), whom he sent in his absence to the subsequent annual conference, also confirmed that the Government would try to roll out the Horizon card scheme as it was originally conceived. Many sub-postmasters rightly made investment decisions on the basis that that would provide secure income generation.

Many of my constituents told me that they had invested heavily in the bricks and mortar of their village and town post offices, safe in the knowledge, as they believed, that their businesses would have some income security. That was turned completely upside down when the Minister of State for Social Security in the last Parliament decided that the game was up and that the scheme would not fly. Everyone took a terrible financial loss, including ICL—the company that promoted the scheme—the Post Office and postmasters. The Government also lost a lot of money. The National Audit Office and the Public Accounts Committee have looked into the matter, which was one of the biggest financial disasters ever known in the public sector.

That is the background to the debate. In June 2000, the performance and innovation unit produced a report—"Counter Revolution: Modernising the Post Office Network"—which gave postmasters in my constituency real hope that if everything that was set out in the report was done, which is what they wanted and needed, there was a future for post offices in urban and rural areas throughout the United Kingdom. The report raised their hopes, and the National Federation of Sub-Postmasters could not have written it better. The report's concepts are still the foundation for a secure future for post offices in rural and urban areas.

The report highlights the universal bank, the concept of the roll-out of the government general practitioner and the "Your Guide" pilot as crucial to the success of the entire undertaking. These are big projects and none of this is easy. It is difficult for Government to procure them and to roll out contracts. They always take longer than anyone would like. I also accept that considerable investment has been put into the hardware system, which is now working and which makes a positive difference. That is all welcome. However, the day of judgment is looming, and we must try to pin down what income stream will flow from the PIU reports and recommendations, the universal bank and the general practitioner services for sub-postmasters. I need not remind the Minister that there are only 53 or 54 weeks between now and when ACT technology starts to be delivered and post office owners no longer have access to the income stream from fees for cashing social security giro cheques. In anyone's language, that is not a long time. The timetable for finishing work on the universal bank and rolling it out in a sensible, coherent way, and for developing sophisticated new concepts such as general practitioner services, is certainly ambitious. Time is not on our side.

Although the concepts and vision are right, post office owners in my constituency are fearful that they will not recover the £400 million that will be removed from the system with the loss in 2003 of social security giro cheque payments. They are not convinced that e-commerce, the universal bank and general practitioner services will provide adequate substitute income.

It is important that between now and 2003 postmasters and postmistresses are able to clarify the business opportunities. The written answer that the Minister gave yesterday to the hon. Member for Kettering (Phil Sawford) will cause them to be more rather than less fearful; the answer was helpful only to the extent that we now know a bit better where we are going. We waited for that answer for some time, but it was not what my sub-postmasters and sub-postmistresses wanted to hear. I will quote some key sentences for the benefit of Members who have not yet read it.

"The emphasis of the ACT migration and marketing strategy will be to ensure that each customer has the best account for his or her circumstances."

That is seductive, but the words "marketing strategy" concern me. If the Government were to make it more attractive for people to take ACTs straight into their bank accounts, it would diminish the opportunities that the universal bank would provide for sub-postmasters and sub-postmistresses.

I am grateful to the hon. Gentleman for initiating this important debate. Does he agree that a subtext is that the Treasury would dearly love to encourage more people to use PAT 14 accounts—named for policy action team 14—at the expense of the major banks, rather than the Post Office card accounts, which would have to be underwritten by the Treasury? I have not had the benefit of reading the detailed answer, but I suspect that it does not tell us how many accounts the Treasury is prepared to underwrite.

I am grateful for that helpful intervention, which underlines my point. Another key sentence in the answer might help the hon. Gentleman understand the Government's plans for a cap:

"Our operational assumption is that around three million benefit and tax credit recipients will open a POCA, but there will not be a cap on numbers or eligibility criteria for a POCA."—[Official Report, 17 December 2001; Vol. 377, c. 119W.]

That is good news, because we have argued all along that there should be no eligibility criteria or cap on numbers for Post Office card accounts. However, it is bad news because the operational assumption of 3 million accounts suggests to me that instead of the £400 million that is available annually at present, postmasters and postmistresses will be lucky to get £50 million out of the system when it is fully operational. Every week, 16 million social security benefit transactions in 18,000 branches throughout the United Kingdom contribute to that annual income of £400 million.

The question is how we will fill the £350 million gap. If the Government limit the amount of funding, it will not matter that there are no caps or eligibility criteria for the Post Office card account. The 16 million Post Office benefit transactions, if they continue at that level, will be financed with only £50 million. That will not take post office and sub-post office operators any further forward. I may be wrong, but I hope that the Minister will answer that crucial question.

I support my hon. Friend's argument. A further difficulty is that the Post Office card account and the basic bank account will not be on an equal footing if they are not simultaneously up and running in April 2003. That start date is desperately important for many reasons, not least of which is the effect of the Tax Credits Bill that is currently passing through Parliament. The Government have decided to split the contracts: one will go to the Link organisation, the other to EDS/Citibank. It will be difficult to get the contract right in the time scale available. Given the experience of previous contracts such as NIRS2, is the Minister confident that a POCA will be functional in April 2003?

I am certain that some people know much more about that than I, or my hon. Friend do, although he has worked extensively on this subject. They are concerned that the roll-out periods and implementation plans are not robust, and feel that a full trial year of the fully spec system should take place before it goes online. My hon. Friend is right to remind hon. Members that the system is vital, especially for the low paid, whose domestic income depends on reliable delivery of benefits. Otherwise, they are thrown on to the social fund safety net.

The Government must persuade us not only that that can be done in the suggested time scale, but that they have a plan B. The obvious plan B would be to postpone the replacement of benefit books by ACT for as long as it takes to ensure that the new systems are robust.

Other questions flow from the operational assumption that 3 million people will open accounts. Do high street banks want a new cohort of people past retirement age queueing up in their branches to obtain their pensions? How will the Government's marketing strategy ensure that POCAs are limited to 3 million? If an agreed rate of return was set for each transaction, sub-postmasters might be able to derive income. If customers wanted to continue using the service, which they currently do at the rate of 16 million transactions a week, postmasters and postmistresses in my constituency could encourage them to do so in their post offices. If the transaction rate were agreed, people could choose where they obtain their benefits without the need for marketing strategies, pressure or incentives. Academic research suggests that people are more comfortable with benefit payments being made across the counter in their local post office.

We must try to pin down the Government's plans, which are crucial to the survival of the post office network. We are talking about 18,000 offices and a high closure rate. I think that the last Postal Services Commission report said that 541 offices closed in the year to March 2000. The Minister may say that closures have tailed off and that things have not been quite as bad this year but people have been founding their plans on the PIU report. When sub-postmasters and sub-postmistresses see the detail of the written answer dealing with the universal bank proposals and others, the closure rate of sub-post offices may accelerate.

I want to talk about the concept of the government general practitioner. The pilot scheme has been running for some months in Leicestershire and Rutland, and all the evidence made available to me suggests that it has been a success. The services that were rolled out have been of considerable interest to the people using the new delivery mechanisms.

Some of my colleagues and I had the advantage of seeing a presentation by the team that is rolling out the project. That powerful system is impressive. If it were put at the heart of the Government's programme of service delivery, it would transform the interface between the ordinary citizen and central Government. That vision was carefully worked out and involved consideration of the way in which post offices could be a one-shop entry into a panoply of Government services. I found particularly exciting the fact that they could to a large extent deal with information and advice themselves, using a combination of new technology and personal services across the counter. There is the additional benefit of passing on customers to specialist advisers and having surgeries on-site.

I think that the Secretary of State may have in mind the possibility of a visit to one of the best examples in the pilot area. I hope that she makes known her views and her experience of how well the pilot scheme has gone. If the Government invested time, effort and commitment in the idea, it would certainly be a key element in developing and delivering post office services in rural and urban areas in the longer term.

Again, the concept and vision are right, and the work that has been done is extremely useful and valuable, but we must ask questions about some of the resources, timetables and other issues. We need to know how the programme is going. What is the Government's view of the pilot scheme and what is their time scale for rolling it out? Which client groups found it most useful and to what extent are they using it in a way that they did not before? Do customer satisfaction surveys suggest that users are satisfied with the new services that they are being offered? I am particularly interested to know how the programme has affected low-income groups and rural areas such as south-east Scotland, which includes my constituency.

What will be the decision-making process? What steps is the Department of Trade and Industry taking to see that the devolved Administrations ensure that the content of "Your Guide" is accurate and up to date? If it is not relevant to the local circumstances, it will be useless and positively harmful. We need to tie in the constituent legislatures in Edinburgh and Cardiff and the content providers in the devolved parts of the United Kingdom where the content is significantly different because some of the rules and laws are different.

How do the Government see "Your Guide" helping to achieve their rightly ambitious targets for the delivery of e-government by 2005? What other areas of government policy are likely to be affected by the new service? The opportunities are almost limitless. It could help to improve public service reform, social inclusion and to tackle fuel poverty in rural areas. It could promote neighbourhood renewal, rural renewal and e-democracy. I came away from the presentation extremely enthusiastic. I am old and cynical yet I was really cheered up by the potential that this new tool can deliver if it is properly used.

Finally, I return to the future viability of sub-post offices in my constituency. Where will the income stream come from for "Your Guide"? When will we know what fees central Government will pay? When will we get down to the nitty-gritty of how these concepts—"Your Guide", the universal bank and other systems of e-government—which are right in theory, will work in practice? The day of reckoning is coming. We need to know how committed the Government are, how much money they will put into the system and how the Department will take forward these issues. We need to know that soon because the ACT migration scheme will kick in in 2003. As my hon. Friend the Member for Somerton and Frome (Mr. Heath) said, if we do not get these things sorted out by then we will all suffer. Certainly the attrition of the network will continue and rural and urban sub-post offices will continue to close at an alarming rate. I hope that the Minister can answer some of these important questions because many people are urgently awaiting his response.

I am delighted to follow my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood)—my neighbour—in this important debate, and I congratulate him on securing it. The attendance for the debate has rather the feel of the usual suspects. There is strong representation on the Liberal Democrat Benches and a blank representation on the Government Benches, apart from the Minister whom we are grateful to see in his place. What was once a reasonably healthy attendance by Conservative Members at previous Post Office debates has now diminished. I do not think that fairly reflects the seriousness of the issue, although I concede that the full title of this morning's debate may be somewhat esoteric and may have scared off a few hon. Members.

The bottom line for us all, regardless of party and whichever part of the country we represent, is that the local post office is a vital part of our communities. My hon. Friend said that our thoughts are focused at this time on the Christmas postal deliveries. I attended the Peebles delivery office yesterday at the ungodly hour of 6.30 am. I was a late arrival; most of the postmen and postwomen had been there since midnight, anticipating what turned out to be the busiest day of the year so far. About 50,000 items of mail were being sorted by a team of between 30 and 40 for delivery throughout the county of Peebles, which forms a large part of my constituency.

Much information technology in the modern post office is used for preliminary sorting, but when the mail gets to delivery offices such as that in Peebles, it is a much more manual affair. That is perhaps why, when I was going round the office, getting in the way of people sorting the mail, several postmen and postwomen told me that they could not understand why, at this busy time of year, senior managers in the Post Office had announced the possibility of 30,000 redundancies. To say that the timing was insensitive is an understatement; to see the hard work being done and the necessary way of working in post offices suggests that senior managers need to get back to the floor themselves if they are to understand more about what goes on in their business.

Although it is not the primary aim of the debate, I hope that the Minister can assure us that there will be nowhere near as many redundancies as has been suggested, even though some doubt was subsequently cast on that figure. The people who deliver the customers' mail would be reassured to know that they are extremely valued and that it is not their fault that the Post Office is in commercial difficulty.

I do not for a moment disagree with the hon. Gentleman about the excellent work and commitment of Post Office workers. In his conversation with them, did he ask why the Post Office or Consignia is responsible for about half of all days lost throughout the economy in industrial disputes?

I did not discuss that issue. The industrial record in my constituency is perfect, and I am unaware of any recent disputes in any of the areas that I represent. Perhaps the hon. Gentleman will raise that matter with the Minister.

We are, rightly and properly, focusing on the delivery of e-government through post offices. Liberal Democrats have consistently expressed anxieties about the future of the sub-post office network in rural areas and in larger towns where sub-post offices also give an essential service. They, too, feel under financial threat because there is great uncertainty about their future.

The Government proposed the universal bank and the 'Your Guide' system as solutions to the crisis; my hon. Friend the Member for Roxburgh and Berwickshire extolled some of the ideas and asked some important questions. Time is short to get the new systems in place, assuming that they will deliver what they promise. Substantial anxieties remain among the sub-post masters and mistresses in my constituency and, I suspect, across the country.

My hon. Friend and I recently held a meeting with our local post masters which highlighted their worries, especially about the shape of the community information network, which "Your Guide" will represent. They expressed great uncertainty about it and although their federation had received a presentation in Perth not long before, they were conscious of widespread ignorance among local agencies in the Borders and elsewhere about the services that could be provided through it and the roles that councils and other agencies would be expected to play. That meeting in Galashiels led us to ask for the meeting, which my hon. Friend mentioned earlier, with the "Your Guide" implementation team in London. We were given a comprehensive and neutral presentation of the project's development to date, and I thank the individuals concerned for their time and patience.

The presentation made it clear that there are three core customer propositions in the project that try to focus its usefulness on retirement, work and community services, and on key groups that use or might be tempted to use the Post Office reasonably regularly. An impressive range of services is being considered on such matters as money and legal issues; retirement; jobs and training; benefits entitlements; local government services; adverts and notices; and, importantly, local information. There are several channels, to use the jargon, through which the services may be delivered, but the touch-screen facility is perhaps the most imaginative and the one that catches attention. We saw a demonstration and were able to test it out in its current form for our constituencies, and we were impressed by what we saw, although we appreciate that it is not yet the finished article.

It was a good presentation in many ways, but it raised a series of questions in my mind. It was not clear which Department is in charge of ensuring that the services that are to be delivered through "Your Guide" are properly prepared, although I assume that it is the Department of Trade and Industry. If the Minister is able to answer that question, perhaps he could list the Departments that he expects to use "Your Guide" and give us a progress report on the state of preparedness for trialling it beyond the pilot stage that is happening in Leicester. It also struck me that, as my hon. Friend the Member for Somerton and Frome (Mr. Heath) mentioned, huge cost implications are often associated with such projects. It is unclear what departmental budgets exist to ensure that proper preparation is made for developing the services and ensuring that they are delivered on time.

Most important will be the roll-out of touch screen and other aspects of "Your Guide" to the wider sub-post office network. Will the Minister tell us what stage the procurement and contract setting has reached? Given that we are within 18 months of the project going live throughout the country, we would expect to hear about an advanced stage of negotiation and roll-out. I hope that we will not be told that nothing will be done until the pilot is finished. I suspect that that will be a handy answer behind which to hide, but no one will believe the Minister and his Department if that is the best that can be done at this stage. We want a cast-iron assurance that the 2003 deadline will be met. As my hon. Friend the Member for Roxburgh and Berwickshire said, there appears to be an alarming shortfall between the income generated under the existing benefits system and what is promised under the new system. If there is no income when we trip over from one to the other, there will be chaos in the system and many people will lock up their post offices and throw away the keys.

My hon. Friend spoke about the relationship between the DTI and devolved administrations. Anxious about the future of our sub-post offices, we in the Borders have devoted considerable time to that matter. The position north of the border is extremely murky: it is not clear who is in charge of the roll-out and the relationship with the DTI. I am a firm supporter of devolution—as, indeed, is the Minister—but that is no excuse for losing the thread of Government policy and the impetus to deliver it.

At what level is liaison with the Scottish Executive taking place and to what extent are the same services as those set out in the "Your Guide" plan for London involved? I do not want to make a personal point, but is the Minister's sister in charge? Perhaps they will have a chance to sort out a few problems over turkey this Christmas.

I have heard some flashy suggestions that the "Your Guide" platform could be used as an internet access point across the country, which would help the Scottish Executive to reach their target of internet access for the whole of Scotland. That is superficially attractive and I can understand why one might think in those terms but, as the history of commercial internet café sites shows, those who want to use the internet do not necessarily use it for a short period. To make this a commercial proposition—and ensure that people are not gummed up in queues until they get fed up and move on elsewhere—internet access may have to be denied and other routes for delivery established. Will the Minister clarify the position, which is a matter of growing concern north of the border?

My hon. Friend's argument came home to roost when we spoke recently to key local players in our region. He and I chair a monthly meeting that brings together the convener and key economic development officials from the council, the chairman and chief executive of Scottish Enterprise Borders, the chairman and principal of Borders college, the vice-principal of Heriot-Watt university, and the chief executive and chairman of the Scottish Borders tourist board: I hope that that list includes everyone. That meeting has taken place monthly for two and a half years, primarily to focus local efforts on maximising the benefit to the region of European funding, but we also touch on wider purposes. When I recently mentioned the roll-out of "Your Guide" I was met by blank stares. I blame not those senior local individuals, but the information system. We are close to implementation yet key players such as the council, which should be interested in developing its services through the platform, know little about it.

My hon. Friend and I suggested that the implementation team should come north of the border at the beginning of January to demonstrate the system to local agencies. That may sound like an ad hoc approach from the Minister's point of view, but it is important from our local perspective. I hope that the Minister will provide the implementation team with sufficient resources, because it is costly to acquire the kit north of the border. The team must be able to meet Ministers and the Scottish Executive. I understand that the Minister cannot instruct or demand in that respect, but I hope that he will encourage the appropriate Minister to meet the team. If the "Your Guide" platform is on time in England, we do not want to be left behind in Scotland.

The bottom line is that within 18 months the sub-post office network should have a viable future. It is important that post offices serve our local communities and that Government policy objectives can be delivered through that post office network. Despite numerous debates in the House, Government announcements in parliamentary answers and so on, it is not clear what form that future will take. The documents that we are asked to read are full of buzz words: modernisation, reform, and one nation—you name it, it is in there. Sub-post masters would add another buzz word, which is uppermost in their minds—survival. They fear for theirs right now. I hope that the Minister appreciates that the onus is increasingly on him to demonstrate how they will survive.

I add my congratulations to my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) on initiating the debate, on his campaigning over the years for the post office network and on the work that he has done on the Select Committee on Social Security in bringing out many of the ways in which the automated credit transfer system will have an impact on the Post Office. The debate builds on a substantial legacy of work. He and my hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore) referred to the problem from the standpoint of the Scottish Borders. However, this is not specifically a Scottish problem, a Borders problem or a rural problem. I represent a relatively affluent London suburb but I know from experience that post office branch closures arouse perhaps more emotion than any subject other than the closure of hospitals. The issue concerns us all.

I wish to ask two opposing questions. First, what can the internet and particularly e-government do for the Post Office? Secondly, what can the Post Office do for the internet and e-government? The first question returns us to the issue that both my hon. Friends have touched on in some detail: the underlying economics of Post Office Counters and of the network and how they will be affected by the changes of the next two to three years. Perhaps I can put the same questions in a slightly different way. I understand that as a result of the phasing in of ACT in 2003, the network will lose approximately £430 million in income, which is slightly more than the figure suggested by my hon. Friend the Member for Roxburgh and Berwickshire. The notional figure that I was carrying in my head, as a result of past debates and parliamentary questions, was that the universal bank and particularly the Post Office card account would bring in about £180 million. My hon. Friend quoted £50 million, and it would help us all to have more clarity about the income string that we could expect. The Government have always said, "That is an issue of commercial secrecy; we cannot discuss it." It may be an issue of secrecy or it may reflect an unwillingness to say that they do not know the answer.

It is also vital to have more clarity for the sake of staff. People are having to make decisions about whether to continue in the business or to close up. If there is a prospect of raising more money than the figures I have cited, it would help to build confidence within the network if we knew that. The more the Minister can say about the expected figures for card accounts and the income stream that will flow from that, the more that would help business planning. It would also help if we could add to that a notional estimate of what fee income the network can expect to derive from its electronic government work, a role that will emerge from the pilot programme. I was given estimates of a fairly derisory income, but that may be over-pessimistic. There may be substantial money in the scheme, in which case it would be useful if the Minister could give us a range of estimates. We are not asking him to put his reputation on the line by citing a precise figure—a possible range of figures would tell us something about the way in which Post Office economics are being affected.

Before leaving the question of the impact on the Post Office, I raise the slightly wider question of how internet-based services will affect Consignia as a whole. As we have learned over the past week, the finances of Consignia are in a dire state. It is not simply a question of strikes, though they are important. The simple fact is that there has been growing competition for the services provided by the Post Office for many years, particularly by electronic mail and fax. The Post Office has been unable to respond because of under-investment, in large part because its annual gross profits every year have been looted by the Treasury. As much as 90 per cent. of its gross profits for much of the 1990s was taken by the Treasury in tax and dividends. It has not invested and is not ready for the challenge. It is now faced with a pincer attack from two sets of regulators: the Association for Postal Commerce—Post Com—which is helping couriers and others to get into bits of its business, and the European Commission, which will squeeze its margins by reducing the weight limit. It is difficult to see anything other than a downward spiral of increasing losses and contraction of business, and at some point the issue will arise of whether Consignia can continue with its universal service obligation.

The relevance of the internet is that at least it offers a positive opportunity rather than a set of negative threats. The Post Office's one great asset is the door-to-door delivery system. It may become a liability, but it could become an asset if it were linked to the increasing use of internet shopping. Terminals in domestic households and the Post Office Counters network could be the mechanism for stimulating new business and value addition for the postman delivery service, and that could be a great boon for Consignia. However, I do not see much evidence of that.

I want to ask the Government for some indication of how they see the income streams of Post Office Counters and Consignia generally being affected by the changes. I also want to turn the question round and ask what the Post Office Counters network can do for the dissemination of internet access and electronic government. I understand that both universal access to the internet and availability of electronic government are targeted for 2005, so the two processes are interrelated. The Government must address the issue of how far the adaptation of electronic government by Post Office Counters can contribute to reducing the digital divide problem, which has several elements. One is the great difference between social classes—about 20 per cent. of families with unskilled workers as head of household, but more than 60 per cent. of those with professionals as head of household, have internet access. There is also a big gap between the old and the young, and between rural areas and big cities. The question is whether the Government can bridge that gap using the post office network. Let us take those in turn.

With imagination in the use of electronic government through the Post Office, much could be done to bring the elderly within the system. They are the main users of Post Office Counters because that is where they collect their pensions. They are being left behind, but they do not have to be. In Twickenham, an imaginative system has grown up around the villages which are the basis of my constituency. One social entrepreneur has created in each suburban village an online system targeted specifically at elderly people, most of whom are now wired up to the internet, but that is unique and specific to my area. The system—Hampton online and Twickenham online—has not, as far as I know, been replicated elsewhere. If elderly people are to have internet access, the Post Office Counters network of branch offices is best placed to achieve that. I wonder how far the Government are targeting that specific audience in that way.

The second problem relates to rural areas. We know that BT is behind with its asymmetric digital subscriber line roll-out, but even if it were up to scratch with that, there would be a problem. We know from case studies in Europe, in countries such as Sweden, that even if there is a line going into a village, the offshoots into domestic households often lag far behind. The way in which village communities obtain access to internet services is primarily by using a focal point, such as the library or the local main post office.

I turn to electronic government itself, an area in which there are clichés. The Government often set themselves a target of having certain services online, but the services offered are often fragmentary and not very useful. It is important that a small trader should, for example, not only be able to use electronic government terminals to find out how to get an application form for a VAT return, but should be able to talk interactively to the VAT office. That would make business and the payment of tax much easier. The quality of electronic government is crucial, not simply access to it. We must understand how far the Government have thought through going beyond mere mechanical targets to achieve a really useful electronic government service. The Post Office experiment could be important in accelerating that process.

We are at a branching point. We can envisage an environment in which the Post Office Counters network declines or disintegrates rapidly and the Post Office as a whole is on a downward spiral. However, it is equally possibly to envisage upturn and increasing opportunities. The use of the internet-based system and electronic government could be a main mechanism in achieving that. The Government must be much more explicit about how they intend that to work and how much income the Post Office can derive from it.

I begin by congratulating the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on securing the debate. It is a timely opportunity to discuss such issues, although it is not one that a significant number of colleagues have taken. Perhaps they are desperately trying to catch the last Christmas post.

As it is Christmas, I join in the tribute paid to postal workers in my constituency and elsewhere. They are a special breed of people. How many of us would want to get up so early and tread the streets in all weathers? I know how committed and dedicated they are to their task.

The real affection that the British people have for the Post Office—if I can use that old-fashioned term—is underlined during the Christmas post. It is therefore all the greater pity that the postal services face so many problems at present. A rather good film was made a few years ago by Mr. Tim Burton called "The Nightmare before Christmas". The postal services are becoming the nightmare before Christmas in some ways.

There are two principal issues. First, how effective are the Government in delivering e-government and e-services generally? Secondly, will the steady erosion of postal services, in particular the closure of branches throughout the land, undermine the efforts to introduce e-government?

It will be interesting to see whether the Minister, in what will probably be a protracted reply, given the time available, will follow the example of his Secretary of State in Question Time the other day. She distanced herself from the many problems currently faced by postal services and no wonder, because we are talking about an organisation that is losing £10 million a week and has the worst industrial relations of any organisation in the country. Perhaps the Minister, who has many and varied contacts in the unions and in politics, can use his good offices to try to get the Communication Workers Union's tanks off Consignia's lawn so that it can at least make some sensible management decisions and have some expectation of carrying them through to fruition.

We know that the management have decided that they must make savings of £1.2 billion. Rather unbelievably, the figure of 30,000 redundancies was blurted out during evidence to the Select Committee. Ministers and senior management have rowed back from it ever since. Underlying all that is Consignia's dismal failure even to come close to meeting what are in my view quite modest delivery targets. Achieving its basic core business of delivering a first-class letter the next day is simply evading that failure.

We keep hearing ideas floated that would dismantle the postal service as we know it. They include the abolition of the first morning collections, which has happened in many parts of the country, and scrapping the second delivery. It has also been suggested that people should actually pay to receive their mail, rather than its being delivered in the traditional fashion. I hope that the Minister will explain how such developments will sit with the universal service obligation.

In introducing the debate, the hon. Member for Roxburgh and Berwickshire rightly dwelt on universal banking services and the "Your Guide" pilot. Despite the written answer that slipped out yesterday, presumably in anticipation of this debate, the universal banking project is fraught with uncertainty. What is certain, however, is that in April 2003, 36 per cent. of sub-post offices' income—about £400 million, although the figure will have risen even during this debate—will disappear. That is one major reason why 547 sub-post offices have closed. That is a record figure, and the trend is continuing this year.

During questions a couple of weeks ago, Ministers tried to draw comfort from the fact that that rate of closure may be slowing. I am sorry to disabuse them, but there are a number of reasons for that. Many sub-post offices have already closed and will probably never reopen. Moreover, the honest truth is that some people are hanging on simply because they cannot find anyone to buy their business. Many in urban areas are waiting until next year, when new forms of financial support will be introduced as part of the Government's regeneration proposals. As has been eloquently pointed out, a great mass of people are waiting to see what will happen with the universal banking project.

In a remarkably frank tour d'horizon before the Select Committee, the chief executive of Consignia accepted that about half the network is, in effect, uneconomic. As many as 5 million people are unbanked, and probably unwired as well. They are the main targets of any proposals. Yesterday's interesting written answer states that good progress is being made, that the Government are negotiating on these matters—one would hope that they are—and that they are developing

"a detailed migration and marketing strategy",

the aim of which is

"to ensure that each customer has the best account for his or her circumstances."—[Official Report, 17 December 2001; Vol. 377, c. 119W.]

The answer also suggests that departmental staff will discuss options with people. Can the Minister assure me that when advice is given, it will be wholly neutral? Departments should not try to pressure people into opening traditional bank accounts or PAT 14, stripped-down versions, instead of Post Office card accounts. According to some estimates, as many as 7 million people could request POCAs. There is a cost involved in providing such accounts, although it is difficult to estimate, as the figures have been difficult to get hold of.

The written answer to which I referred also states that there will be no cap on numbers. I welcome such talk, as far as it goes, but is the Minister really suggesting that the Treasury will write a blank cheque for these accounts and pick up the bill regardless of how many people apply for a POCA? Moreover, according to one estimate, PAT 14s will cost £60 or £70 a year per account. Will the banks or the Treasury bear those costs? According to the Minister's estimate, how many people will want to open such accounts?

Although it is nice to hear that the Minister is still negotiating and developing a strategy, does he accept that the April 2003 deadline is rapidly becoming unrealistic? The key issues of training for sub-postmasters and, indeed, for customers have already been mentioned. For the elderly in particular, keying-in pin numbers and swiping cards will be difficult and unfamiliar tasks. We ought to hear a little more on the migration strategy and the way in which costs will be allocated.

To judge by information that we have received, the consensus is that the "Your Guide" pilot has proved to be quite a success. It has had 150,000 users so far, which is impressive for a six-month pilot in one area that has run for only two thirds of its term. That is encouraging. As co-chairman of the all-party group on older people, I can see enormous potential for helping older people in the community, especially those who are less able to get around. There have been massive benefits through Age Concern, and the surface has barely been scratched. It is a good idea and we are pleased that it is going well. No doubt the Minister will tell us more.

The original performance and innovation unit proposal envisaged a 12-month pilot, and there was quite a scramble to get it up and running for the six-month period. Ministers should not just wait for the pilot to come and go, after which people's expertise will dissipate, and then start thinking about what will happen next. A few days ago I tabled a question on that for written answer, to which I have yet to receive a reply. I was hoping for the purposes of the debate that I might get it yesterday afternoon, but I was not as lucky as the hon. Member for Roxburgh and Berwickshire, who received his answer on the universal bank. We deserve to be told about the attitude of Ministers to the pilot. Following all the work that has gone into it from the private sector, are they producing their own detailed proposals on how it will work in practice, or has there been slippage in the decision-making process? What is their timetable?

I recently searched the Government's e-envoy website to see their strategy paper for the coming year. As far as I could see, it made no mention of Consignia or post offices. That rather suggests that the organisation is not necessarily seen as crucial to the delivery of services. I hope that that is not the case. The Minister will not mind if I remind hon. Members that he has not always inspired the IT industry with confidence. In July, a publication called "The Register" questioned whether he had done enough about the internet, and concluded that he had done "nothing at all". By September, its view had changed somewhat, and it said that

"there's no way he's up to speed on what is going on with the Internet".

I am sure that he will wish to refute that.

The real problem is the Government's attitude. When difficulties arise—there are legions in this instance—the Ministers involved tend to say, "It's not me, guv." They have made desperate attempts to distance themselves from the failures of the Post Office, saying, "It's nothing to do with us, it's the company—it has commercial freedom." If they are prepared to stand by while existing services are dismantled, what is their attitude to the new, exciting e-services? The simple message is that they cannot have it both ways. They cannot say on the one hand that it is nothing to do with them, while on the other the Secretary of State effectively sacks the chairman of Consignia, Dr. Neville Bain, during Question Time in the House of Commons. The Government are the 100 per cent. shareholder in Consignia. I have tabled another question, which remains unanswered, on whether they will waive their dividend this year in view of the company's dreadful commercial results.

Ministers are interfering at every level of Consignia's management and organisation. The other day, when 30,000 redundancies were announced, the Minister was reported to have made clear the Government's "concern and anger." Behind the scenes, they are constantly chivvying Consignia in one direction or another. They must therefore take responsibility. If they are not prepared to give Consignia real commercial freedom, so that management can get on with managing and making the decisions that are necessary to bring our postal services firmly into a new century, they must carry the can. I look forward to hearing what the Minister has to say.

Like other Members, I congratulate the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) on his success in securing this morning's debate on such an important topic. He was, along with the Member for Tweeddale, Ettrick and Lauderdale (Mr. Moore), the first Member to seek a meeting with me on these issues when I assumed office in June. I know that it is an issue of special concern to him, not only in his own village or constituency but throughout the country. I am also grateful to the hon. Gentleman for his kind remarks about the difficulties that I am encountering at home at the moment. The difficulties of which he speaks arise from the very early arrival of a son last week. I am glad to say that he is doing well, as is his mother. Although, on reflection, I think that my wife took rather literally the interpretation of the general election by my right hon. Friend the Prime Minister as an instruction to deliver.

I now move on to the substantive issue. I shall direct my remarks first to the issue of the government general practitioner or the "Your Guide" service, as it is now known in the pilot. I will endeavour, in the time available to me, to answer as many of the substantive questions, the very genuine questions, that have been raised by the hon. Gentlemen and colleagues.

First, I shall make clear the context of today's debate. The Post Office is still piloting the concept of post offices as government general practitioners in Leicester and Rutland. The aim is to test the concept of post offices acting as one-stop, first-stop shops providing information, advice and access to transactions within a range of public voluntary sector organisations. The Government have put £25 million into the pilot, which is being branded as "Your Guide" and which began to be rolled out from mid-July of this year.

The pilot was fully up and running in all post offices in the Leicester-Rutland area by the end of August, and was formally launched at the beginning of September. During the pilot, post offices concentrated on a number of limited, key services to core customers, which included advice, information, assumptions, actions in broad areas of retirement, seeking work and local information. The service will include advice and information on pensions, other benefits, job vacancies, local transport, interface with local government, and much more. I hope that that gives some guide to the hon. Member for Tweeddale, Ettrick and Lauderdale in terms of the Government Departments that have been involved in the project, and in terms of the evaluation.

The services are being delivered through five channels: first, electronically by touch-screen kiosks; secondly, by means of a freephone hotline; thirdly, by over-the-counter service from sub-postmasters who are supported by the network's relatively new Horizon intranet system. In a meeting I had with the National Federation of Sub-Postmasters yesterday, its representatives were keen to emphasise the centrality of the role of sub-postmasters in the "Your Guide" pilot. They were keen to suggest that this was a means by which we could place leverage on the trust that is felt in many local communities towards the advice and guidance that can be offered by sub-postmasters. The fourth channel is through leaflets, and a much wider a range of leaflets than currently appear in most post offices. The last channel is an expert advice centre that brings representatives from key organisations, such as the Benefits Agency and Age Concern, closer to those in need of face-to-face interviews.

The Leicester-Rutland pilot fulfils the recommendation of the performance and innovation unit report, which has been much discussed this morning. For a range of reasons we believe that post offices would be well placed to offer the services involved. I should add that post offices offer a vital service, not only to vulnerable citizens but to the viability of many rural communities. Often post offices provide the last shop in a village, and may be the only place within reach for less mobile citizens for banking services. The current pilot in Leicester—Rutland provides the opportunity to examine these hypotheses.

The outcome of the pilot will be fully evaluated by the Post Office—I will give some more detail about that in a moment—by those organisations participating in the pilot, and by the Government participating as a whole. The Department of Trade and Industry is co-ordinating an overall Government evaluation of the findings of the pilot. The responsibility of the DTI, the evaluation will examine the extent to which the "Your Guide" concept can deliver services that citizens really want and need. It will also examine the extent to which "Your Guide" can provide value for money for Government Departments and other organisations using it as a channel to offer their services to the public. This includes examining the extent to which "Your Guide" can help those organisations achieve efficiency savings. It will also cover the extent to which "Your Guide" services can improve the ability of Government Departments to meet their service objectives.

The pilot ends on 1 March 2002. The full evaluation report is expected in June next year. I emphasise that this reflects a tight timetable. I will turn to evaluation in a moment. First, there is the question whether the pilot as it stands is going well. The post office network and local and central government departments participating in the pilot have already done a tremendous amount of work to set up the pilot, and have it running within such a short timetable. Indeed, yesterday that point was emphasised to me by the National Federation of Sub-Postmasters, which was keen to stress its confidence in and support for Consignia's work.

I take the Minister back to his point about evaluation being completed in June next year. That is six months later than was envisaged in the original plan, which means that the project is six months behind schedule.

The hon. Gentleman will be glad to hear that I heard the section of his speech that dealt with that issue, and I shall address it in a moment.

Full and robust evaluation of the pilot outcomes must be conducted to inform future planning decisions. Among the tasks that the core evaluation must perform is that of interpreting the data that emerge from the pilot. For example, it is easy to measure how many times an individual page of content has been called up on an electronic kiosk in any post office, but a degree of analysis is necessary to establish and measure usage and to understand the extent to which the services provided by the pilot are proving to be useful for customers. The evaluation process includes gathering data both manually and electronically, the conduct of surveys within and beyond the pilot area and the gathering of qualitative data via focus groups, discussion groups and feedback sessions involving the public, sub-postmasters and stakeholder organisations, including both central and local government.

As the Minister responsible, my answer to the question, "How is the pilot going?" is "Please be patient, we must wait and see." I must emphasise that evaluation is taking place and is continuing during the pilot. I have been keen to emphasise both to my Department and to Consignia the importance of expediting the evaluation process for the reasons mentioned by the hon. Member for Tweeddale, Ettrick and Lauderdale. I hope that by early next year we shall be able to state how the pilot has gone.

Turning to the decision-making process on the national roll-out, the hon. Gentleman asked about the timetable and the procedure. The decision whether to proceed with roll-out of a national government general practitioner service and the form in which it should be delivered will involve not only the DTI but my colleagues in several Departments and, as far as possible, leaders of local government. I am the Minister responsible for the GGP project and I am actively championing it within Whitehall, but given that a range of Departments and organisations are involved, and that they would pay for the national service, the decision must be made collectively.

Turning to the specific question about the timetable for the roll-out of the national GGP service, the PIU recommended that pilots for the GGP and internet access point propositions should be up and running early this year with a view to evaluation and full roll-out in mid-2002. Given that the Post Office had to work on the supporting business case during autumn last year and that the details of funding arrangements and the scope of the pilot, including where it should take place, had to be decided, it was agreed at the end of November last year that it was impractical to put pilots in place until early this year. Consignia has therefore done a superb job in designing, building and rolling out a pilot that commenced last June. That has been a major task involving detailed on-going discussion on the original PIU recommendations with various Departments, local government and the voluntary sector.

We have decided to limit the length of the pilot to six months to address concerns about the timetable. The current pilot finishes at the beginning of March. Full evaluation in line with best practice, project management and public procurement cannot be rushed because there are rules to which we must adhere for the national roll-out of the pilot to be judged a success. Interpreting the data from the pilot and understanding its implications for a wider national service is a complex task. In addition to evaluating the pilot, which will entail looking back and learning lessons from it, there will need to be a forward-looking application of the lessons learned. We must involve the full range of potential stakeholders in order to design a service that will meet both the needs of citizens and the service aims of participating organisations.

Paying organisations must examine how a national GGP service could fit in with their wider service delivery plans, how far it could help them in achieving greater efficiencies, how much the service which they find useful would cost them and whether it would provide value for money compared with alternative direct channels to the public. As the hon. Member for Roxburgh and Berwickshire was kind enough to acknowledge, by definition these are complex issues and not to be taken lightly. At this stage, I am not ruling out the option of commencing roll-out of a national service next summer—as proposed by the PIU report. Realistically, it is not likely that it could be a full roll-out of a comprehensive national service. If the pilot proves successful, and paying Departments believe that a national service can provide value for money for them, it is more likely that some services will begin to be rolled out next summer in parallel with on-going longer-term work on a fuller comprehensive service.

A fully comprehensive national service will, of course, not be cheap. The touch-screen facility, mentioned by the hon. Member for Roxburgh and Berwickshire, is only one feature of the system operating in Leicestershire and Rutland. That is a relatively costly way forward but, on the basis of anecdotal evidence, it appears popular with certain members of the public. Before committing the funding that would be required, it is therefore essential to ensure that the service is designed in a way that meets the needs of users in the paying Departments.

The Government are approaching the project with urgency. We have already commissioned a pilot that will run for just over six months in all post offices in the area, and a full evaluation will be carried out as quickly as possible while complying with best practice regulations. We will ensure that the various streams of work required—evaluation, funding, service design and such like—are conducted in parallel. If proved a success as a pilot and if the concept is shown to provide value for money, the project will be taken forward with all expedition.

The specific point about the participation of devolved Administrations is of concern not only to other hon. Members, but to me. Administrations received consequential funding for the piloting of GGP in post offices at the same time that money was made available for the pilot in Leicestershire and Rutland. The money was not ring-fenced, so it was for individual Administrations to decide whether to run pilots in their regions. I understand that the Executive in Northern Ireland are actively considering running a pilot, but that neither those in Wales and Scotland have decided to do so at present.

I, too, am a long-standing advocate of devolution, and on some subjects one must accept both the power of and the responsibility for devolved Administrations. Notwithstanding the option of Christmas-lunch conversations, the hon. Gentleman will understand the political reality that although we can suggest the great merit of schemes north of the border, a decision to commit funds ultimately rests in Edinburgh and Cardiff respectively. If the decision is taken to go ahead with national roll-out in the United Kingdom, reserve services could be delivered through post offices on UK-wide. However, it is for devolved Administrations to decide whether devolved services should be included in that programme. I fully acknowledge the point—not least in a Scottish context—about the importance of services that are provided by an Executive being available in a way that is genuinely useful to constituents.

Although a case may be made for tailoring the service in devolved Administrations on the basis of local need—I have acknowledged that in relation to Scotland—on the whole, it would detract from the overall service. It would be a great pity if it were less comprehensive in one part of the United Kingdom than elsewhere. I am happy to say that the three devolved Administration are keeping in close touch with my Department and Consignia about national roll-out following the pilot being taken forward. Like Whitehall Departments, they will carefully review the outcome of the pilot in Leicestershire and Rutland, apply the lessons learned and actively identify services that they might want to offer through post offices.

As the hon. Gentleman will be aware, a number of other initiatives are being introduced by the devolved Administration in Scotland. They are relevant to his Scottish constituency and deal with social inclusion through the internet. I do not wish to suggest a lack of geographical knowledge of Scotland, but there is a digital highland project at the other end of the country from his constituency, and an initiative—introduced by the Scottish Executive—that addresses public internet access points. There is continuing potential for such initiatives to have a role in post offices in future. However, on the basis of conversations to date between Consignia and the Scottish Executive, Consignia has reached a judgment that those two initiatives had no particular role to play in post offices. Although I welcome the hon. Gentleman's work at local level, scope exists for further discussions, not least involving the Scottish Executive and Consignia, about the possibility of schemes that are not specifically tailored for post offices being made relevant to them as regards social inclusion and digital divide work elsewhere in Scotland.

I mentioned earlier some of the areas covered. The Department for Work and Pensions, the Inland Revenue, the Department for Education and Skills and the Department for Transport, Local Government and the Regions have all been involved in the development of the pilot. We expect each of these Departments to be heavily involved in the evaluation process. That addresses the substantive point on the government general practitioner. Unless Members wish to raise any further points on that issue I shall turn to the universal bank.

In prefacing his remarks on the universal bank, the hon. Member for Roxburgh and Berwickshire paid due acknowledgement to the difficulties encountered by the Conservative Government in the original benefit card proposals. It pleases me to say that the revised model Horizon card scheme has been rolled out successfully throughout the post office network. In looking for grounds for optimism about the capacity of both the Government and the Post Office to move forward that initiative, the £480 million committed to the computerisation and modernisation of sub-post offices over the past year or so should give us great courage and optimism for the future.

The hon. Gentlemen emphasised the terms of yesterday's written answer on ACT migration and marketing strategy. Interestingly and perhaps unsurprisingly, he and the hon. Member for Eastbourne (Mr. Waterson) held conflicting views on the importance that should be attached to it. I disagree with the suggestion of the hon. Member for Roxburgh and Berwickshire that a marketing strategy is inappropriate given the scale of public education that is necessary on ACT migration. Ironically, I am more inclined to agree with the hon. Member for Eastbourne, who acknowledged that the information must be made available to the elderly. Therefore a marketing strategy will be a key part of that work.

Will the Minister deal with my request for an undertaking that there will be total neutrality in the advice given and that people will not be pushed in one direction or another regardless of their personal circumstances?

I reiterate the points that I made in yesterday's written answer: we will give advice that allows people to make the best choice dependant on their circumstances. There may be some disagreement on the best way forward on this serious point. We have always recognised, not least in terms of social inclusion, the great merit in moving many of those currently not banking into the banking system and ensuring their full participation. Perhaps the hon. Member for Roxburgh and Berwickshire did not pay due acknowledgement to the significance of the statement in yesterday's written answer that there would be neither a cap nor eligibility criteria in terms of POCA numbers. Those points were emphasised in our previous debate in this Chamber by many of the usual suspects, as the hon. Member for Tweeddale, Ettrick and Lauderdale so charmingly put it.

The emphasis of the ACT migration and marketing strategy will ensure, as I have just said, that each customer has the best account for his or her circumstances. Conventional basic bank accounts offer more services than the Post Office card account and do not have its limitations, and so are likely to be the best option for a significant number of people.

As hon. Members are aware, in recent months we have been working on the detail of our migration and marketing strategy. In that context consideration has been given to eligibility criteria and caps. I am glad that clarity was offered in the written answer given to the House yesterday. POCA numbers must be managed to levels that deliver value for money while ensuring that the new system meets the needs of benefit recipients who want to keep their benefits separate from their normal bank account—for example, women with joint accounts who want to keep child benefit separate.

All that is true, but how much money is going to Post Office card accounts?

I fear that I may disappoint the hon. Gentleman. I have to say that the contract negotiations are still continuing. I assure the House that often on a more-than-daily basis I am updated on the discussions that are taking place. As stated earlier, there is the issue of commercial confidentiality, but much detailed work is being done at present, not least that involving the DWP, which is why I was grateful for its involvement in the project management work. We shall have to wait a little longer for information on the details because, by definition, what will ultimately go to the sub-postmaster will in part be a judgment informed by POCA management's decision and also the—

Order. We come now to the next topic for our consideration.

First, I want to thank Timothy Edmonds, who did a prodigious amount of work and produced an excellent Library research paper on the Barnett formula, which I am sure that many hon. Members will quote. I also thank Professor lain McLean—a Scot—of Nuffield college, Oxford, who is currently working at Yale, and who helped me with the debate.

We have been given only 90 minutes for this discussion; the debate in the House of Lords in November was for more than three hours. That may, or may not, be a reflection of the importance of Joel Barnett.

The debate is topical; this morning a headline in the Financial Times stated:

"Scotland's fiscal deficit narrows to £4bn excluding oil revenues."

I was going to quote the hon. Member for Banff and Buchan (Mr. Salmond), who said that it was bogus, but he is present. Statistics and the economy in Scotland are topical north of the border and today, for once, they may be topical south of the border.

The origins of the Barnett formula go back to the 1880s, to a Chancellor called George Goschen. Joel came to it in 1978, using it as an expedient because the Prime Minister at the time, James Callaghan, was caught short; he could not work out how to resolve a technical issue of how to spend our money in Wales, and, more especially in Scotland. Joel told me privately that he thought that the formula would last six months at best; in his speech in the House of Lords he said perhaps a year, but it was meant to be only six months. It has lasted 21 years, which is not bad for a temporary measure. Curiously, it is not a statutory instrument; perhaps we should bless Joel in one way but not in another.

My question is fundamental to how we, as Members of Parliament, work. How do we decide the underlying philosophy of how to allocate our people's taxes, which we sometimes call Government expenditure? Do we do it by head of population, by the needs of our population or by a compromise consisting of the two? I shall return to that issue shortly.

My question is more complicated because we have enacted several relevant pieces of legislation in the past four years—the constitutional reforms that gave Scotland a Parliament, Northern Ireland and Wales Assemblies, and London an Assembly, and the UK human rights legislation, which enshrines some human rights of European law into UK law. Shortly, we shall have the White Paper on regional assemblies; I am sure that there will be elected regional assemblies by 2005, certainly in the north-east, perhaps in the north-west, and possibly in the south-west if we can agree the boundaries. This is the right time to talk about the Barnett formula because England has never had a say on it, which is curious.

As the regional assemblies develop in England, they will all want to have a say and to change the way in which the formula is decided. The local government funding review announced last week has changed the way in which local government will be funded from 2003 onwards. It will be funded according to needs, which is a minor change, but a change nevertheless. The comprehensive spending review takes us up to 2004–05. Considering that block of legislation—some past, some to come—we cannot expect changes to Barnett until 2005–06 at the earliest.

I shall place on the record one or two quotes from the excellent Library research paper. On the mechanism of the Barnett formula, it states on page 9:

"The first key to understanding Barnett is to remember that the formula determines the amount of additional changes to the expenditure of Scotland and Wales. It applies to the margin, not to the bulk of expenditure as determined by past decisions. Secondly, Barnett only applies to some types of expenditure. In particular large expenditure areas such as welfare payments are outside of the formula's jurisdiction. Barnett has played very little role in the overall relative level of public sector provision, but simply produces a value for the increase in a single year."

The next page gives the three parts to the calculation:

"1. The change in planned spending in departments in England.

2. The extent to which the relevant English departmental programme is comparable with the services carried out by each devolved administration; and

3. The population proportion in each country."

Slight changes were made to the Northern Ireland part in 1998. The population of Northern Ireland used to be compared to that of Great Britain as a whole; now, it is compared to the population of England. Northern Ireland has therefore benefited slightly more in the last three years of the Barnett formula. If the Scottish Parliament ever exercised its tax-varying powers, the resources available to it would be adjusted up or down, according to the formula.

In my short period in the House, I have noted that the civil service would rather explore change within existing law or practice—I cite the Child Support Agency reforms as an illustration—than start to make changes from scratch. Therefore, I do not expect any Government to do away with Barnett, but it will have to change beyond 2005, especially as the regional assemblies come on line.

Why will the formula change? It is manifestly unfair to the English taxpayer—of course, I would say that. Those who represent English constituencies will all be able to quote their own figures, and I took mine from the Treasury's public expenditure statistical analysis for 1999–2000. Government spending for Scotland was £5,271 per head; for London, it was £5,035 per head. For the north-east, it was £4,837 per head, and for all England, it was £4,283 per head. The figure for the south-east, which includes my constituency, was £3,734, so I have some reason to wish for an analysis of the Barnett formula and for changes to be made to it.

A few minutes ago, my hon. Friend quoted the excellent Library research paper, and he will know that the formula's supporters refer to it as a way of reaching convergence in spending over time. However, that paper quotes Professor Bell of Stirling university, who estimates that it will take at least 30 more years to reach any form of convergence. Does my hon. Friend have a comment on that?

I agree with my right hon. Friend. Joel's original idea was that the formula would provide convergence, but it never has and I doubt if it ever will, which is another issue for English taxpayers.

I am not clear whether the figures to which the hon. Gentleman refers are for identifiable public expenditure. However, he will be aware that most of the 25 per cent. of Government expenditure that is non-identifiable is spent in the south-east of England, whether it goes on central Government administration or military research and development. If we seek a fairer allocation of Government spending among the countries and regions of the United Kingdom, should we also be looking to redistribute that non-identifiable element and decentralise much of central Government administration to the regions and nations of the UK?

I think that that will happen once we have regional assemblies in England. As I said, wherever we happen to look, statistics are an issue. Of course, everyone argues their point from their background—that is what we are here for—but I shall resolve the statistics issue in a moment and return to the hon. Gentleman's question.

I hope that I have read all the papers on the Barnett formula. There seem to be more from the north of the country and certainly north of the border. I have noticed that there have been many more front-page stories on the issue this year in Scotland than anywhere else in the United Kingdom. Whatever figures are produced, it is apparent that the Barnett formula favours Scotland. Martin Wolf of the Financial Times suggested that Scotland enjoys Scandinavian services in exchange for British taxes.

Hon. Members from Scottish constituencies will want the Barnett formula to remain: that is understandable. We need to find a consensus on the issue after 2005, but I would like to suggest a way forward between now and then—not the Barnett formula 1.1 or 2.1 but the Wyatt suggestions. Whoever delivers statistics is not trusted among the regions of Scotland, Wales and Northern Ireland. How can we trust the figures, and which Members of Parliament would we choose to ensure that the statistics were fair? Would we trust a Bank of England committee to study the Barnett formula? Would we trust a royal commission, or a special commission such as Lord Wakeham's on House of Lords reform? I suggest that Parliament should do it. My first suggestion is that a joint House of Lords and House of Commons Select Committee be established next year to consider the future of the Barnett formula.

The hon. Gentleman suggested a House of Lords and House of Commons Committee. Does he want such a joint Committee to encompass the Scottish Parliament and the Welsh Assembly as well, or is he trying to rig the game before it starts?

The hon. Gentleman should have let me finish. Evidence would be taken throughout the United Kingdom. The Select Committee would visit the Scottish Parliament, the Welsh Assembly, and the Northern Ireland Assembly and take evidence in London. The Committee could be formed next year and report in 2003.

We have to resolve how we divvy up the money. I side with Professor Iain McLean's research. He suggests creating a commonwealth grants board, which

"should agree the apportionment of regional public spending by a qualified majority vote (that is, with the support of more than half the regions represented).

Two extremely important questions remain. How large a qualified majority? And what if they fail to agree? The two are linked … Unanimity gives each and every region a veto over any scheme. So the region with most to lose from any change would veto it, and the result would be failure to agree to any settlement at all. Then what matters is the 'default'. What if the inter-regional body fails to agree by the deadline for an agreement? If the default is the status quo, then all who can see that they are better off under the status quo than under any change will tend to block that change."

McLean suggests two rules for a commonwealth grants board: first,

"any formula it recommends must be supported by at least two-thirds of the regions"

and secondly,

"that the default, if the Board fails to agree, is that each region gets the reciprocal of its relative GDP per head."

Would the decision of that proposed Select Committee be binding on Parliament, or would it be debated in the House?

It would have to be debated in the House. If we were to effect change, some sort of statutory instrument would probably be necessary.

I have started the debate, and I am sure that that will not be the end of it, but it is the first time that we have debated the matter in 23 years in the House. I look forward with interest to the rest of the debate.

rose—

Order. Hon. Members seem to be engaging in a conversational style. Comments must be addressed through the Chair. No accusations should be made to the Chairman, although I have allowed them to pass until now. For those who are not familiar with proceedings in Westminster Hall, the winding-up speeches start 30 minutes before the debate concludes. That means that the three Front Benchers must begin their exchanges at 12 noon. Seven hon. Members are seeking to catch my eye to make speeches and 45 minutes are available, so I appeal to hon. Members to help me to help them by making their remarks clear, concise, pertinent and respectful.

I am grateful to the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt) for securing the debate. We live in an unequal state, and territorial justice is at the heart of current political issues. There are issues of regional equity in England and, as demands for democratic devolution develop in England, the concerns are rightly coming to the fore of English democratic debate.

I will focus on the relationship between Barnett and public expenditure for Wales. Plaid Cymru has some principal concerns about the Barnett formula, which is not needs-based but population-based. As the hon. Member for Sittingbourne and Sheppey says, it is a stop-gap measure, which remarkably has survived for 21 years. In the case of Wales, it is a short-term political fix to prevent bickering, rather than a real attempt to allocate resources fairly according to need. We last had an official estimate of needs in 1979, and it was found that expenditure in Wales should be 9 per cent. higher than in England according to need. The actual expenditure was 6 per cent higher. There could be at least a tentative conclusion that Barnett has short-changed Wales. There has been no needs assessment since then, so let us have the research that Plaid Cymru has been requesting for some time; we can then consider a different needs-based assessment for Wales.

As the hon. Gentleman points out, Barnett is a convergence formula. The Wales Office estimates that convergence has been happening at a rate of 2 per cent. per annum from 1999 to 2002. One effect is that the rate of increase in spending on a core area such as education will rise by 3.2 per cent. in real terms per annum for Wales over the comprehensive spending review period, compared with 5.6 per cent. per annum for England. So the convergence effect—the Barnett squeeze—is beginning to have a real effect on the rate of increase in public spending.

There is also the problem of the Barnett block. The change in funding for the devolved Administrations arises perversely from an assessment by Whitehall Departments of England's needs. The resulting changes for Wales and Scotland are what are known in the jargon as consequentials—in other words, they are consequential to the assessment of England's needs. The political consequence is that every year there is an absence of negotiation between the Treasury and the devolved institutions on changes to the block grant. That is bureaucratically convenient, but it is hardly in the spirit of democratic devolution. More than half the entire block grant in Wales consists of Barnett formula adjustments, which are nothing to do with the needs base of Wales but are the product of decisions between Whitehall Departments largely in respect of England. To add insult to injury, those discussions occurred during the tenure of a Tory Government. Wales was effectively locked into a mechanistic formula for the reallocation of changes in public expenditure and locked out of wider debates about levels of public expenditure and spending priorities.

Since the introduction of the Barnett formula, Secretaries of State for Wales and for Scotland have been excluded from departmental spending rounds. Welsh and Scottish Members of Parliament cannot debate on the Floor of the House the need for more resources for health and education without immediately being told that those are matters for the Assembly. In reality, the size of the overall health and education budget in our countries depends on spending plans and political priorities drawn up exclusively in England. We are no more than passive observers of what happens to tax and public expenditure.

Change is never easy, but from my party's perspective, reform is long overdue. We require a needs assessment that examines a wider range of factors. Lessons about fiscal federalism or fiscal equalisation from Australia, Canada, Germany and other countries should be learned. To avoid disruption, any new system will have to be introduced over a long period. However, given the levels of deprivation in Wales, we have nothing to fear and much to gain by replacing an antiquated formula with a more progressive needs assessment for the UK as a whole. A new public expenditure settlement is more important than objective 1 funding and should be one of the central goals of all who are committed to democratic devolution. Without it, the constitutional settlement that we won in the referendum on devolution will be undermined.

The operation of the Barnett formula and the general financial relationship between Scotland, England and the rest of the UK is often misunderstood. I must tell my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) that the very title of his Adjournment debate—the Barnett formula—shows how one element of the relationship between Scotland, Wales and the rest of the UK can be taken out of the picture, failing to present an accurate assessment of the real relationships. It is not the case that the Barnett formula gives Scotland—or Wales and Northern Ireland—any extra or unfair share of UK resources. Far from conferring advantage, its effect is to bring Scotland's expenditure into line with the rest of the UK.

In response to the question asked by my right hon. Friend the Member for Gateshead, East and Washington, West (Joyce Quin), my hon. Friend the Member for Sittingbourne and Sheppey referred to the work of Professor Bell on the Barnett formula and needs assessment. A reference to Professor Bell's full work would show that, under present spending trends, the Barnett formula will bring Scotland's expenditure into line with the needs assessment within a mere eight, not 30, years.

Is the hon. Gentleman aware that the paper by the Cuthberts suggests an even more rapid convergence than—

Order. I make a plea to all hon. Members to address the Chair at sufficient volume for the Chairman to judge whether remarks are in order. Will the hon. Gentleman please repeat his inquiry?

I was asking whether the hon. Gentleman was aware of a paper produced by the Cuthberts, two prominent Scottish economists, which suggests a more rapid convergence than that suggested by Professor Bell.

I am much obliged.

I am sure that that is so. The spending policies of the present Government also underpin the greater trend towards convergence. Indeed, some people in Scotland have suggested that the current formula leads to a Barnett squeeze which they say works against Scotland's interests. The hon. Member for Banff and Buchan (Mr. Salmond) and his colleagues have at times criticised the Barnett formula precisely because it brings about a convergence.

Does my hon. Friend agree that the fact that the Barnett formula has been in existence for more than 20 years means that, in terms of deprivation in the English regions, it has been a poor way of getting any convergence at all?

If my hon. Friend is suggesting that an assessment of the way in which expenditure is allocated in England as a whole is needed, that is well and good, but I do not think that it is a reason for taking an attitude to the Barnett formula and the allocation of spending between Scotland and the rest of the UK that does not reflect reality. As other hon. Members have pointed out, the Barnett formula and the base upon which it applies take no account of many elements of Government expenditure that undoubtedly benefit the London area. The subsidy for commuter travel in London, the channel tunnel link, the dome and all the expenditure that we see around Westminster are not reflected in the Barnett figures.

If hon. Members looked closely at the budgets of other Departments, they would find that their base figures were not chosen as the result of any scientific assessment. Why does my hon. Friend the Member for Sittingbourne and Sheppey think that Government spending in Scotland should be singled out for scientific analysis when that is not applied to other areas of Government expenditure? Even if the figures that he put forward were correct, the benefit to the rest of the UK would average out at only about £17 per head. I accept his concern about levels of Government expenditure in his constituency, but breaking down spending on a constituency-by-constituency basis inevitably leads to anomalies because large elements of Government expenditure are concentrated on certain constituencies. Moreover, the analysis takes no account of the contribution that constituencies make to the public exchequer.

My hon. Friend appears to have been swayed by those who paint post-devolution Scotland as a land flowing with milk and honey, enjoying Scandinavian levels of spending provided by lower levels of taxation. Those of us who represent Scottish constituencies know that that is not the case. He should not allow himself to be too strongly persuaded by those who point to areas where the level of spending on particular budget heads is higher, because spending per head in other areas of expenditure is often less than in the rest of the UK. It is misleading to pick out certain areas of Government expenditure to suggest that Scotland or Wales benefit.

I agree with those hon. Members who have said that the Barnett formula is not perfect. Certainly, there is no way in which the rationale for Government expenditure across Departments as a whole can be regarded as subject to scientific verification. As the UK moves towards regional government, there is a case for looking at the way in which the Barnett formula operates and for conducting a review. However, the suggested commonwealth board or a parliamentary Committee reflect all the metropolitan-centred thinking that has bedevilled debate on these issues over the years. My hon. Friend should not take a line that will destabilise the UK and play into the hands of the hon. Member for Banff and Buchan and his colleagues.

I find myself disturbingly in agreement with the hon. Member for Edinburgh, North and Leith (Mr. Lazarowicz), but I shall begin my comments by mentioning an article by Peter Hetherington in The Guardian today. It suggests that a review of the Barnett formula will begin early next year on behalf of the Treasury and the Department for Transport, Local Government and the Regions. Perhaps the Minister will confirm whether the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt) has succeeded beyond his wildest dreams by provoking a review before he even made his speech. I am sure that the House would be interested in her answer, given the number of denials that have been made in recent weeks, not least by Scotland Office Ministers.

The Barnett formula is like the Schleswig-Holstein question, in that only three people understand it: one is mad, one is dead, and I have forgotten. On the basis of a recent television interview with Lord Barnett, I can report that he is among those who have forgotten how the formula was meant to work, noble and true though he is. The hon. Member for Edinburgh, North and Leith rightly said that Barnett was a convergence formula. It has been pointed out that Barnett has not led to convergence. However, significant changes in the past few years will provide convergence, much to the detriment of Wales, Scotland and Northern Ireland. The Barnett formula now operates as a population-based formula and is updated accordingly. Thus, there will be a severe squeeze on Scottish spending because any increase will now be relative to total spending.

The right hon. Member for Gateshead, East and Washington, West (Joyce Quin) suggested that convergence might take 30 years. I believe that she was reading a review of Professor Bell's paper and not the paper itself. In fact, Jim Cuthbert, the former chief statistician at the Scotland Office, and his wife Margaret estimated that the Barnett squeeze on Scottish public spending could be as much as £2 billion over the next three years. Barnett may achieve the desire of the hon. Member for Edinburgh, North and Leith to squeeze Scottish public spending and amass a huge £17 per head for his constituents, but the view in Scotland, Wales and Northern Ireland is that Barnett is not ideal.

I am following the hon. Gentleman's argument closely. If he is right, surely he would want a review of the Barnett formula and a proper needs assessment such as that advocated by the hon. Member for East Carmarthen and Dinefwr (Adam Price)?

I am coming to that point. The difficulty that I have with many of those who argue for scrapping the Barnett formula is that they do not support a needs assessment, as the hon. Member for East Carmarthen and Dinefwr (Adam Price) suggested, or fairer distribution of resources. Their argument is about grabbing Scottish money. The comments that have been made by Conservative Members and by many Back-Bench Labour Members can best be described as anti-Scottish. There seems to be a desperate attempt to grab as much of Scotland's money as possible. I can suggest a better option.

I deprecate the motives of many hon. Members who rally against the Barnett formula. They do it not for the best or noblest reasons but to grab £17 per head for their constituents, who are south of the border. Perhaps the hon. Member for Sittingbourne and Sheppey does not have such a motivation; only he can clarify that.

The best way to proceed would be to give the Scottish Parliament fiscal autonomy. The hon.. Gentleman mentioned the Government expenditure and revenue in Scotland analysis, which was published this morning. If we accepted GERS, which I certainly do not—for no apparent reason it failed to take account of £1 billion of Scottish income tax in the past three years—and compared its analysis with current estimates of oil revenues, we would have a Scottish economy in fiscal surplus by £1 billion, even on the Government's figures for this year. The hon. Gentleman must explain why he has suggested cutting Scottish public spending, which was the essence of his comments, at a time when there is a substantial fiscal surplus in Scotland. It is unacceptable for the Scottish population to hear such a suggestion, and it should be equally unacceptable to have a squeeze, which is the effect that the Barnett formula is having on Scotland, Wales and Northern Ireland.

I have one difficulty with the hon. Member for Edinburgh, North and Leith, who otherwise made an admirable speech, including his many examples of non-identified public spending that are hugely concentrated in south-east England and London. Indeed, I have seen one survey that shows that London public expenditure is the highest by far of any area of the United Kingdom when all the factors that were mentioned by the hon. Gentleman are taken into account. My difficulty with him, and others who defend Barnett as the only possible formula, is that they do not take account of the considerable squeeze that it will cause in the next few years.

I am in favour of fiscal autonomy for the Scottish Parliament. It would provide the only secure protection from the efforts of the hon. Member for Sittingbourne and Sheppey and the many other Members who want to raid as much of Scotland's finances as possible. I suggest to him that if he wants a review, or if the Treasury Minister suggests one, it should be carried out on an equal basis. It would be unacceptable to have a review with a Joint Committee of the House of Lords and House of Commons at a time when the Northern Ireland Assembly, Welsh Assembly and Scottish Parliament are functioning. At the very least, the hon. Gentleman might have suggested a little more than a day trip to Scotland to take evidence from the very people from whom he is trying to filch money. Any review would have to be based on a position of equality, and the arguments for financial freedom and fiscal autonomy for the Scottish Parliament should be heard and should win through.

I congratulate my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) on securing the debate. I firmly believe that all areas of public policy and expenditure should be open to constant question and review. I have some concerns about the narrow nature of the press debate in this area, which I believe circumvents reasoned discussion on the allocation of overall expenditure in the UK and sets us at each other's throat. Taking a broad macro and brush-stroke approach clouds the issue when we should be examining micro-situations and what happens in different localities throughout the UK. It is often said that the devil is in the detail. We as politicians have a responsibility to examine that detail and to act accordingly.

In any debate on the Barnett formula, we should discuss the breakdown of expenditure under comparative budget heads relating to different areas of the UK, and review it on a needs basis. I agree with my hon. Friend that some English regions suffer levels of deprivation similar to those found in many communities in Scotland, Wales and Northern Ireland, and that they should receive similar financial assistance. If there is a failure in the formula or a breakdown in the mechanisms that weigh the vital indicators of need, we should take them in hand and put them right quickly. When the Minister of State, Scotland Office last answered questions on the topic only a few weeks ago, he made it clear that any identifiable regional differentiation in England that needed extra Government expenditure should be addressed, given the programme of increased public expenditure.

My hon. Friend the Member for Sittingbourne and Sheppey made a reasonable case about the national issues that affect us across the boundaries of the separate entities that make up the UK. We should consider, for example, the recent unemployment figures for north-east England, London and Scotland, which are comparatively similar at 6.9 per cent., 6.5 per cent. and 6.7 or 6.8 per cent. respectively. Those areas need Government funding and are addressed through the work of the Treasury and relevant Ministries.

On the micro-level, the Sittingbourne and Sheppey constituency is ranked 284th in the UK, 197th in England and has 3.3 per cent. unemployment. Compare that with my constituency, Dundee, East, which is ranked 40th in the UK, fifth in Scotland and has 6.8 per cent. unemployment. Those regional disparities must be addressed.

I was glad to hear the reference to the Scandinavian services that we enjoy in Scotland. I have travelled widely throughout Scotland as a local government councillor and as a private citizen, and I would be glad to discover where the Scandinavian services are, but ultimately—this is a contentious point—Scottish taxpayers are British taxpayers. They pay their contribution to the Treasury. The Government are increasing public expenditure against the objections of the European Commission year after year, and are committed in their manifesto to promoting social justice. The Government will not fail to address, where necessary, the issues of deprivation and poverty that arise in dealing with English regions. The central principle of the Labour party, to which the Government's programme rigorously adheres, was set by Nye Bevan when he talked about Labour Governments having to practise the science of priority.

I do not discount the arguments put forward by my hon. Friend in this welcome debate. If there is real need, based on personal experience throughout the UK, that must be addressed. The nature of the UK constitution means that it is imperative that the Westminster Government ensure that allocated spending is spread fairly throughout the UK, and that is what the Barnett formula attempts to do in a crude fashion, primarily on the basis of population. However, I agree that if the squeeze is on, or if convergence is not to be in place for 30 years, or if differentials apply throughout the UK, rigorous criteria should be laid down. Needs assessments should be carried out that are sensitive enough to upgrade the Barnett formula. If the factors of average earnings, population density and spread, peripheral locations and key social factors such as changing structures of industry, levels of poverty and conditions of housing and health, are properly and fairly assessed, they will show the case for the retention of the Barnett formula.

The Government strongly support that position, and that is reinforced by their decisions on how to spend the EU objective 1, 2 and 3 funds of the European regional development fund and social fund allocation. Large tracts of Scotland achieve access to those funds on the just basis of need, which has been identified through the criteria.

In summary, we need to consider the issue constructively. We should examine what is happening throughout the region. In considering how Government finance is handled, we must bear in mind the creation of the Scottish Office in 1926 and the increase in social policy spending in the 1960s and 1970s. The Barnett formula was devised in the 1970s, prior to an expected Bill on devolution that would have created a Scottish Parliament well before its eventual creation in 1999. We should consider the issue of the English regions, because that would provide the vehicle for assessing the needs of the different regions and for enabling the Government to fine-tune their spending policies. I am not arguing for retention without consideration of a needs element to the Barnett formula, but the union between Scotland and England is based on a collaborative effort to do what is best for Britain. The Barnett formula serves that end.

I pay tribute to my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) for initiating the debate. As he said, it is the first time in about 20 years that the issue has been discussed in the House. His was a well-researched speech and a thoughtful and excellent contribution to the debate.

What we have been told about the Barnett formula today is well known: it is non-statutory and has been used since 1978. The history books show that Chancellor Goschen in the 1890s had a similar formula, which related to the allocation of probate duties between the countries of the Union.

I shall briefly explain my understanding of the formula and make some suggestions for the future. I think that there is some misunderstanding about how the formula works across the UK. As we have heard this morning, the method is based on population, sharing out changes in public expenditure plans between the countries of the Union. It is not used to determine overall spending levels: that is a key point. We are talking about the margins of expenditure, where changes and populations are reflected, not about the base budget.

People might say that I would be bound to say that where Scotland is concerned, but what Scotland receives is a population-based share of changes in spending in analogous programmes in England. Importantly, population factors have recently changed. In 1992, it was agreed that population changes evident from the 1991 census would be taken into account. Now, yearly changes based on figures from the Office for National Statistics are also considered.

I offer an example that was proposed in Library research paper 01/108 in November 2001. It is a good worked example, but I had to examine it carefully because statistics in maths was never one of my strong points. It examined what the figure for Scotland would be if, for example, £1 billion expenditure were allocated to health in England, and how that would be worked out. The figure for Scotland would be £103 million, based on 2001 figures. The formula would be £1 billion x 10.34 per cent. x 99.7, where 10.34 per cent. is the population of Scotland as a percentage of that of the United Kingdom, and 99.7 is the comparability of the English health services to Scotland's. That is a dense formula, and I am sure that my son, currently doing standard grade maths, would be interested in trying to work the figure out in practice. It is important to know where the formula comes from.

We have heard a lot about convergence, and there are differing arguments about whether it will come in eight years or 30 years. However, before we can make those predictions, we must ask what the formula for convergence is. It will of course depend on the growth of comparable spending in England on such things as health and education. It is also—I do not think that this has been touched on much so far—about the relative stability of population changes. For example, if Scotland's population declines relative to England's—it is at the moment, and it is predicted to continue to decline in the next decade—that will offset the convergent effect of the Barnett formula.

I quote figures from 1995–96, when expenditure for Scotland was approximately 19 per cent. and that for Wales about 12 per cent. above the UK average. As the House of Commons Library research paper on public expenditure states, this is

"not necessarily a simple relationship between the geographic area in which money is spent and the resident who benefits … it is also important to remember this analysis is not exhaustive and only covers around three quarters of total spending"

in the UK. The Barnett formula has nothing to say about the size of the cake; it is about how that cake should be divided up.

A further issue, which was touched on by the hon. Member for Banff and Buchan (Mr. Salmond), concerns identifiable and non-identifiable public spending. We could have a debate simply on that. We must examine hot-spot spending in, for example, growth parts of London—I am aware that there is great social need there—and Edinburgh. There are pockets of poverty and higher need throughout the UK. I have mentioned London, but there are such areas in the north-east, in Wales, in Northern Ireland and, as my hon. Friend the Member for Sittingbourne and Sheppey made clear to me last night, in the south-east.

However, academics such as Professor Midwinter of Strathclyde university have acknowledged that Scotland has higher expenditure needs relative to the UK average. It has higher morbidity rates, sparse population in remote areas, low pay, the islands—which we have not mentioned and where life is very expensive—remoteness and high service costs. I give an example from my own area in the highlands. We were one of the few areas in Scotland that qualified for the old objective 1 funding, because our economic spending was less than 75 per cent. of average European GDP. The problem is the extent to which need is greater, which is difficult to establish.

Following devolution, it is up to the devolved Parliament and the Assemblies to decide their spending within the block and formula grants system. The Office for National Statistics recalculates population shares annually, but the Treasury last carried out a needs assessment in the mid-1970s, in which it concluded that spending on the basis of need would result in per capita spending in Wales and Scotland being greater than average.

In its second report, the Treasury Committee agreed with Treasury officials, who stated that

"there is a long-established practice of looking at the allocation of spending across programmes and across regions to try and get the right distribution".

The Government's response to the Select Committee's 1998 report was that there was no case for reviewing the Barnett formula, but the White Paper on Scottish devolution argued that any substantive revision to the Barnett formula would need an in-depth study of relative spending and full consultation between the Scottish Executive and the UK Government. Interestingly, exactly the same comments were made in the White Paper on Welsh devolution that established the devolved Assembly. The Barnett formula provides Scotland, Wales and Northern Ireland blocks with a population-based share of planned changes in equivalent English spending programmes.

We have not touched on redistribution, and time will not allow me to examine that issue, but the Government have addressed redistribution through programmes such as the minimum income guarantee, the working families tax credit and the pensioner credit, none of which are covered by the Barnett formula. The new deal, which is an anti-poverty and employment support measure, is also not covered by the formula. Those programmes are crucial to regional development and totally independent of the Barnett formula.

Today's debate must be accompanied by health warnings. We cannot directly compare spending across various countries and blocks. For example, the Scotland and Northern Ireland blocks include provision for water and sewerage services, which are not included in English spending. If we include non-block programmes such as social security, Scotland receives only 9 per cent. more than the equivalent figure in England.

Will my hon. Friend give way?

I have just about finished. If the Barnett formula did not exist it would be necessary to invent it. I am not claiming that it is perfect, because it produces inequalities within regions and nations. Perhaps the time has come for a full needs assessment across the UK to deliver the son of the Barnett formula. Until that happens I say, "If it ain't broke, why fix it?"

I congratulate my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) on securing this debate, which comes at an important time. As he rightly says, we are about to consider regions and regionalism in England and that is bound to trigger a debate about the distribution of public spending across the UK.

I must speak with some caution, because I represent a city that was besieged and occupied by the Scots in 1644. Nevertheless, I say to the hon. Member for Banff and Buchan (Mr. Salmond) that this is not an issue over which anyone should develop a Tora Bora complex that leads them to retreat, dig in, hide in caves and hope that it will go away.

The hon. Member for East Carmarthen and Dinefwr (Adam Price) called for a needs assessment that would stretch into the non-identifiable areas of public spending. Many representatives of English constituencies will echo that approach, and it will certainly be echoed in my region. We would be happy to work on that approach when we discuss English regionalism.

I am still trying to work out the relevance of the Tora Bora complex. Does the hon. Gentleman appreciate that many Scottish people would be suspicious of a review based on reducing Scottish public spending? He heard me say that financial autonomy for the Scottish Parliament is an entirely different matter, but does he support financial freedom for the Scottish Parliament?

No, I do not. On this issue I am clearly a Unionist. We should try to hang on to the fiscal integrity of the United Kingdom, which is an important part of a proper sense of British Unionism. The hon. Gentleman should understand that many of us are asking for a proper needs assessment for the English regions not because we think that Scottish expenditure is too high and should be reduced, but because it would provide a benchmark against which we can compare the needs of our own regions. Neither I nor my right hon. Friend the Member for Gateshead, East and Washington, West (Joyce Quin) has ever said that Scottish expenditure is too high; nor have we regarded it as a pot to be raided to serve the needs of our own region. Such a description is a misrepresentation of our case.

In considering the so-called Barnett squeeze, it is important to bear in mind the fact that the Barnett formula was originally a makeshift needs allowance. As matters have progressed, more makeshifts have been added to it, so to prevent the Barnett squeeze the comparison of English and Scottish expenditure has itself been changed. Two years ago, London Transport expenditure was added to the comparison with Scotland. However, that addition was never properly explained to Parliament, and it proved very difficult to dig out of statistics. The Treasury does not have a history of replying clearly to parliamentary questions on the matter. The addition was a neat trick, which enabled Scotland, Wales and Northern Ireland to get more resources without a penny extra being spent on London Transport. Such a "makeshift within a makeshift" destroys the integrity—such as it was—of the Barnett formula.

Public expenditure is growing, so the time is right to address this issue and to consider a needs assessment. In paragraph 6.56, on page 114, the pre-Budget report states that

"the 2002 Spending Review will assess how departments' policies impact on different regions and seek to ensure that spending is fairly distributed and targeted at those areas where it is needed most".

I look forward to hearing the Minister's explanation of what the regional spending review will mean. She is unfailingly helpful, so I am sure that she will not let us down. Will it be stretched to cover Scotland, Wales and Northern Ireland, or confined to the English regions? What form will it take and how can Parliament be involved in the decision-making process?

The Barnett formula is a makeshift that has run its course. The time is right to move to a needs assessment on the broad basis set out by the hon. Member for East Carmarthen and Dinefwr.

I begin by adding my congratulations to the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt) on securing this debate. As he said, this subject has not been debated in the House for some time, although it has been discussed in the other place on several occasions. Until the issue is resolved, I hope that it will receive the same treatment as the issue of post offices, which arises regularly.

A few days ago, I had the honour of being the first person to inform the hon. Gentleman that he had secured today's debate. I asked him the simple question, "Are you for or against?", to which he replied that he was against. I therefore thought that I would be able to quote "Julius Caesar", in saying that he had come to bury Caesar, not to praise him. However, he had slightly more praise for Lord Barnett than he had given me to understand, and it was more a case of burying with faint praise.

The Barnett formula has become shorthand for general discontent about various aspects of the financial settlement relating to the nations, and I deprecate the narrow nationalism that has crept in both in England and in Scotland. We need to reconsider what it seeks to achieve and how to achieve it.

The formula has been roundly attacked. On 7 November, Baroness Ramsay of Cartvale said in another place that it must have something going for it if it is attacked on one side for being too generous and on the other for not being generous enough. Lord Barnett said:

"I had always assumed that the arrangement would be temporary until a more sophisticated method could be devised which took account of needs. In fact, not only has there been no change to take account of needs, there have been only minor changes to take account of changes in population."—[Official Report, House of Lords, 7 November 2001; Vol. 628, c. 225.]

This mechanism, which was last only six or eight months, is still with us because a formula is required. That was made clear by Lord Campbell of Croy. He explained, on the basis of his experience as a Minister and Secretary of State, the difficulties that arose prior to Barnett, when negotiations had to be undertaken annually. The one aspect of the formula that can be defended is that it has provided relative stability and a framework. I come neither to bury it nor to praise it. We should accord it its due, but consider what to replace it with.

Any new formula must be needs-based. Given the diverse economy of the United Kingdom, we must consider the differing needs of the various regions and make available corresponding funding to match those needs. In fact, Barnett does no particular favours to some regions of Scotland. For example, the latest figures show that in 1998 gross domestic product per capita in the highlands and islands was some £9,000, whereas that for Scotland as a whole was some £12,000. Those figures are not reflected in expenditure. The area was compensated to some extent by objective 1 finance, but that has now been lost. Scotland has differing needs in terms of expenditure, as do England and Wales.

I do not want to interrupt the flow of the hon. Gentleman's even-handed speech, but can he tell us whether the Liberal and the Labour parties in the Scottish Executive have a common position on the Barnett formula and, if so, what it is?

I have no idea of the position in the Scottish Executive, but I can clarify our position in this place. We felt that there was a strong necessity to maintain the relative stability that Barnett had produced and that that stability should be maintained by keeping the formula for the first two Scottish Parliaments, but that the underlying policy should be a review to produce a new formula to take account of needs. When asked what he would do about it, my right hon. Friend the Member for Ross, Skye and Inverness, West (Mr. Kennedy) put it very well. He said:

"Quite simply—reform it! We would review the current formula and replace it with a needs-based one which would look at the UK region by region giving each region the amount it needs. Therefore, places like the North East which need more funding, would be fairly treated."

That is our position.

The formula should not be based only on population. In many regions—for example, the north-east and the highlands—per capita allocations for expenditure simply do not work. The formula should recognise that many areas of expenditure, such as roads, require a different basis. As was suggested by a number of hon. Members, we must examine existing needs in the diverse regions and economies of the United Kingdom and allocate a new formula that takes account of those needs, based on expenditure that is not currently part of the Barnett formula, expenditure that is best driven by population and expenditure that is best driven by other methods. That should be negotiated between the devolved Assemblies and the Treasury. I do not agree with the hon. Member for Sittingbourne and Sheppey that the best way of doing that is through a joint Select Committee of both Houses. It must be properly negotiated, and the relationship must be akin to that between our Ministers and their European ministerial colleagues. With our devolved settlement, it is impossible to imagine devolved Parliaments and Assemblies being excluded from the process.

The hon. Member for Banff and Buchan (Mr. Salmond) referred, as he is wont to do, to the squeeze. The point about the squeeze is that it is a reduction not in Scottish expenditure but in the increase in Scottish expenditure compared with that in England. He cannot call for fiscal autonomy and boast of a surplus in the Scottish economy while at the same time saying that it is foul and unfair that there is a squeeze. He cannot have his cake and eat it. The hon. Gentleman suggested that the appropriate way to deal with the problem was to give Scotland fiscal autonomy.

I am tempted to say that Liberal Democrats can have their cake and eat it in almost any place I could mention. It is fair to argue for fiscal autonomy—he may not know this, but some members of his party have argued for it in the Scottish Parliament—while at the same time being concerned about the review of the Barnett formula, which, in the minds of some people, has as its prime objective further squeezing of Scottish expenditure. Is that not a fair and consistent position?

I was talking about fiscal autonomy. I feel strongly that fiscal autonomy would bring with it almost as many difficulties as the Barnett formula. Where exactly are the borders of fiscal autonomy defined? Does one say that defence is included, but foreign policy is excluded? When looking for provision for the needs and economies of Scotland, fiscal autonomy holds out no greater hope of benefit than the current system. We need to reform the current system. We need to recognise the relative stability that having a formula has delivered, and to recognise that any new formula must be based on needs.

The Barnett formula has stood the test of time in one sense. It has provided relative stability. However, to ensure that expenditure is fairly allocated across the whole of the United Kingdom, we need to change to a formula that recognises the varying needs of the various parts of the United Kingdom. To achieve that, we need to be able to—

Order. I appreciate the hon. Member's inconvenience and discomfort, but time is being squeezed.

Then I leave it at that, Mr. Winterton.

Thank you, Mr. Winterton. It is a pleasure to welcome you to the Chair, and I am sure that we can anticipate that combination of gravitas and panache that you invariably bring to our proceedings.

I congratulate all hon. Members who have taken part in the debate, not least the hon. Member for Sittingbourne and Sheppey (Mr. Wyatt). I do not think that he has resiled from his opposition to the way in which the formula works. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) should recognise that the hon. Gentleman was just making his argument in his usual gentlemanly and understated way. His message was certainly pretty clear to me; he is not entirely sanguine about the way in which the formula works.

I also congratulate the hon. Members for East Camarthen and Dinefwr (Adam Price), for Edinburgh, North and Leith (Mr. Lazarowicz), for Banff and Buchan (Mr. Salmond), for Dundee, East (Mr. Luke), and for Inverness, East, Nairn and Lochaber (Mr. Stewart), not to mention what I might describe as the representative of the north-east, the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins). I think that I am right in saying that he speaks also for the right hon. Member for Gateshead, East and Washington, West (Joyce Quin), who spoke on this subject on 19 July in Treasury questions. She signalled her growing disquiet about the way in which the formula operates to the disadvantage, as she sees it, of the north-east of England.

There is a tendency for positions to be polarised in this debate. My starting point is to observe that the Barnett formula is neither a godly blessing nor the devil's curse. It is rather curious that it has subsisted for the best part of 22 years. As a number of hon. Members have observed, Lord Barnett expected that it would last perhaps six months, possibly a year, but was very unlikely to go beyond that. The fact that it has lasted for as long as it has might suggest that it has benefits. That is not of itself justification for its continuance. One commonplace and truism that I can utter without dissent from anyone who has taken part in the debate is that successive Secretaries of State for Scotland representing both parties have judged that the formula has merits. It has merit in terms of stability, merit in terms of flexibility, and merit for the people of Scotland.

Secretaries of State for Scotland have been spared the annual ordeal of having to negotiate with the Treasury, which is not something that should be taken for granted. For example, I was interested to learn on studying the debate in the other place that Lord Forsyth of Drumlean was himself a supporter of the Barnett formula, and he remains so. Anybody who knows the noble Lord will testify that he is not exactly scared of confrontation: he is always prepared to argue his corner. However, he is of the view that the merit of being spared that annual negotiation and the stability that the formula has brought about in the past 20 years are not inconsiderable benefits.

There is some misunderstanding about the purpose of the formula. It is to ensure not a cut in Scottish expenditure, as the hon. Member for Banff and Buchan unworthily and inaccurately suggests, but simply to secure a reduction in the differential between per capita expenditure in Scotland and England. We can argue the toss about whether and to what extent that objective has been achieved, but it is important not to misrepresent the initial purpose. The idea is to ensure that, in relation to expenditure that is comparable between England and the rest of the United Kingdom, proper provision exists for Scotland based on its population and what is admittedly a grossly outdated assessment based on 1976–77 figures for local needs.

In the interests of not being misrepresented—no one wants to suffer that—I would like to ask a question. On 7 February this year, the shadow Leader of the House, who was then a Back Bencher, charmingly asked the Prime Minister:

"When will the Prime Minister end the scandal of English subsidies for Scottish benefits?"—[Official Report, 7 February 2001: Vol. 362, c. 928.]

Does that represent the view of the Conservative Front-Bench team or any significant part of it?

I am disappointed in the hon. Gentleman. I have made many speeches over the years that have attracted vociferous criticism and complaint, but when I have sat down to discuss my views with people, they have rarely been in any doubt as to my position. My right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) is now a distinguished member of the Opposition Front-Bench team and, as shadow Leader of the House, he accepts collective responsibility. I will tell the hon. Member for Banff and Buchan the exact position taken by my right hon. Friends the Members for Bromley and Chislehurst and for Haltemprice and Howden (David Davis), the chairman of the Conservative and Unionist party. We are all engaged in a thorough-going and heart-searching review of policy across the field and we will report on our findings in due course.

It is fair to point out that there has been a significant downwards change in the population of Scotland during the intervening 22 years. That can be cited by hon. Members for English constituencies, including those for constituencies in the north-east, but it has not been reflected in public expenditure. Similarly, it is a fact that gross domestic product per head in Scotland is £12,512, whereas it is £10,449 in Wales and only £10,024 in the north-east of England. That is not reflected in expenditure per head, which is greater in Scotland at £5,271 than in Wales at £5,052, or in north-east England at £4,837.

In the past, the right hon. Member for Gateshead, East and Washington, West has pointed out that six of the nine English regions receive less funding per head than Scotland. That must be taken into account. Seven Back-Bench speeches have been made today, whereas 22 speeches were made during the 7 November debate initiated by Lord Barnett in the other place. It would be an exaggeration to say that there were 22 differences of opinion, but a miscellany of different views were expressed. It is fair to say that most reasonable people in Scotland—it would be rash in the extreme to include the hon. Member for Banff and Buchan in that category—judge that the formula has worked well for Scotland. The leader of the Conservatives in the Scottish Parliament, Mr. David McLetchie, has said that the financing arrangements have served and continue to serve the people of Scotland well.

I agree with Lord Barnett that there is a compelling argument for a review of his formula. An undeniable and unanswerable case exists for a thorough needs assessment in 2001; we should no longer depend on the hotch-potch that resulted from an examination of the situation 24 years ago. Any review should be wide-ranging, all-embracing and thorough. In the context of the formula, I note a slight difference between the position enunciated at the last Scottish questions in the Commons by the Minister of State, Scotland Office and that expressed by Lord McIntosh in the other place. The Minister of State said that the system was stable, fair and flexible and that the Government had no plans to review it. There was a difference, at least of tone and nuance, during the debate in the other place, when Lord McIntosh of Haringey splendidly said:

"We have no commitment to review the Barnett formula. On the other hand, it is not fixed in stone."—[Official Report, House of Lords, 7 November 2001; Vol. 628, c. 262.]

That is a splendid example of the two-handed lawyer.

We should have a thorough review. It should be systematic and comprehensive. It will necessarily take some time. There is a strong case for the creation of a royal commission to consider all the arguments as far as the people of Scotland, Wales, the north-east of England and the other English regions are concerned. After that detailed and thorough consideration, which the Opposition favour, I will be able to enunciate my party's conclusions with the clarity and specificity that the hon. Member for Banff and Buchan requires.

It is a pleasure to see you in the Chair, Mr. Winterton. I congratulate my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) on securing this important debate. It is a topical issue and I am delighted to be here to debate it. My hon. Friend's contribution was well researched and interesting. As various hon. Members pointed out, Lord Barnett himself did not expect that the formula that bears his name would last so long. The longevity of the Barnett formula is a tribute to its effectiveness in determining the allocation of public expenditure to Scotland, Wales and Northern Ireland. There are at least two reasons for that longevity.

First, although no formula is perfect or above criticism, the Barnett formula has produced what have been perceived as generally fair and broadly acceptable distributions of public funds since it was first introduced. It has been used by both Labour and Conservative Administrations. It underpinned the devolution settlements with Scotland, Wales and Northern Ireland and is not perceived to be politically biased. Secondly, as the hon. Member for Buckingham (Mr. Bercow) pointed out so eloquently, the formula has avoided the need for separate negotiations between Treasury Ministers and their counterparts in Scotland, Wales and Northern Ireland during public spending reviews. It has provided a transparent, durable and simple rule for reaching spending settlements without direct negotiation.

A frequent misunderstanding is the widely held impression that the Barnett formula is responsible for determining the level of spending per head on services in Scotland, Wales and Northern Ireland. That is not the case. The formula is a device to allocate to the devolved Administrations a relative population share of changes in planned spending on comparable UK Government Departments' programmes. The formula was not used to determine the initial baselines, which have been inherited from the past. Furthermore, the Barnett formula is used to determine only the overall increase in the assigned budgets of the devolved Administrations. It is for the devolved Administrations to decide how they want to allocate their budgets to individual programmes. The UK Government do not determine the levels of spending per head on devolved services such as health and education.

In order to remove one bogus argument from the agenda, will the Minister confirm that use of the tax-raising power by the Scottish Parliament could in itself raise only £450 million, which is just 3 per cent. of the total allocation of funds to Scotland? Therefore, it is a complete red herring to suggest that the use of that power could make a dramatic difference to Scotland. Manifestly, it could not.

Of course the use of the tax-raising power is up to the Scottish Parliament itself. It is an important tool that it may choose to use at a particular time, but I do not suggest that it is particularly relevant to the Barnett formula.

We have heard a wide range of views in today's debate. Questions have been asked about the comparison of per capita public spending in Scotland and the equivalent figures for English regions such as the north-east or the north-west. However, the Barnett formula does not determine the allocation of resources within England—which is generally a matter for English Departments and reflects Department's various needs-based allocation systems—or baselines inherited from the past, or non-devolved spending in Scotland, Wales and Northern Ireland.

It is reported in The Guardian today that Ministers are moving towards a full review of Whitehall spending throughout the UK. Will the Minister endorse that as a "report", or knock it on the head as a "story"?

Even though I used to work for that newspaper, I am reluctant as a Minister to endorse every single line written in it. We have neither a commitment nor any plans to review the Barnett formula, and there is no tension between that position and the fact that the Barnett formula is not set in stone. We have to review it in the run-up to spending reviews and it changes according to population shifts, so reviewing the detail is an on-going process.

A comparison between spending in Scotland, Wales and Northern Ireland and in the English regions shows that there is a substantial variation in need within regions as well as between them. Outside London, the north-east has the highest level of public spending per head in England.

The Government are committed to improving prosperity in all regions and countries within the UK. Since the 1997 election, youth unemployment has greatly declined and long-term unemployment has been reduced. All regions are benefiting from the new deal, the working families tax credit, the introduction of the minimum wage and cuts in corporation tax and capital gains tax.

My hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Cousins) asked about the reference in the pre-Budget report to public spending decisions being

"fairly distributed and targeted at those areas where it is needed most".

It might be helpful to put that in context. At the time of the pre-Budget report the Government published a paper on "Productivity in the UK: the Regional Dimension" which sets out the economic analysis underlying the Government's approach to regional economic policy and the institutional framework necessary to deliver it. Working in partnership with the Government, regional development agencies and other local and regional economic bodies have put in place a substantial programme of policies designed to tackle economic failure—at every geographical level—and deliver sustained improvements in the UK's economic performance.

The forthcoming spending review provides an opportunity for the Government to consider the lessons of the first years of this new regional economic policy and incorporate the analysis into our evidence-based approach to public spending. Reference is made to public spending that takes place in England, but that does not imply any fundamental rethinking of the Government's approach to the Barnett formula. It is all about learning from experience and building up an evidence base to inform public spending within the overall context.

There has been criticism from some in England that the Barnett formula is too slow in delivering convergence in per capita total identifiable spending between the four countries of the UK. I would point out that the speed of convergence is affected by a variety of factors, including the rate of increase of comparable English programmes, changes in relative population between the countries of the UK, and changes in relative public spending per head on programmes that do not fall within the Scottish, Welsh and Northern Ireland assigned budgets.

On the other hand, there has also been criticism in the opposite direction that spending percentage increases in Scotland and Northern Ireland are lower than elsewhere in the UK—sometimes referred to as the Barnett squeeze. In fact, no fixed or predetermined convergence path is built into the Barnett formula. The so-called convergence characteristic simply reflects that fact that population-based increases represent a smaller percentage increase where baseline levels of spending per head are higher.

The Government's policy on funding the devolved Administrations, including the Barnett formula, is set out in the statement of funding policy published by the Treasury in July 2000. The statement fully and transparently sets out the details of the funding arrangements, and was agreed with the Secretaries of State for Scotland, Wales and Northern Ireland, following consultation with the devolved Administrations. It allows for operational change. We have updated the population figures, for example, and the comparability factors are kept under review.

We have heard a wide range of—sometimes conflicting—views. The Barnett formula has served us reasonably well, but we will continue to listen to various representations.

I regret that time is up. We thank the Minister for her reply. We move to the next debate.

I am grateful for the opportunity to raise this issue, which is of great importance to my constituents, and to allow the Minister to place some important points on record. I also thank the hon. Member for Thurrock (Andrew Mackinlay) for attending the debate. He may not have an immediate or obvious interest in what goes on in my constituency, but he has historic connections with it and Opposition Members are grateful for his support.

The Wolvercote clinic is a therapeutic facility that is run by the Lucy Faithfull Foundation. It treats approximately 20 convicted paedophiles and seeks to educate them into departing from their offending behaviour to ensure that they can become safe members of the community again. It operates a contract regime. People who are in the clinic are not prisoners: they enter into a contract with the clinic to stay there for the duration of their treatment, but they are free to go whenever they choose. At present, the clinic is at Epsom, on the site of a large, disused psychiatric hospital that included a medium-secure psychiatric unit. The Secretary of State for Health has sold the site for development and houses are being built. Therefore, the clinic must move.

I emphasise that the debate is not about the clinic, which I have visited. I have no reason to suppose that it is not doing a good job: more than 80 per cent. of those treated in the clinic do not reoffend. The debate is about the Home Office's handling of the relocation proposal. The need to relocate the clinic was not sudden or unexpected—but there had been six years to plan the move. Ministers appear to have taken the decision to relocate the facility only on 11 May 2001. The clinic was relocated to Silverlands near Chertsey, which is owned by the Department of Health. That decision was not announced, no one local was briefed, and I was not informed as the Member of Parliament for that constituency. Given that the decision was taken just a few weeks before the general election, one can perhaps understand why.

I was first informed about the decision on 12 October, by which time there were less than six months until the date by which the clinic had to vacate its premises. I want to put on record that the Minister was not responsible for that decision because, of course, she was not there. When she reviewed the decision in the summer, she identified concerns about the decision-making process. She described it as one that:

"could have been better handled."

Local people were relieved when the Minister announced that she would review the decision that was taken in May behind closed doors. However, there is great concern in my constituency to ensure that all options are genuinely reviewed and that the review does not repeat the shortcomings of the original decision-making process. I have had more than 2,400 representations on the matter, which is easily the most that I have received on any subject since becoming a Member of Parliament.

The debate will not primarily be about whether Silverlands is an appropriate location, but about the decision-making process and the procedure that was followed. However, I will briefly outline some of my constituents' concerns about the location of the facility at Silverlands. It is in a residential area and is directly overlooked by at least two properties. Many schools and child care facilities are in the immediate vicinity, St. Peter's hospital and two creches are on the site, and a psychiatric unit and the White Lodge centre for handicapped children are close by.

The large and diverse traveller community in that part of my constituency has clear views about the issue. After some difficult years, that community has integrated well with the rest of the local community. The key to integration has been Lyne and Longcross primary school, a small Church of England school that is attended by many children of travellers, sometimes on a seasonal basis. The school is coping well and facilitating their integration into the community.

The building that the Department is proposing to relocate the clinic to is a grade 2 listed mansion. Some of the security arrangements that have already been put in place, without the nicety of obtaining planning or listed building consent, have already damaged its setting.

I share the strong local belief that the criteria used to select the site for a facility of this nature must include some measure of the effect on the community in which it is placed. It is well established that perceptions have an important effect: fear of crime is as damaging as crime itself. I submit that special factors make the community particularly vulnerable to the effects of such a facility.

However, I do not wish to engage in special pleading. I ask only for a fair and objective evaluation of all the alternatives, confident that the case against Silverlands will stand on its merits. There is no evidence that the May decision was made on the basis of rigorous evaluation and it was manifestly made without consultation. Such a decision is unsatisfactory and vulnerable to challenge. I believe that the Minister has recognised that and therefore agreed to a review. Other communities will raise other concerns, but I will accept the outcome of an objective evaluation procedure that is fair, transparent and rigorous. I wish to discuss the process that is necessary to ensure such evaluation.

How will the Minister apply the criteria to evaluate the different sites? The Home Office issued a list of criteria, but there is still some confusion. It is not clear whether they were prepared at the outset or reactively during the process. According to a Home Office minute of a meeting in my constituency the Minister said that the criteria for selection were simply that the site was big enough and was part of the Government estate. The Home Secretary wrote to one of my councillors that

"a nationwide search throughout the NHS and Prison Service estate"

had taken place. He said that the advantages of Silverlands were that it was of the right size and could be refurbished to meet Home Office requirements and that

"the existing, experienced staff could transfer easily; and the site is already in Government ownership".

The published criteria are ambiguous. Officials made it clear to me that Government ownership is not an issue, but the criteria could be interpreted to require that it be taken into account. I hope that the Minister will be able to confirm that all options will be considered, regardless of ownership. I understand that instructions have been given to property consultants to look for suitable sites throughout the country.

The conflicting statements sometimes leave us with the impression that the selection criteria have been cobbled together during the process, rather than carefully thought out in advance. Nevertheless, we now have a set of 15 criteria. Most of them are sensible and uncontroversial, if somewhat inward looking: they tend to deal with the suitability of the building, rather than the effect on the community. However, I wish to ask the Minister about a few specific difficulties with the published criteria.

I do not want a lengthy debate on the European convention on human rights, but rights are affected by a decision to locate that type of facility. Regardless of human rights considerations, the least onerous solution that has the least negative impact on the community should be sought. The Home Office criteria do not refer to impact on the community, which should be the primary criterion. Does the Minister agree that minimal impact on the community should be one of those criteria?

Criterion 3 details the retention of specialist and experienced staff. That is a sensible aspiration. Due to the time scale—only four months are left until the backstop date for relocation of the clinic—we are concerned that the criterion introduces a narrow geographical bias against Silverlands. That appears to contradict what Ministers have said about undertaking a nationwide search for suitable sites. I accept that relocation across substantial distances will pose difficulties in that short time scale and may involve temporary arrangements, but it is not impossible. Not all staff live close to the current site in Epsom. Crucially, criterion 3 cannot have been one of the original criteria used, because we were told that a nationwide search was undertaken. At this stage of the review, I would be concerned if a new criterion were introduced that, for geographical reasons, biased the search against Silverlands. Will the Minister confirm that geography will not be a determining factor, as it was not in the original decision?

It is not clear whether the criteria will be weighted when taking a decision on an application, or whether some of them are absolute criteria with which a site must comply. Will the Minister confirm that there will be a transparent scoring system so that any location can be objectively evaluated and seen to be so? Ideally, I would like a matrix at the end of the process that identifies possible sites, and the criteria against which they are measured, and that scores them in a way that the public can scrutinise and challenge. I hope that the Minister will accept that the Government must publish details of evaluated sites and must make open to scrutiny the basis for any conclusion that a given site is the most suitable according to the defined criteria. Will the Minister assure us that she will publish the data that underpin her decision?

The Minister told me on 12 October that a review process would be conducted, followed by consultation of local people in the preferred location. That is her position, but since that statement, Ministers have been at pains to avoid the use of the word consultation. The Home Secretary wrote:

"It was always intended that there would be a process of dialogue."

The Minister herself referred to engagement with community concerns, which is not the same as consultation. That shyness over the word consultation may relate to the fact that courts have established that a proper consultation must occur when the decision maker's mind is still open and the decision may still be influenced.

It is not clear how the views currently gathered from local people and representative groups will influence the decision-making process. None of the 15 criteria relates to impact on the local community. Via her mechanical scoring process, will the Minister explain how the views of the local community will be scored and plugged into the evaluation system, along with more mechanical issues such as the quality of the property and its appropriateness? If the process is to be credible, it must be seen to be even handed. There is a perception of bias in favour of Silverlands, partly because of the time scale. It appears that a new criterion has been added that biases the playing field against us.

Despite the announcement of a review of the original decision, a £2 million contract for work on the Silverlands mansion has been let. That work continues unabated. There is deep suspicion locally, which I hope is misplaced, that the decision has already been made and the review is really an exercise in propping up a faulty and vulnerable process. I hope that the Minister will reassure us that, in the Home Secretary's words, this will be a "genuine" and "wide ranging" review and that

"all possible alternatives will be properly investigated".

I would be grateful if the Minister would put a time limit on my constituents' agony by making it clear when she expects to reach a decision. The clock is ticking and there is a tension between the need for a full and thorough review procedure, which we understand, and the fixed deadline for the clinic's removal from its present site in Epsom. We believe that the dice are becoming increasingly loaded against Silverlands. I look forward to the Minister's response.

As the hon. Member for Runnymede and Weybridge (Mr. Hammond) indicated, I welcome the opportunity to take part in this debate and to put on public record some of the important issues concerning Wolvercote and the decision-making process, as well as the wider context of how we better protect children from sex offenders.

I shall deal with four areas. The first area is the reason why Wolvercote has had to move and the initial decision on the Silverlands site. Secondly, I shall deal with how that initial decision is being reviewed—I shall answer some of the hon. Gentleman's questions. Thirdly, I shall touch on the work of the Lucy Faithfull Foundation. Finally, I shall consider some of the broader questions— how we better protect children and the difficulties we all face as policy makers and in local communities in trying to implement measures to protect children effectively.

As the hon. Gentleman will know, the Wolvercote Clinic had to move because its site at Horton hospital was only temporary. It was always known that it was unsuitable. It was in poor physical condition—now, it is in extremely poor physical condition. In any event, as the hon. Gentleman pointed out, the site is being sold and the clinic has to be relocated.

Prior to my coming to this post, an extensive nationwide search was conducted through the national health service and Prison Service estates for possible alternatives, in which the Silverlands site was identified. Although many would argue that there is no ideal site for such a facility, those making the decision thought that Silverlands had several advantages. It was of the right size, it could be refurbished to meet security and health and safety standards, experienced staff could transfer there easily, which was highly important, and it was already in Government ownership as part of the NHS estate. Ministers agreed that Silverlands was a suitable site for the clinic.

However, substantial issues of finance, security and listed building status had to be resolved before my former colleagues could be sure of the viability of Silverlands. It was clear that they always intended that there should be dialogue. Arrangements were set in train to organise that process, starting with an information day for everyone concerned, including the public. Officials were in contact with the chief executive of the local authority about that proposal.

Can the Minister clarify whether this was dialogue post the fact, or consultation which could have some bearing on the decision?

I am speaking with hindsight, because I was not party to the information, but I think that it is fair to say that Silverlands was certainly the preferred site at that stage. My colleagues clearly recognised the need for, and desired, a process that involved the local community. I had concerns about the proposals. After I had discussed them with my right hon. Friend the Home Secretary, I decided that we should review all the alternatives and that community concerns should be heard and included in the decision-making process.

The head teachers in the surrounding area, which I think is peppered with a large number of schools, did not know about the matter until October. That is a matter of fact, which I hope my hon. Friend the Minister will bear in mind. If consultation was embarked on before, some people with primary interests were not consulted until October.

I am aware of that, which is partly why I decided to review the decision so that community concerns across the board could be heard and, more specifically, included in the decision-making process. At that stage, I briefed the hon. Member for Runnymede and Weybridge on the situation. Let me deal with some points that he raised about the review process.

On 20 October, I appointed Tony Raban from the National Probation Service to head a project team to review all possible alternatives for a new site. On 31 October, I met a group of local stakeholders and gave them those assurances. To be fair, I think that people accepted that what I said was genuinely and sincerely meant and that the process would be robust, fair and objective.

The project team's work continues. The search for alternative sites throughout England and Wales has included a comprehensive review of Government properties, which involved the Department of Health, the Prison Service and the Ministry of Defence. The review included what we learned about what might be available in the private sector.

The hon. Gentleman spoke about the criteria and suggested that there might be conflicting statements. When we started the process, we had a broad remit, asking those agencies to tell us about any property or site that might be suitable as regards size and facilities. Once names of sites started to come in, the evaluation criteria were applied. The initial trawl was wide, with no criteria set down other than the broad parameters that my right hon. Friend the Home Secretary mentioned in his letter. The criteria are necessary to evaluate those sites.

Chief officers in all 42 probation areas have been asked to assist. The search conducted by the Department of Health has been undertaken through not only the regions but 400 health trusts. We have employed an independent consultant to search for properties in the private sector and we have been following up a contact that the hon. Gentleman gave us about a company specialising in private residential care.

I emphasise that the process of searching for and evaluating alternative sites has been thorough, systematic, open, rigorous and objective. I wholly reject any suggestion that the process was tipped towards selecting Silverlands. I would not be party to that and I will not entertain the suggestion because it is not true.

To ensure that people in the community accept that the process has been open and rigorous, will the Minister undertake to publish the resulting data, so that they can see which sites have been evaluated and how they scored against the defined criteria? People would then see that there was a clear and objective case for whichever site was ultimately selected, rather than being asked to rely on the Minister's judgment on a set of data that she had seen behind closed doors.

I am sorry that the hon. Gentleman appears to continue to question my integrity and the way in which I am approaching the review. I have reassured local people about it, and with hindsight, local people will be able to examine our process and judge for themselves. I insist that the review is as open, transparent and comprehensive as possible. I shall take advice on what can be published and I have no difficulty in publishing the detail of the scheme, its criteria and the how they have been applied. I will not guarantee at this stage the publication of the details of all the other sites that we considered, because to do so could have implications for other places in England and Wales. I shall ask for advice on that, but I shall publish what detail I may.

Any property identified—the search found many—was first subjected to a desktop review against criteria, which I have made available. Sites that were assessed as having potential were visited and a full evaluation took place. The second task for the project team was to continue the dialogue with local people. I understand fully the concerns of parents and local people and it is for that reason that we have conducted the review and guaranteed that their views would be incorporated into the decision-making process. The meetings that have taken place between Tony Raban, the project team and local people have enabled us to hear directly their concerns and clarify some issues of misunderstanding.

I in no way questioned the Minister's integrity. You would have ruled me out of order had I done so, Mr. Winterton. However, does the Minister accept that it will be difficult for local people to accept a decision if they do not know the other sites against which Silverlands has been compared? They will always stand accused of nimbyism. They do not want to be accused of that; they want to conduct a fair and objective assessment of the alternative sites on offer.

I will be able to put into the public domain the evaluation process, our criteria and the weightings that consultants advised us to apply. The criteria try to create a balance between the two issues that the hon. Gentleman identified—the needs of the clinic and the impact on the local community. We have used weightings to ensure that both factors are given importance. As I said, I will take advice about publishing the names of individual sites and identifying them by location, but I am happy to publish the scheme's details because I am confident about our process.

The work of the Lucy Faithfull Foundation is important to the debate. The hon. Gentleman said that the debate was about Silverlands, Chertsey and the decision-making process, but it is not. The issues that he raised would be important in decisions to locate such a clinic anywhere in the country. They are the natural concerns of people, but we must examine them in the context of trying to protect children. The Lucy Faithfull Foundation and clinic are undertaking pioneering work in the field of child protection. It is critical that the clinic continues its work somewhere in the country and child protection would be much worse if it could not do so. I am determined that we will find a suitable location.

The protection of the public, and of children in particular, is clearly a high priority of the Government and one at the forefront of our minds after the recent conviction of Roy Whiting for the murder of Sarah Payne. There has been much debate about how we can better protect children and whether public access to the sex offenders register, for example, would help. We have concluded that it would not. Child protection is best served by the police and others knowing where sex offenders are, keeping them under supervision and providing treatment to reduce the risk of further offending. Clinics such as Wolvercote make a significant contribution to that. If we are to keep known sex offenders in our sights and enable the police to know where they are, clinics such as Wolvercote are essential. There is not an abundance of possible locations that are removed from housing and proximity to schools, so wherever there are clinics and hospitals, these issues will be raised and politicians and members of the community who, understandably, want to protect their children must face up to that.

I am grateful for this opportunity to raise an issue that has annoyed and upset some of my constituents for more than two years. For reasons that will become clear during my speech, it has also caused considerable irritation to their Member of Parliament.

The constituents live on a new, private development known as Melbeck Park. They came to see me following a series of burglaries on their estate where there are 170 houses, all built by the developer Redrow Homes. I warmly welcome the significant growth of private development in my constituency in recent years; Wythenshawe was traditionally known as the largest council housing estate in Europe, and the fact that there is now a greater diversity of housing tenure is helping to give the community a broader, more sustainable social base. None the less, in this case, the conduct of Redrow Homes falls well short of the manner in which a responsible company should behave.

On its website, Redrow describes itself as

"widely acknowledged to be one of the UK's leading residential and commercial property developers, with an excellent reputation for quality."

Redrow won the Daily Express best national house builder award for three years running. In the company's latest annual report, chairman Robert Jones reported that the group's pre-tax profits had risen to more than £72 million pounds. He commented:

"We have had an outstanding year in terms of public recognition of our achievements".

In the same annual report, Redrow's chief executive, Mr. Paul Pedley, said that the awards recognised his company's

"focus on quality, design, customer care and environmental awareness."

He said:

"Redrow fully recognises its responsibilities to the wider community. In tandem with creating an excellent living and working environment is the need to add significantly to the daily life of the communities in and around our developments."

One might expect such remarks from an organisation that recently sponsored the annual lunch of the City of Westminster home safety committee under the theme "Safer Homes in the new Millennium", but they are not reflected in the experience of my constituents.

I was first approached by some Melbeck Park residents in 1999. Their homes had been burgled and they took the view that the poor quality window units installed by Redrow Homes were largely responsible for making their homes vulnerable to crime. During the whole of 1999, 2.5 per cent. of UK households were victims of burglary with entry. On the small Melbeck estate, in the six months between April and November 1999, there were 14 burglaries, which is equivalent to an annual rate seven times the national average. In 12 cases, the burglars got into the property by removing the kitchen window. The residents told me of their fear and insecurity. One had reluctantly decided to put her home on the market. One does not have to be an expert on double glazing to understand why it was so easy to break into the houses: the double-glazed kitchen windows were made of uPVC and externally beaded. All that was required to break in was a knife to cut the beading before lifting the window out.

In May 1999, I wrote to Redrow Homes asking the company to replace all the kitchen windows on the estate; it refused to do so. In addition to my representations, a few months later Greater Manchester police also brought the windows' security defects to Redrow's attention. In a letter to Redrow's customer services manager, GMP's architectural liaison officer stated:

"Most of the burglaries have been carried out through the same location to each property. The rear ground floor kitchen window is concealed from natural surveillance, offering the opportunity for the criminals to peel off the external pvc glazing bead to the windows. The ease with which this is carried out is normally without damage to the components. The glass panel is removed and entry is made to the property. This action would create no noise and the burglar would be confident in the knowledge that articles could be removed without risk of being seen particularly if an intruder alarm is not fitted."

He went on:

"The police are aware of the problems that external beading to windows causes to occupants and we always encourage, particularly with the installation of uPVC windows that all ground and first-floor windows, including french windows and patio doors, are beaded internally and then with secure clips. We would further suggest, in certain circumstances, that windows are glazed with laminated glass. The problems current indicate the wisdom of this course of action."

The letter continued:

"You will appreciate we are always concerned that the components specified in buildings meet minimum secure standards. For windows, apart from other design, manufacturing and mechanical specifications, BS 7950 is the accepted minimum security standard for window sets. We would encourage you to consider this specification in the near future."

Given that clear and unambiguous advice from the Greater Manchester police, I wrote again to Redrow in December 1999. The following month, I received a reply from Redrow Homes northern managing director at that time, a Mr. Andrew Swindell, who told me,

"I am aware of the problems which have been experienced by a number of residents on the Melbeck Park development with burglaries. We are concerned that the police appear to be unable to prevent these burglaries, and rather than addressing the issue by more patrolling of the development, they suggest that the developer, in this case Redrow, have not provided suitable windows. The windows fitted on this development are the same as those fitted throughout the Redrow Group, they need to be relevant to building regulations and NHBC standards.

Whilst I do sympathise with the residents of the Melbeck Park development, I feel they should be pursuing the Greater Manchester police to try and provide a better service to the residents of the development".

It is thus perfectly clear: the fact that windows can simply be lifted out of their frame to facilitate a burglary is not a matter for the developer but for the police. That is not my view or that of the Melbeck Park residents, who have a positive relationship with the local police. The residents believe that the police have done everything possible to make their estate safe.

It is a Member of Parliament's responsibility to look for answers to constituency problems. Therefore, given the difference of opinion expressed by Mr. Swindell, I resolved to try to bring Greater Manchester police and Redrow Homes together to discuss the difficulties that the Melbeck Park residents were experiencing. The police said that they were more than happy to meet Redrow, but Redrow were reluctant to meet us.

I wrote to Mr. Swindell in February 2000 to request a meeting; I received no reply. I wrote again in May and in June. Eventually, having telephoned his office on numerous occasions, we fixed a meeting for August 24. On the morning of the meeting, Mr. Swindell's office telephoned to say that he was unable to attend. I was appalled at such a lack of concern for my constituents. I wrote to the chief executive of Redrow Homes, Mr. Paul Pedley, to complain. I subsequently received a reply from Mr. Barry Harvey, regional chairman of Redrow Homes (Northern). He informed me that Mr. Swindell had left the company and that he, Mr. Harvey, would investigate my complaint.

Any initial hope of a breakthrough was dashed when 10 days later he replied with the standard retort that it was unfair for me to take Redrow to task. I wrote again to Mr. Harvey asking him to meet me and representatives of Greater Manchester police. In January this year he wrote to say that he could

"not see any way forward as we have no intention of changing or replacing windows."

That strong denial of responsibility might have been more persuasive but for the fact that in August 1999 Redrow had commissioned Avonside Window Systems, the original supplier of the windows to offer all Melbeck residents, free of charge, the opportunity to have the beading removed from their kitchen windows and replaced with an additional silicone seal. Clearly, the company knew that something was wrong. Only 36 of the 170 households on the estate agreed to the offer—figures that Redrow confirmed in writing to me. The other residents were not persuaded that that would improve their security and, in any event, the majority of them continued to believe that Redrow Homes should replace the entire kitchen window unit. Yesterday evening, Redrow Homes issued a statement in anticipation of today's debate, claiming that 90 per cent. of the estate's 170 residents agreed to extra silicone treatment for their windows, yet it had already written to me confirming that only 36 residents had so agreed. Its claim is therefore so at variance with reality as barely to constitute credible evidence.

All hon. Members are regularly in touch with a wide range of commercial organisations. They might need to deal with a constituent's complaint, with plans for investment, or even with job losses. In my experience, although such organisations do not always share one's views, they invariably show courtesy and respect. I asked to meet the American owners of an engineering company in my constituency that had just announced several hundred redundancies and they readily agreed. As you know, Mr. Winterton, I am trying to help the managers and work force at the Manchester airport division of FLS Aerospace to retain several hundred jobs that are under threat as a result of the recent downturn in the aviation industry. Such organisations are always happy to meet and to respond to my requests. In fact, Redrow Homes is the only company to refuse to have a meeting with me in my almost five years as the Member of Parliament for Wythenshawe and Sale, East.

This sorry saga not only displays a wilful disregard for the residents of Melbeck Park, it also has serious implications for public policy and resources. In a letter to one of my constituents, Barry Harvey, chairman of Redrow Homes' northern region, remarked that the windows in the properties sold on the estate reflected exactly those on display in the show homes. He said:

"You bought what we sold".

I do not accept that a developer should be allowed to get away with such an irresponsible attitude. A wide range of legislation and regulations deals with customers' rights in respect of the purchase of goods and services. The time spent by police following up the disproportionate number of burglaries on the estate gives rise to considerable public expenditure implications. There is also the question of the distress caused to the families and individuals involved, but all Redrow Homes seems interested in is the house as sold.

My principal purpose in raising this issue is to ask the Minister what action the Government are taking to ensure that developers are not able to wriggle out of their wider responsibilities in the manner of Redrow Homes. In particular, the residents of Melbeck Park would like to know what Ministers are doing to ensure that local authorities are able to enforce effective security standards on new housing estates as part of the planning process.

In recent years, as a result of this Government's actions local partnerships have been established in every area to spearhead the fight against crime. In that regard, I pay tribute to the efforts of Greater Manchester police, Manchester and Trafford councils and other local partners in working together in my own constituency. That work is made all the more difficult, however, when houses are built to a defective design.

An annexe on design attached to Government planning guidance contains a paragraph on security that includes the following advice:

"In considering the design of proposed new developments, local planning authorities, developers and designers should take into account the advice contained in DOE circular 5/94, "Planning Out Crime". In doing so, the approach should be sufficiently flexible to allow solutions to remain sensitive to local circumstances."

Advice and good intentions are not enough, however. When a developer seeks planning permission for a new estate, the council can recommend that the developer consult the police about the estate's layout, but it is powerless to insist that the developer follow police advice. It is also powerless to insist on minimum security specifications for windows or doors. Local authorities need more effective powers to monitor the implementation of approved plans, particularly in respect of crime and security issues.

My constituents bought their homes from a developer with a good reputation, on an estate for which the local authority had given planning permission, yet they were badly let down. I strongly support the "Secured By Design" initiative of the Association of Chief Police Officers, which is standard in all housing corporation-funded schemes and which local authorities increasingly view as a reasonable minimum for new developments. That view is, however, resisted by developers such as Redrow, and the windows that it installed in Melbeck Park would not meet the "Secured by Design" standard.

Recently, burglaries on the estate have decreased significantly, which is largely due to Melbeck Park's residents, who have displayed an impressive sense of community spirit. They have established a residents' association and a neighbourhood watch and they look out for each other, as all good citizens should. However, they deserved a more positive and responsible attitude from the organisation that designed and built their estate—Redrow Homes. Some residents have replaced their kitchen windows at their own expense, but even at this late stage, two and a half years after the issue was first raised, I call on Redrow Homes to reconsider its position and to offer every Melbeck Park resident a new kitchen window of the standard suggested by Greater Manchester police.

I hope that my hon. Friend the Minister will endorse my request and I look forward to hearing more from her about the action that the Government are taking to make developers more accountable for the delivery of public safety, more responsive to public authorities and more responsible to those who purchase properties from them.

I congratulate my hon. Friend the Member for Wythenshawe and Sale, East (Paul Goggins) on securing this debate and raising this important issue. He has conveyed the serious concerns that have been raised by his constituents about public safety on the Melbeck Park estate and I was sorry to hear about his constituents' difficulties.

I shall deal with planning issues and briefly touch on building regulations, but first I must state that there should be no doubt about the Government's willingness to tackle crime and the fear of crime wherever they exist. We have determined a course, of which planning, house building and neighbourhood management are important parts, to help communities to fight back against crime.

Many of my hon. Friend's comments relate to the quality of detailing on new private housing schemes. Although planning regulations can stress good standards in design, unfortunately they cannot solve the problem of crime. However, when they are co-ordinated with other measures, including sensitivity to designing-out crime by developers, their contribution can be significant. Well-designed developments can reduce the fear of crime, make crime harder to commit and increase detection rates. There have been too many cases in which criminals' work has been made easy and people's lives have been blighted unnecessarily—the Melbeck Park estate seems to be a case a point.

As my hon. Friend said, the planning system must play its part in tackling crime, which is why the Government intend to review and update the existing circular advice on planning-out crime to which he referred. We want to drive home the fact that crime prevention is a key objective in planning. Local authorities already know that crime prevention is a possible material consideration when planning applications are determined because it is a social issue to which their development plans must pay attention. We shall remind local authorities that they can insist on appropriate crime prevention measures and refuse planning applications where they have concerns about community safety. Local authorities must not step beyond what they can legitimately pursue under planning legislation, but there is no reason why community safety and crime prevention should not be central concerns for local authorities when they exercise their planning responsibilities.

In recent planning policy guidance, we have already underlined the importance of thinking about crime prevention when designing new developments. For example, our new approach to planning for housing, which we set out in PPG 3, requires local authorities to adopt policies that promote designs and layouts that are safe and take account of crime prevention and community safety. We are reinforcing that guidance with advice on sound practice: "Better Places to Live", which we published in September, provides sound practical guidance on how the planning system can help to achieve quality residential environments. It emphasises that good design is concerned not only with the appearance of a development but with matters such as community safety.

My hon. Friend rightly feels strongly about tackling crime on the Melbeck Park estate. Although by no means a whole solution, thoughtful planning and design can be effective in creating more secure environments. Most crime is opportunistic. Design principles based on common sense, such as encouraging natural surveillance and ensuring that such areas as kitchen windows can be overseen, can help to improve security for people and property. Through good design, we can secure safe neighbourhoods where people want to live and that are well connected to an inclusive city.

I am sorry to say that once a development has been completed, the main opportunity to incorporate crime prevention measures may have been lost. That is why we expect crime reduction to feature in the discussions that authorities have with developers and their designers right at the outset of the design process. Local authorities are advised to consult police architectural liaison officers on planning applications for developments where there is potential to eliminate or reduce crime through the adoption of suitable measures at the design stage. That is especially important for major developments such as new housing estates. We have stressed the importance of consulting the police architectural liaison officer at an early stage and my hon. Friend drew attention to the problems if the officer is consulted only after building has finished.

My hon. Friend touched on the "Secured by Design" scheme promoted by police forces throughout the country. Given that scheme's potential, I can appreciate why he wants to see the best use made of it. There should be no doubt that local authorities can insist on appropriate crime prevention measures and refuse planning applications where they have concerns about design safety. However, as he may know, "Secured by Design" covers a wide range of issues, some of them reaching beyond the boundaries of planning control.

In reviewing our planning guidance, we will examine how the principles in "Secured by Design" can best be employed. As part of the review, we propose to build up collective knowledge of what works in designing out crime. Our aim is a pool of good practice guidance relevant to local planning authorities and police that is practicable and robust in a wide range of circumstances.

My hon. Friend the Minister rightly lays great emphasis on the need to follow and share good practice. She has also emphasised the need for developers to consult the local police architectural liaison officer and has spoken in support of the "Secured by Design" initiative. However, is not the problem that although those are noble aspirations, when a developer such as Redrow takes no notice of that good practice, or, as in the case that I have quoted, of the advice of the architectural liaison officer, the residents are very badly let down?

I take my hon. Friend's point and have some points to make in reply. There is clearly wide discretion for local planning authorities when considering and approving plans. We provide them with the tools to make the best possible decisions, in the interests of all parties involved. The final decisions are down to them, but we give them strong guidance on how to consider such matters. I have clearly set out that community safety is a material consideration that they can properly take into account.

In examining how we can best use the "Secured by Design" principles, we will take account of considerations such as those that my hon. Friend mentioned in relation to the residents of the estate that he highlighted. The aim is to prevent just such problems arising. On his point about the architectural liaison officer, it may well be that had his advice been given earlier, the circumstances for my hon. Friend's constituents might not have turned out as they did.

I want to deal with other issues relating to building regulations, which I hope will reassure my hon. Friend about the seriousness with which we view community safety, building design and building standards. In addition to the planning system, building regulations cover health and safety, welfare and convenience, but not the protection of property, which would require an amendment to the Building Act 1984. We are looking into that and I will ensure that my hon. Friend's views are passed on.

Every house buyer in a private housing development will have a contract with the house builder. They will have seen the property, had it described, and probably had a survey. If there is any suggestion that purchasers were misled when they bought, there may be an opportunity for them to take legal action for breach of contract. I appreciate that that is difficult for an individual, but my hon. Friend is referring to an estate. If residents have specific worries about the way in which the developer has behaved, they may wish to bring the matter to the attention of the local trading standards office. However, I cannot comment on that, because such cases require careful consideration.

On the standard of new housing in general, the non-statutory Buildmark new home warranty scheme run by the National House Building Council covers a large proportion of new homes built for sale. The scheme standards specify that doors and windows must be designed to resist unauthorised entry. That reflects the point that my hon. Friend made about the windows on the Melbeck Park estate. The NHBC's guidance manual states that ground floor windows should have key-operated locks and that windows in general should be designed to prevent opening from the outside. However, that design must reflect the fact that windows, especially above ground floor level, may provide an escape route in the event of fire.

Under the NHBC's Buildmark scheme, any noncompliance with scheme standards that comes to light in the first two years of the 10-year cover must be put right by the builder. In this case, the problem started almost exactly two years ago. In years three to 10, cover is mainly confined to repairing structural damage. Any home owner whose home is registered with the Buildmark scheme can contact the NHBC to check whether a problem with their home is covered. If my hon. Friend is unaware of the NHBC, I shall be happy to give him its contact details after the debate.

I thank my hon. Friend for drawing the matter to our attention. I extend my sincere sympathies to his constituents and congratulate them on the way in which they have tackled their problems by establishing a residents' association and taking local action to help to reduce the crime rate. I assure him that I have taken note of the serious issues that he raised. I have already mentioned our intention to review and update the existing circular advice on planning out crime, and I will ensure that his views are passed on. I will also ensure that attention is paid to the details of house design that he mentioned and pass on his concerns about building regulations and any efforts to update them. When I meet house builders, I always underline the importance of good design, especially designing for safer communities, because I understand its importance to the well-being of people in their homes. I shall continue to do that strenuously.

I hope that I have helped my hon. Friend's constituents to find some immediate solutions to their problems by suggesting several avenues through which they can seek assistance. I hope that I have also reassured him as to the seriousness with which the Government regard planning, home design, building standards and community safety. It is our intention to continue to work to ensure that people are safe in their own homes.

I am grateful to have been given this opportunity to raise the impact of foot and mouth in Devon. I am grateful to Devon county council, Torridge district council, West Devon borough council, Dartmoor national park, South West Tourism, the National Farmers' Union, and numerous other farmers and business men in my constituency for the help that they have given me in preparing for today's debate. I should also put on record that I farmed for more than 20 years in my constituency and I still own farmland there, which is rented out.

I believe that it would help the Chamber if I gave some stark statistics about this years' outbreak of foot and mouth in so far as it has impacted on Devon, and particularly on my constituency, which was the most severely hit of all the Devon constituencies that suffered foot and mouth. We had by far the largest incidence of the disease. The constituency of my hon. Friend the Member for North Devon (Nick Harvey), had the second largest incidence of the disease in the county.

In Devon, we had 173 confirmed cases of foot and mouth and 4,500 farms were placed under D form notices and movement restrictions. Taken together, nearly half the farms in Devon were directly affected. A total of 386,203 animals were slaughtered in the county and 3,000 miles of footpaths were closed when the disease was at its height. I hasten to add that they are virtually all now open. We lost 2.6 per cent. of the county's gross domestic product, which meant that about £316 million went out of Devon's economy as a result of foot and mouth. In West Devon borough, of which my constituency envelopes the bulk, 89 per cent. of firms reported a downturn in business as a result of foot and mouth.

It should be borne in mind that in Devon, 32 per cent. of our population earn less than the EU average. Devon county council has estimated that over a 12-month period, job losses have reached nearly 8,000, of which slightly more than 1,500 are in agriculture. Nearly 3,000 are in ancillary industries, and some 3,332 jobs were lost in tourism.

I am anxious to highlight some real problems in Devon and in my constituency, but nevertheless, I shall point to some positive signs. The people of Devon will never lie supine in despair in the face of any catastrophe. They have the courage, foresight, imagination and energy to recover. I intend to stress the steps that we are taking to recover towards the end of my speech.

The Minister will know that on a number of occasions I have raised the problems of Ash moor, which is in my constituency. It is in the parish of Petrockstowe. At the height of the foot and mouth crisis, there was real confusion in Devon. We kept being told that some half a million carcases had not been disposed of, and that was the justification for constructing and purchasing Ash moor. As it happens, that was a gross overestimate of the number of carcases that had not been disposed of. In any event, Ash moor was just about the most unsuitable site for a carcase burial site that one could find. Carcase burial is about the worst method of disposing of animal carcases. Far from being impervious, the land below the site at Ash moor is extremely porous. There was no environmental assessment and no microbiological study. Worst of all, the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Scunthorpe (Mr. Morley), told me in reply to a parliamentary question that the water table is between 1.3 m and 3.5 m below ground level. The burrows are more than 20 m deep, so if the site were ever brought into use and however many pumps were available, one flash flood would cause thousands of gallons of pernicious effluent to flood the valley and poison the water supplies of many thousands of people.

In response to the same series of questions, the Under-Secretary told me that the cost of the work at Ash moor at the beginning of November this year was around £5.6 million. However, he qualified that figure because it is subject to confirmation following negotiations that are taking place with, I believe, the main contractor. That figure also excludes the cost of purchase of the site. I estimate that the cost of the site—a white elephant—is currently in the region of £10 million. In addition, the weekly cost of monitoring and keeping the site is £20,000 a week, or more than £1 million a year just for upkeep. The Minister informed me that if Ash moor were ever brought into use further costs would be more than £1.5 million and that odour control, long-term maintenance, monitoring and testing would cost, in addition, approximately £400,000. Ash moor has been and continues to be a vast waste of public money. I hope that the Minister for Rural Affairs will confirm today that the site will be dismantled and restored to its former use as a peaceful wildlife habitat.

I have never understood why during the foot and mouth crisis the then Ministry of Agriculture, Fisheries and Food did not liaise with local authorities and other local bodies. If it had done so, it would never have made plans for four or five huge pyres within half a mile of Holsworthy hospital. The weather in Devon is far from predictable. Fortunately, after a series of negotiations and demonstrations, we had to suffer only one smaller pyre at Holsworthy, but it is time for Arscott farm to be restored to its former use as a farm.

The events at Ash moor and Holsworthy demonstrate two reasons why we need a public inquiry into what happened during the foot and mouth crisis. West Devon borough council, with the full support of the three political groups represented on the council, wrote to the Secretary of State for Environment, Food and Rural Affairs requesting a full statutory inquiry into the causes, course and handling of the outbreak with the purpose of promoting understanding and an improved response to any further recurrence.

I hope that the Minister will have the opportunity to address some additional points. First, as he knows, due to movement restrictions during foot and mouth, many cattle went over the 30-month limit. I know that he has been tackled about that before. Farmers whose cattle went over the limit suffered a direct economic loss as a result of foot and mouth. Will the Minister reconsider his Department's decision not to pay compensation in those circumstances?

Secondly, there is currently a 20-day cooling-off period for stock movements. We all appreciate that this is important to the prevention of disease, but can the Minister tell us what is proposed for the future? If, following a significant movement, other animals from the same farm cannot be moved for 20 days, that will cause real problems in the agricultural industry. For example, I have bred suckler cattle and if a calf dies, it is imperative to get another one to replace it right away. I hope that the Minister will consider a 20-day cooling-off period only so far as the moved animals are concerned, provided that they are isolated and that proper biosecurity rules are adhered to. It should not be necessary to prevent movements of other animals on the farm for that period.

Thirdly, the European Court of Justice has recently ruled that the French ban on British beef is unlawful. The French have unilaterally decided to disregard that ruling. Will the Minister please tell the House what action the Government propose to ensure that the French abide by the rule of law and do not flagrantly flout it? As the Minister knows, exports add a vital base to prices. Are the Government satisfied with the adequacy of our import controls? We still receive numerous consignments of beef with spinal cord.

Fourthly, speculation in the press has been that the Government are proposing that every British farm should be linked to the Minister's Department by computer and that farmers will have to report regularly to Whitehall on what is happening where on their farms. We do not want the state to run the agricultural sector; we want the industry to be freed up as much as possible. I hope that the Minister will concede that it would be unfair to penalise farmers who cannot, or cannot afford, to go online.

Fifthly, during a debate in the Chamber on 4 December the Minister stated that the Inland Revenue and Customs had given an undertaking to continue to be sympathetic about the repayment of deferred tax and value added tax. I hope that the Government are speaking to the clearing banks on the matter and that they are providing similar forbearance.

Sixthly, the south-west regional development agency worked well during the crisis. As the Minister knows, Lord Haskins recommended an immediate increase in the business recovery fund by some £40 million. The Government's response has been £24 million but I hope that that will be reconsidered and increased. Both West Devon borough council and Torridge district council have made applications under the Bellwin rules. They have incurred substantial extra cost for giving rate relief, so I hope that the Minister will be sympathetic to their requests.

If there is one thing that the Devon tourist industry requires, it is further worthwhile marketing campaigns. I highlight the fact that per capita spend on tourism is £4.03 in Wales, £3.77 in Scotland and only 26p in England. That puts the south-west at a severe disadvantage. The regions of Britain should be treated the same and although I appreciate that tourism is not the Minister's responsibility, I hope that he will make my point to the Secretary of State for Culture, Media and Sport.

At various taskforce meetings during the crisis, I raised the inadequacy of the loan guarantee scheme, which is extremely expensive. The cost of funds is about 4 or 5 per cent. above base rate and the scheme is cumbersome and bureaucratic. I wonder whether there was there any take-up of the loan guarantee scheme during the foot and mouth crisis?

I am endeavouring to get financial support for the Council for Voluntary Services in Okehampton and Tavistock. The voluntary sector is vital in the west country and a mainstay of our rural communities, providing, among other things, child care and some social services. Mrs. Carmel Fanconi and Okehampton's CVS initiated, organised and ran the advice and assistance centre at Hatherleigh during the foot and mouth crisis. Lack of assistance for those services is just one area of concern highlighted by Devon county council in its admirable recovery plan. The council has welcomed the Minister's interest in the initiatives proposed in that plan. Innovative and positive actions have been suggested, and we look forward to seeing him in the west country in January because we know of his commitment to "Taste of the West" and other west country initiatives. The headline in The Western Morning News on 29 November 2001 stated: "Be wise, eat well and we'll prosper". Our regional newspaper launched this campaign and it is designed to achieve a huge increase in the purchase and consumption of local food and produce.

On the positive side, as I said to the Minister earlier in the debate, the people of Devon will overcome this crisis and we are working hard to do so. We do not ask for special favours; all we ask is to be treated like any other region of the United Kingdom.

I congratulate the hon. Member for Torridge and West Devon (Mr. Burnett) on securing the debate, on the content of his contribution and on the manner in which it was delivered. It will be challenging to cover all the points, but if I fail to address them all I undertake to write to him. May I also say how pleased I am to see you here, Mr. Winterton? I am sure that the behaviour of both Government and Opposition Members will be impeccable.

The hon. Gentleman rightly highlighted the problems and opportunities, and the determination of people in Devon that should recover their economy and their communities. That reflects my experience of meeting people in Devon and I join him in thanking the groups to which he referred. Those groups have helped and assisted me by putting forward points in both correspondence and meetings that I have held in Devon.

I endorse the hon. Gentleman's reference to "Taste of the West". It provides a model for other regions of how to achieve a clear regional identity and branding while encompassing within that branding local identity and information about quality. I join him in congratulating the newspaper on highlighting the need for people to pay attention to the impact of their purchasing decisions on the local economy.

I met all the party leaders when I was in Devon in the summer and also received representations from the Devon taskforce when it made its presentation, which was excellent, to the rural taskforce. As the hon. Gentleman has indicated, I shall be meeting its representatives in the new year.

The hon. Gentleman is right to highlight the fact that Departments have given an undertaking to extend the sympathy with which they are dealing with the deferment of tax and other payments. The Secretary of State for Environment, Food and Rural Affairs and I met the clearing banks through their association, and I have met one or two separately as well. We have discussed the problems in rural areas with them and they gave an undertaking to do all that they can to deal sympathetically with customers and to acknowledge the difficulties that many farmers, particularly those who were not directly affected by foot and mouth but who nevertheless lost income, and people in the tourist industry face. In short, we raised with the banks the impact of foot and mouth on both farming and non-farming industries.

Rate relief has been raised by several hon. Members. The definition of those local authorities that can receive help is clear, but my colleagues at the Department for Transport, Local Government and the Regions have indicated that if other local authorities produce evidence, it will be considered. Relief is available to individuals and compensation is available to local authorities and we have sought to target the measures on those areas that were most directly affected.

I can assure the hon. Gentleman that the Government have no plans to use the Ash moor site for the disposal of animal carcases. At the height of the foot and mouth outbreak, the preferred methods of disposal—rendering and incineration—could not keep pace with demand. That was also true in Devon. Before June, when I was a Back Bencher, the question of carcase disposal on a site in my constituency arose, so I am familiar with such problems and I understand local concerns. However, our judgment must be based on the progress of the disease and it is now—thank goodness—well over 60 days since a new case has arisen. We must stand prepared for the possibility of a further outbreak, but I can assure the hon. Gentleman that my officials plan to meet Devon council officials shortly to discuss possible future uses of the Ash moor site in the light of the cost and benefit to the environment and the community. I am happy to expand on this issue, but I recognise that time is short and I am willing to give way if necessary. Work ceased on the site in May in response to the local state of the disease and the need for disposal. In effect, the site has been mothballed.

The hon. Gentleman asked several questions about 30-month limit and 20-day movement issues. One understands the wish of farmers and all those involved in the rural economy to return to normal as quickly as possible, but Ministers must strike a difficult balance between doing so and ensuring that we act only in accordance with the veterinary risk assessment. We must do nothing that might exacerbate the problems, should there be a further outbreak. None the less, I can assure the hon. Gentleman that my colleagues who are dealing directly with those issues are mindful of the wish of everyone to loosen requirements as soon as it is safe to do so.

On the French ban on importing British beef, we welcome the recent judgment and hope that France will comply with it by lifting the ban as soon as possible. It is probably unwise to say more than that at present, but I can assure the hon. Gentleman that we are as keen as he is to see matters progress. It was interesting to hear restaurateurs and others in Paris who were interviewed on the day of the judgment say that they are looking forward to consuming British beef.

On the adequacy of our import controls, I assure the hon. Gentleman that we are looking afresh at the way in which they are implemented. Commercial imports and imports for personal use are both important issues and we are keeping them under review, although I should point out that some of the scare stories are not justified by the evidence.

On computer links, the Department certainly wishes to deal with more business electronically and to make it easier for farmers to do likewise. Using modern methods to avoid paperwork could make a significant difference, and would be very much in the interests of farmers. Many farmers are computer users, so they would not find it at all strange to use such methods. We want to develop that opportunity, but there is no question of each farmer being filmed by a camera as they do their daily work, in the fashion of "Big Brother". In that regard this issue has been reported with a certain amount of journalistic licence.

I certainly endorse the hon. Gentleman's point about the importance of encouraging farmers to act entrepreneurially and to develop a business without being unnecessarily constrained. Of course, some constraints and regulations are necessary in respect of public protection, food quality, traceability and so forth. However, we certainly do not seek the kind of "Big Brother" controls that have been mentioned.

I endorse the hon. Gentleman's emphasis on the importance of the voluntary sector. That is partly why we put a lot of money into match funding for voluntary organisations such as the rural stress action group, which deal with strain and pressure. Those organisations play an important role. The support that they receive, which was increased during the foot and mouth outbreak, comes jointly from my Department and from the Department of Health. Of course, supporting the voluntary sector locally is primarily a matter for local authorities, but I share the hon. Gentleman's view about its importance in reconstructing local communities. In the new Department, we are considering how to increase the ways in which we work with the voluntary sector in rural areas towards that end.

The most important objective for the rural economy is to return it to normal. The hon. Gentleman rightly mentioned the need for further efforts to promote tourism, which was one of the prime recommendations of the rural taskforce. I hope that he has seen the document that was published last week, "England's rural future", which responds to the taskforce report and to the report by Lord Haskins and sets out the progress that has been made in the past year on the implementation of the rural White Paper.

One of the document's most important recommendations concerned the business of encouraging people to return as visitors to the countryside. The taskforce is meeting again tomorrow to discuss that issue with several additional representatives, whose presence will ensure that we widen the discussion about how to promote tourism and visits to rural areas in the coming year. We want to talk to the right people to build up an inclusive campaign in the new year, or as soon as we can be confident that the countryside is open—a situation that we want to accelerate towards as quickly as it is safe to do so. Tomorrow's meeting will include representatives from Devon, and the discussion will form part of the debate in the forthcoming meeting with Devon representatives in the new year.

Tourism is the responsibility of the Under-Secretary of State for Culture, Media and Sport. I have been working closely with him and with several other Ministers to pave the way towards helping the recovery of the tourism industry. The grant in aid was the equivalent of £3.77 per head of population for Scottish tourism, £4.03 per head for Welsh tourism and 20p per head for English tourism. There are many more heads of population in England than in Scotland or Wales.

In the past 30 years, trying to promote tourism in Wales, especially in my own attractive constituency, the capital city of Cardiff, has been an uphill job. That is reflected by the fourth report of the Select Committee on Culture, Media and Sport, which was published in October. The hon. Gentleman would find that interesting reading. In their response, the Government say

"the record of success of tourism in England stands up to any comparison with that of Scotland or Wales".

They say that

"comparisons of grant-per-head of population may be misleading. They say nothing about the extent to which financial support is needed to address market failure in different parts of the UK or about comparative success in attracting tourism earnings."

That is what we should measure. Incoming visitor expectations per head of population in England are higher, at £227 per head, than in Scotland, where the figure is £154, or in Wales, where it is £91.

We need to help tourism to rural areas of England to recover and to grow and I assure the hon. Gentleman that that is at the forefront of my mind. We have introduced a package of measures to help business. The loan guarantee scheme to which he referred is only one of several such schemes. In recognition of the wider impact of foot and mouth disease, we made £74 million available for the business recovery fund—