I am delighted to have been able to secure this debate. The subject is of great interest to the Opposition, and I am grateful for the support of my hon. Friends. If it comes about, the Central Railway scheme would have as great an impact on my constituency as anywhere else. Not only would an area of outstanding natural beauty have to play host to a 14 km tunnel that would take five years to construct, but the railway's operations would have a disastrous impact on the quality of life of thousands of my constituents in Merstham, where the route is proposed to run overground.

Since being elected in 1997, I have spent some time making home visits in order to listen to the noise of trains in tunnels. I and my hon. Friend the Member for Mole Valley (Sir Paul Beresford) have no confidence that the tunnel would insulate those unfortunate enough to live above it. It is therefore unsurprising that, following the scheme's resurrection after its decisive defeat in Parliament in 1996, I have been taking a keen interest in Central Railway's proposals. I note that the Under-Secretary of State for Transport, the hon. Member for Plymouth, Devonport (Mr. Jamieson), is the fourth Minister to reply to debates on Central Railway. I hope that he will be the last.

The scheme's proponents claim that it will meet 75 per cent. of the Government's objectives in moving freight from road to rail, but that it will be done at no cost to the taxpayer. That superficial level of analysis seems too good to be true. Indeed, on the available evidence, one must conclude that the scheme is too good to be true at national level, as well as being too awful to contemplate at constituency level.

When the subject was last debated here—it was in a debate initiated by my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), who is in his place today—the then Minister, the hon. Member for Coventry, North-East (Mr. Ainsworth), was unable to answer my hon. Friend's two simple questions. He had asked whether the Government supported the scheme and, if so, whether they would use the company's proposed vehicle of a hybrid Bill to enable it to escape the usual scrutiny of a planning inquiry. The Minister said that it would be impossible for the Government to take a position until the Strategic Rail Authority had completed its review of Central Railway's proposals.

That evidence was made available to the Government last year, but still no decision has been taken. Indeed, yet more work has been commissioned from the SRA. I regret that, as do my blighted constituents, but I understand the Government's reluctance to give up their pursuit of the crock of gold at the end of the Central Railway rainbow. However, enough is enough. My primary objective today is to invite the Government to state their opposition or their support for the scheme at the completion of the latest analysis.

I want to summarise why the Government should not support the scheme. In the last debate on the subject, the Minister helpfully recited the terms of reference that the Government had given the SRA, and they are listed at column 54 of the Westminster Hall debate of 6 March 2001. Because of time constraints, I do not intend to repeat them, but any analysis based on the Government's terms of reference will show that the scheme should fail.

First, on volume, market share, revenue and operating forecasts, the conclusions of chapter 3 of the consultants' report, "Market and Revenue Forecasts", are devastating for the Central Railway proposal. Central Railway claims that within three years it will win a 35 per cent. market share of all freight currently transported by lorry or container between the United Kingdom and the continent via all French, Belgian, and Dutch ports and through the channel tunnel. It is claimed that that market share will generate revenue of £1.4 billion in 2011. That is based on the market continuing to grow at historic rates of 6 per cent. per annum. Central Railway claims that that figure is conservative, but I regard it as heroic. However, from what we know so far, the SRA is in no position to advise the Minister that those market share assumptions are valid. The SRA's report states:

"Central Railway's investigation of the price elasticity of demand in the UK showed that a 10 per cent. reduction in tariffs would generate a 27 per cent. increase in volume. The consultants were not told whether a 10 per cent. increase in tariffs results in a 27 per cent. reduction in volume."

The consultants went on to say:

"The traffic forecasts are highly dependent on the assessment of price elasticity and customer mode switching behaviour, however demand is very price sensitive. The model does not assume any competitor reaction to Central Railway, it is almost certain that improvements would be made to the competitor offer…MDST concludes that a 40 per cent. market share is unattainable"

and that

"the haulage rates used are totally unrealistic."

Yesterday, I asked Chris Savage, the director of government affairs at Central Railway—I am grateful to him for taking the time to come and brief me—whether any further work had been carried out on the economic forecasts. He told me that it had not. That updates the SRA's consultants' statement that

"Central Railway has not yet carried out any further market research to test specific service/price propositions and provide a validation of its initial assessment of buying behaviour."

The whole scheme rests on one survey of 200 road hauliers conducted by the proponents of the scheme. In a paper exercise, the hauliers responded overwhelmingly to a question about price. In the real world, it will not work like that, even if the price data are reliable. For example, Central Railway states that the scheme

"assumes that Transport firms would use the unaccompanied service if the cost saving justified it."

At the moment, Central Railway is proposing that lorries will go on trains without their drivers. Quite apart from the inherent inflexibility of rail compared with road, Central Railway appears to have taken no account of the fact that a significant percentage of the road haulage industry is represented by owner-drivers who are unlikely to want to put their lorry unaccompanied on a railway. There is no discount factor in its calculations for that section of the road haulage industry. Its calculation is based solely on its price claims.

The Minister said in the previous debate on 6 March 2001 that operating costs were part of the SRA's remit. The SRA states:

"As part of our review, we sought back-up for the operating cost assumptions. Central Railway told us that these had been provided based on advice from France (SNCF)."

It is, at the very least, inconsistent for what is supposed to be an entirely commercial scheme to rely on advice about operating costs from a nationalised and highly subsidised business. The Minister will have noticed that the SRA's consultants dryly report:

"The costs do not appear to have been benchmarked against any current UK experience or supply market tested."

On capital costs, at the time that the consultants' report for the SRA was completed, Central Railway did not have a comprehensive costed schedule of all the work that is required to be undertaken for the total route. According to the information that I received from Central Railway yesterday, that remains the case. Even the most superficial examination of the capital costs, related solely to the work in my constituency, suggests that the ballpark estimate of £4 billion for the construction costs must be way off the mark. Central Railway claims that the 14 km tunnel that will end in an unspecified place in my constituency between junction 8 of the M25 and the A23 will represent 10 per cent. of the cost. It does not know where the tunnel will go, which is a comment on the quality of its proposals. In 1999, my hon. Friend the Member for Epsom and Ewell (Chris Grayling), his predecessor, Sir Archie Hamilton, and I met the chairman of Central Railway. We had to point out that the company's paper exercise on where the line would run showed that one end of the tunnel would come up in the middle of a housing estate in what was then Sir Archie Hamilton's constituency. On the basis of that information, the tunnel's planned route was changed, but there is still an almost total lack of detail about this important matter.

I do not want to stop my hon. Friend in mid flow, but I am sure that he agrees that all our constituents face a big problem because their properties will suffer blight as long as the plans and the route remain uncertain. Admittedly, that blight has been masked by the rise in house prices, but it is blight all the same. Something must be done quickly, which is why I am sure that my hon. Friend will urge the Government to say no to the plan as soon as possible.

I am grateful to my hon. Friend. One can see from the presence of so many hon. Members today that there is concern among constituents, who are experiencing real hurt because of the loss of asset value of their properties. The Central Railway proposition has been kicking around for seven years, and anyone living near the proposed route or routes has suffered property blight. The Government owe it to our constituents to end that uncertainty, and the primary objective of today's debate is to enable the Minister to give an undertaking to do so.

My hon. Friend will see that several Opposition Members from Buckinghamshire are here to support him. Do the figures that he received recently from Central Railway include estimates by Chiltern Railways of the costs involved? Chiltern Railways recently received a new 20-year franchise, and is probably the best train-operating company in the country. It says that the wide gauge of the Central Railway trains would require every station on the Chiltern line to be rebuilt and new tracks to be installed. It also notes that Central Railway's ill-thought-out proposals could be achieved only by constructing two entirely separate tracks along the Chiltern line. Has my hon. Friend received any estimate of the vast costs and disruption to our constituents and the local economy?

The answer is, of course, no. Indeed, I do not think that Central Railway has any idea of the costs that would be incurred, which is part of the difficulty with the scheme. As the Strategic Rail Authority's consultants told the Government, there is still a complete vacuum as regards details of how the scheme will operate alongside existing railways, such as the Chiltern line. My hon. Friend has given a classic example of the risk factors involved in such schemes. As she said, they have not been quantified at all in this case.

I congratulate my hon. Friend on his approach to the matter, and I strongly agree with him and with my hon. Friend the Member for Uxbridge (Mr. Randall) on the question of uncertainty. Does he accept that people up and down the M25—I refer particularly to constituents in Byfleet and West Byfleet—have faced blight for years? That uncertainty is damaging, and it is vital to reach a conclusion quickly and to oppose the proposal.

I am grateful for my hon. Friend's support for my central proposition, which is that the Government must make a decision at the end of the period of analysis. I hope that the Minister will give us and our constituents comfort on the matter later in the debate.

Central Railway claims that the tunnel, one end of which will be in my constituency, will take up about 10 per cent. of the construction costs of the whole railway—£400 million. Nearly two decades ago the channel tunnel cost £100 million per kilometre, four times the price that Central Railway claims for the proposed tunnel under the North Downs. It proposes that the railway will exit the tunnel and run alongside the M25 and M23 past the Merstham estate in my constituency. Any examination of the substantial cuttings and embankments that make up the boundary of the motorways at that point will demonstrate what a huge civil engineering undertaking that 3 km stretch alone would be, let alone what the Highways Agency would have to say; I am not even sure that it has been consulted. On the evidence of my eyes, I cannot believe Central Railway's capital cost forecast for the scheme.

The Minister will also know that the chapter on technical feasibility and deliverability of the scheme in the SRA consultants' report is far from a robust endorsement. The consultants said that, to clarify feasibility further,

"There will be a need to communicate and operate the route with interfaces with Railtrack as the UK's prime infrastructure owner. Each interface constitutes a risk to the operation of the networks. These risks have yet to be quantified which can only occur when the dialogue with Railtrack, the TOCs and the SRA has been undertaken on a more focused basis."

That is the point that my hon. Friend the Member for Chesham and Amersham (Mrs. Gillan) made and it is reinforced in the report that is before Ministers. If the Minister does not get satisfaction on those points, it will be a serious indicator that the Government should reject the request for a hybrid Bill.

Central Railway has been around for over seven years; longer than Railtrack or the train operating companies. The fact that it has been unable to address the issues with them in a serious way, and to find solutions, must give us cause to doubt the robustness of the proposal, which throws up myriad serious planning concerns, not least in my constituency, as some of my hon. Friends have mentioned. One can understand why the company wants a hybrid Bill. The Government should not give their weight to any scheme that poses as many serious planning issues the length of the country as this one does, if that enables the issues to escape proper public scrutiny.

I hope to say more later, but I should like to highlight the inclusion in the scheme of terminals for trans-shipment from road to rail. One is proposed in my constituency in an area that is already saturated with traffic, and to which it is intended to attract lorries from a 200 km radius. Such issues and their implications seem to be totally unaddressed by Central Railway.

My hon. Friend makes the point extremely well and I agree with him. I am glad that I do not appear to be getting a terminal as well as a tunnel. The point about planning is central. A hybrid Bill would be the most inappropriate vehicle for this scheme. Planning blight is well documented and has already been mentioned—many of our constituents have been badly affected. After seven years, those constituents and other people who have suffered damage as a result of the scheme are now owed certainty from their Government.

My hon. Friend has kindly raised the question of certainty. That is much in the minds of my constituents, as they still have hanging over them the possibility of a service station at Downside. This morning's papers report that consultants now say that the M25 should be widened further. That will undoubtedly affect my constituents and his, and it means that the Central Railway plans will be subject to many other considerations that the Government will have to take into account. We will not know the outcome for some time unless the Government are decisive and reject at least that element of uncertainty.

I am grateful to my hon. Friend, as I had not been aware of the precise points that he made. The M25 has recently undergone an extension, not least through Reigate. The junction of the M25 and M23 is a central point, and no doubt the motorways will be developed beyond the present four lanes. To put a railway line bang alongside the M25 and M23 would be unacceptable to the Highways Agency, I imagine, as it would preclude expansion of the motorway network in decades to come. Consultation has not taken place on such issues, which is another nail in the coffin of the Central Railway scheme.

I have a question on blight. My hon. Friend will be aware that Central Railway maintains that it has an innovative compensation scheme for people who are likely to be affected. Has it suggested how many people might benefit from that scheme? Does not the firm retain control over who is offered the compensation package?

My hon. Friend is right. On superficial reading, the compensation scheme seems excellent, but one then has to read the small print. In the end, Central Railway decides who has access to the scheme. As there is no one else to adjudicate on access, the decision will be taken by Central Railway.

Will the hon. Gentleman give way?

In a moment.

However good the compensation scheme looks at first, I regret to say that it is not robust enough to survive analysis. Perhaps the hon. Member for Luton, North (Mr. Hopkins) will suggest that the scheme has changed since it was last presented to me, but that is currently its fatal flaw.

Does the hon. Gentleman not accept that the scheme proposed by Central Railway was praised by the then Department of the Environment, Transport and the Regions? The essence of it is that it will pay enough to compensate people. There have been examples of negotiations with possible trackside homeowners in which they have agreed to accept compensation under that scheme.

I am grateful to the hon. Gentleman, because he makes the point that the scheme is superficially generous and sounds good. However, in preparation for the debate, I asked Central Railway in a letter whether entry to the property owners' compensation scheme was a matter for the company's discretion. Central Railway replied that the provisions of the property protection scheme were at the discretion of the company, and pointed out that they were more generous than the statutory arrangements. It also said that people would continue to have their statutory rights under the scheme. The scheme sounds very nice, like the whole Central Railway proposition, but the detail is lacking. It is in the detail that the scheme fails.

The essence of the compensation scheme as I understand it, is to underwrite the value of a property, and thus make it tradable while the blight continues. Is not the real weakness of the scheme that the guarantee is only as strong as the company that makes it? That company is thinly capitalised and likely to go belly-up if the scheme itself does not proceed.

Quite.

I want to return to capacity. Some other points may be dealt with in other hon. Members' speeches, and I will hurry to a conclusion to allow time for others to contribute.

The channel tunnel is a vital choke point for the scheme, but it does not have enough capacity for Central Railway's projections alongside those of everyone else. There will be a mix of demands from different rail operators through the channel tunnel. Central Railway must operate throughout the day to handle its forecast volume of ad hoc lorry traffic. It suggests that peak arrivals in 2010 will be 403 units an hour. That includes 10 Central Railway trains, increasing to 15 trains an hour by 2020. However, by 2010 the tunnel will be approaching capacity, based on the projections of the Eurotunnel shuttle and the high speed Eurostar passenger traffic from St. Pancras. Simply put, there may not be enough capacity in the tunnel to meet Central Railway's plans. In response to that potential showstopper, Central Railway challenged the assumptions of Eurostar and Eurotunnel, but why should their assumptions have less merit than those that underlie the Central Railway proposition?

The quality and detail of the Central Railway proposal has always been the problem, which is perhaps unsurprising given the nature of the company. It employs fewer than a dozen full-time equivalents, has only one corporate shareholder and its proposed project manager is an American company called Parsons, which owns only 8 per cent. of the equity. The remainder is owned by the directors and employees. The entrepreneurial nature of the company is at one level to be admired, but the Government would be in wholesale dereliction of their duty if they invited Parliament to pass a hybrid Bill on the basis of the scant information available now from that little company.

The latest report from the SRA leaves more questions unanswered than answered. It has exposed a project built on unreliable evidence. In the words of the disclaimer on Central Railway's own information document, "The business case for Central railway":

"While every effort has been made to ensure the accuracy of the information in this document, no responsibility can be taken for errors or omissions made."

The Minister will be aware that the Government cannot properly make such a disclaimer—certainly, we understand that to be the case under the new management of his Department.

The Government are providing Central Railway with a third opportunity to refine its superficially attractive proposals for a freight railway line from Liverpool to Lille. On examination, the proposal seems an entrepreneurial and environmental catastrophe waiting to happen. The SRA will finish its next assessment of the revised proposals in September. The Government must then be willing to put this half-baked scheme out of its misery.

I congratulate the hon. Member for Reigate (Mr. Blunt) on raising this important subject, although I take a different view of the scheme. I am a strong supporter of the concept of Central Railway and look forward to the Government, in time, making a positive decision to accept and support it.

If the scheme's merits are so self-evident, why are its promoters reluctant to use the established procedures for obtaining approval, as laid down in the Transport and Works Act 1992, and seeking instead to shelter behind Government support in the form of a hybrid Bill?

The hon. Gentleman would have to ask the company that question. The hybrid Bill route is one way in which to achieve Government support and involvement, which is important for a scheme of such national consequence. It might be easier to get the scheme through under a hybrid Bill than by using the measures under the Transport and Works Act 1992.

The hon. Gentleman has hit the nail on the head. Of course it would be easier to get the scheme through under the hybrid Bill procedure because it would avoid the planning constraints and public inquiries that would normally take place. In other words, by that means, the scheme would avoid proper public scrutiny. Does the hon. Gentleman not think that that is an inappropriate way in which to proceed with such a scheme?

No, I do not think that it is an inappropriate way to proceed. Of course, any Government involvement would necessarily mean that the Government would have to take careful account of all interests involved, especially those affected by the route. No Government would ride roughshod over people's feelings and interests—certainly not this Government.

I have been involved with the scheme for the past seven years, but I should emphasise that I have no pecuniary interests in the matter. I have had lunch with people from the company on many occasions, but have always insisted on paying for myself, because there is no such thing as a free lunch. I believe profoundly in the scheme, which would make a vital contribution to the nation's transport infrastructure. A dedicated freight link between the industrial heartland of Britain and the continent, especially from the north, is essential.

How can it be a dedicated freight line when its proponents intend to share the track that will run through my constituency and the constituencies of several of my hon. Friends with Chiltern Railways, which says unequivocally that shared use is incompatible?

It is essentially a freight scheme. Clearly, extra track will have to be built in some areas, but the scheme will mostly use unused track bed and unused tunnels. I do not dispute that there are likely to be technical and civil engineering difficulties, and, indeed, social and economic difficulties on the route. Those will have to be dealt with and paid for, but that is insufficient reason to prevent this great scheme from going ahead.

The north-west of Britain and south Yorkshire have suffered serious economic decline in recent decades, and it is vital to link peripheral economies with the continent of Europe. We are experiencing increasing gridlock on our roads, which increases the difficulties for lorries such that reliability will soon be impossible for the road haulage industry. This turn-up-and-go rail scheme will guarantee delivery to the continent of Europe in a few hours and will have tremendous cost advantages for road hauliers but, more importantly, it will have the advantage of reliability and will breathe new life into northern economies.

Roads beyond south Yorkshire and south Lancashire can still cope because traffic density in the area is not as great, but roads further south are already clogged, and getting worse.

Does the hon. Gentleman agree that the objectives that he has outlined of revitalising northern economies could be achieved as easily by the alignment of a freight-only railway to the east of London, and that such an alignment would fit more comfortably with the Government's policy of regenerating the Thames gateway? Can he see any reason why the railway would have to pass to the west of London?

No. I do not think that there is an argument for any alternative. The original scheme proposed a long tunnel from Olympia to Croydon in the constituency of my hon. Friend the Member for Croydon, Central (Geraint Davies). There has now been a new proposal, but I do not think that there are other alternatives. It is important to ensure that the scheme goes ahead, so that there is an aorta—a lifeline—between the northern and midland economies of Britain and the continent of Europe. It will form part of the trans-European networks on which the European Union is so keen. I have some criticisms of the European Union, but in this respect, I am on its side. I believe that there is also some sympathy for the scheme among Commissioners in Brussels. That may not persuade all Opposition Members, but the scheme is important to our economy.

The major advantage of the scheme is that it will use super gauge—large height and width gauge—so that full-scale lorries can be put on to trains and rolled off at the other end. It will not require investment in cut down trucks or special lorries—a key advantage for hauliers. The gauge will also permit double stacked containers, although the channel tunnel cannot take two full-size containers. It can take one container of 9 ft, 6 in and one of 8 ft, 6 in, but not two containers of 9 ft, 6 in. If the channel tunnel were built slightly larger, double stacked full-scale containers could have been used all the way through.

The hon. Gentleman has just given an example of how the scheme fails in the detail. There is no dispute about what appear from his argument to be the superficial attractions of the scheme. I agree with him about the desirability of the strategic objective that Central Railway appears to deliver. The problem is that the scheme simply fails on both the business and the practical cases. Double stacking, which was in the Central Railway proposals for some considerable time, is a classic example: it failed to measure the size of the proposal against the size of the channel tunnel. That rather suggests that the scheme is under-prepared and under-resourced in terms of research. It would be wholly improper of the Government to invite Parliament to support a hybrid Bill on the current evidence.

The primary attraction of the scheme is to put lorries on trains. Another attraction is that it can take containers and double stacked containers up to a certain size. The limiting factor is not Central Railway, but the channel tunnel. The problem is the lack of foresight of those who built the channel tunnel.

Does the hon. Gentleman agree that to the extent that it is possible to stack double containers or to have full-height lorries going on at ambient level in journeys within the United Kingdom, the environmental impacts in the rural parts of our constituencies will be considerably aggravated?

I thank the hon. Gentleman for his intervention, but the alternative is more lorries on roads. As the M1 goes through my constituency, I am very conscious of the impact of lorries on roads. Trucks damage roads, and motorway congestion is caused by road repairs necessitated by that damage. Axle weight is crucial. The fourth power road law suggests that road damage is proportionate to the fourth power of an increase in axle weight. If the axle weight is doubled, road damage is multiplied by 16; if it is trebled, it is multiplied by 81 and if it is quadrupled it is multiplied by 256. If there were no lorries and only cars on the motorways there would be almost no damage. There would be almost no congestion due to road repairs because the motorways would last for such a long time. It is lorries that cause the problem. We will have to have lorries on the motorways for the foreseeable future, but if we take a significant proportion of them off the roads, there will be less road damage and lower costs to the Government.

I am grateful to the hon. Gentleman for giving way. I appreciate his point as a generality, but there is a practical issue. Those lorries will have to get on to the trains at some point. Terminals have been projected by Central Railway and one is to be located in my constituency. The hon. Gentleman will know the geography of my constituency well enough to realise that the area is currently entirely saturated with traffic. Far from reducing the volume of lorry use in the area I represent and the surrounding districts, the scheme, if Central Railway is successful, will multiply it by an almost infinite amount. Yet here is a proposal—

Order. This is becoming a speech. Will the hon. Gentleman bring his intervention to a speedy conclusion?

I will do so. The issue has not even been addressed in Central Railway's own proposals.

I thank the hon. Gentleman for his interesting intervention. The bulk of the traffic will be international and will go from the north right through his constituency. But there will clearly be some terminal loading and offloading in parts of Britain too. Inevitably there will be some disruption in certain areas to get this great scheme to work. The alternative is for all that traffic to go on roads through Kent and other beautiful southern counties instead of on a relatively narrow rail track at a rapid rate, with several trains an hour and many lorries on each train.

The loading and offloading will be very quick. I visited France last year with the rail freight group and a number of hon. Members from both sides of the House. We saw the modern technology for loading and offloading lorries. It is very speedy: it takes a second for a truck to drive on at an angle, straighten and go off the other side. One can take the tractor on the train or leave it behind. The technology is advanced and is in place—indeed, the technology for building railways has existed for a century and a half. No new trickery is involved; it is very straightforward. The costs are nowhere near as questionable as hon. Members have suggested.

I hope that the hon. Gentleman will forgive me, but there are just 20 minutes before the Front Bench speeches start and at least five other Oppn Members want to speak. The hon. Gentleman has been speaking for 14 minutes. Does he intend to convey the impression that he is filibustering?

I must come to the defence of the hon. Member for Luton, North (Mr. Hopkins), who has given way many times. However, we need to start the winding-up speeches in 20 minutes and several hon. Members have indicated a wish to speak. I want to call at least four hon. Members before then. I hope that hon. Members will show self-discipline.

I will draw my remarks to a close soon. I thought it important to take interventions and I am trying to be generous, but that cuts into other people's time.

The key issue is the future of our country, in terms of its environment and economy—particularly the northern economy. Many hon. Members live in areas of high unemployment and some look forward to the development of terminals in their constituencies because they provide much employment to people in the construction industry. The scheme would provide other economic benefits.

The central economic point is that we do no service to the British economy if we initiate a scheme that turns out to be entirely uneconomic when the business case is examined. That would suck resources from the economy rather than improve it and do damage to the whole economy, including businesses in the north.

I shall round off my remarks by saying that that is not the view on the continent of Europe. Last year I visited France with the rail freight group; we saw massive investments in rail freight and passenger services. We should go the way of France. It is building new passenger lines and using the older network as a dedicated freight network for the whole country. It takes railways seriously; it invests two and a half times what we do in railways every year. That is the way forward. Railways take traffic off roads. Roads and road damage are causing problems and the country would be grateful if the Government sensibly allowed the scheme.

I have been to two revenue forecast presentations by independent consultants. Both concluded that the revenue case is very strong. I see no possibility of the scheme not working, given the enormous demand for north-south freight traffic in Britain. That traffic is currently crowded on to our motorways and up to the equivalent of one motorway lane would transfer on to the proposed railway. The scheme has a great future and I hope that the Government will eventually promote it.

I hope, unofficially, that subsequent speakers will restrict their remarks to four minutes. That would enable most hon. Members who wish to do so to speak. [Interruption.]

Long may the peace continue.

I first came across the proposal as a member of the Committee that considered the channel tunnel rail link. The Committee sat in this very Chamber—it was then known as the Grand Committee Room—from February 1995 to February 1996, and we sat for long enough to walk from London to Madrid at a leisurely pace. During the 300 hours of sittings, we considered the then proposal for the Central Railway.

We are short of time today, but I must say that the proposal now before us is a much-improved one. It is entirely consistent with the Government's strategy of getting more traffic off the roads and on to rail. That will benefit Hinckley, a main town in my constituency of Bosworth in the middle of England. It is absolutely right that the Govt have asked the Strategic Rail Authority to make further investigations that will answer many of the questions raised by those of my hon. Friends who may not view me as a particular friend in this debate. I apologise to them.

The hybrid Bill procedure that was used for the channel tunnel rail link legislation is the correct one to use. That quasi-judicial Committee dealt with a complex measure and had to fix many important aspects of that route and to make decisions about tunnels.

I am also impressed that the funding for the railway is intended to come from the private sector. If the money does not come, the railway will not be built and the private sector will decide on the merits of the proposals. They are not right yet, and I know that my hon. Friends the Members for Runnymede and Weybridge (Mr. Hammond) and for Reigate (Mr. Blunt) feel that strongly, but the proposals are well on the way.

Let us not forget that the Sheffield, as the Great Central railway was originally called, was propelled south from Sheffield through Loughborough, Leicester and Rugby at the end of the century. It came into St. Marylebone after upending the pitch at Lord's, and that is why there is a slope on the ground there. It was the finest railway ever built in Britain, and many in the midlands think that the wrong line was shut. Beeching should have shut the Midland and not the Great Central railway. To rebuild the section between Princes Risborough and Rugby would be relatively easy, because most of the track bed is in place. It is also a very level railway. As the hon. Member for Luton, North pointed out—I shall not use the same terminology—it was built to Berne gauge, so one of the greatest tunnels ever built, the great tunnel at Catesby, is built to Berne gauge. The "cage" at Rugby is still there where the Central railway crossed the west coast main line. It was a superior railway.

The proposal to rebuild the Central railway on a new route around the M25 makes a great deal of sense. I had a long discussion on Friday with Albert Sharpe, a former railwayman who is a consultant in my constituency, and he spoke about the upgrading of Hinckley station to take heavy goods trains and the ability to run more traffic on the upgraded new line. That is the right approach.

All the problems that my hon. Friends have described will be resolved quite simply and all the planning blight will disappear when the line is built. There will be no relief until the line is built. It is the obvious option and we need the line in the midlands and the north. If this proposal is kicked into touch, there will be another proposal for the Central railway, as the track bed is largely in place. If one studies the map in the Library, one sees that the proposal would use mainly disused railways, and the hon. Member for Luton, North is nodding as I make that point. There is inevitability about the proposal. The line will be built sooner or later. It is in all our interests to build it—and the sooner, the better.

In principle, it is a good idea to have a north-south freight railway that links to the channel crossing. However, in practice, the proposal is flawed and faces many political and business problems. The financial risk that would be involved in the Government promoting the current scheme would be enormous and the opportunity cost of the money that they would end up spending to bail out a business failure could be better invested in the main transport infrastructure that we so urgently need.

I have several specific problems with the proposal. As Members will know, a cursory glance at the projections for the channel tunnel shows that it is expected to reach capacity in terms of Eurotunnel and Eurostar by 2010. There is no prospect of widening the tunnel or building another, so the proposal is immediately reduced to a north-south rail link, leading on to ferries. It may be a good idea to have such a link, but we should not pretend that any of the freight would be able to go down the tunnel.

Doubledecker containers and stacking on trains have been mentioned. An earlier proposal presumed that doubledecker trains could go through the tunnel, but in fact they cannot—we cannot get them under bridges, for example. That shows how early on we are in pushing forward the proposal. We must consider the detail, because it is not the case that everything will be all right once the proposal has been considered. Whether trains fit in tunnels is a fundamental issue, and the fact is that they will not. The smaller trains will fit, but there will be no opportunities for them unless Eurotunnel and Eurostar give up some of their capacity, and obviously they will not.

The business analysis assumes that the trains are filled to 100 per cent. capacity, but empirically one finds that they are more likely to be filled to 50 per cent. My hon. Friend the Member for Luton, North (Mr. Hopkins) said that there would be no delay in loading and offloading, but in reality if a lorry breaks down in the queue on the way to a train, the train will be delayed and will not get through the tunnel or will not get its slot. The assumptions are based on perfection, but clearly we live in an imperfect world. In reality, delays occur and have a knock-on effect on efficiency.

A haulage company owner wants to know that his product will go from A to B in a certain time. Obviously, there are congestion problems and delays on the motorways, but it would require only a series of unexpected delays on the trains for a client suddenly to go on to the roads, and the fixed costs in the infrastructure—interest costs and so on—would become difficult to pay. The private sector—the consortium that backs the project, in the first instance—would then go into quick liquidation, and the public sector would have to pick up the tab. If there were a multi-billion pound investment in a north-south freight link, ultimately the Government would be required to finish the project once it had been started. We would then have an enormous white elephant and a massive problem for taxpayers.

I know that many other hon. Members wish to speak, but I am concerned about the risks down the line for Government and taxpayer. I am concerned about ownership of the line passing to Central Railway and about public accountability. The train-operating companies, Her Majesty's railway inspectorate, Eurotunnel, Railtrack and so on appear not to have been properly consulted. I hope that the Government are not suggesting that the proposal will hurtle ahead, but that it will be properly evaluated and the opportunity costs of alternative risks and investments properly considered. That would allow us to get more freight on to the railways, but not on the back of a rather hare-brained scheme.

I am no opponent of rail freight in principle. I would very much like Daventry international rail freight terminal to be used more intensively. However, the Minister is well aware of the difficulties with security in the channel tunnel, and this debate has brought out well the long-term constraints of that tunnel in terms of a separate rail link. For that reason, I have serious reservations about the Central Railway proposal.

I have not spoken on the matter previously, not least because I thought that as we were likely to consider it under the Transport and Works Act 1992 procedure, I should operate quasi-judicially and wait until we had a scheme to consider. I would have fewer inhibitions about making my views known if the measure were to be introduced as a hybrid Bill. I suspect that, like me, most of the Opposition Members here today are concerned about the environmental impact on their constituencies. That concern is proper, especially with regard to my constituency, as the railway would transect it from south-east to north-west over a 30-mile area and would have a major environmental impact. My singling out of particular places in no way removes the generality of my concern.

In Brackley, the major viaduct of the old great central line was demolished some years ago, and rebuilding it would cost some £10 million. It would also be necessary to produce a new alignment around the housing and industrial developments that have been built since its removal. In Helmdon, flora has developed within the old cutting, making it a site of special scientific interest. At Woodford Halse—the old marshalling yard and engineering base of the great central line—a housing estate has been built across the line. The village of Lilbourne—the newly proposed diversion route from Rugby in the far north-west of my constituency that adjoins the Leicestershire border—is already heavily beset by the M1, and would suffer further major environmental, visual and aural intrusion. The bypass would also have major implications for any restructuring of junction 19 on the M1.

I want to emphasise how different things are now from 1963, and the different concept of the scale, frequency, visual and aural intrusion of the trains. I add my concerns to those developed so adeptly by my hon. Friend the Member for Reigate (Mr. Blunt). My abiding concern, which echoes that raised by the hon. Member for Croydon, Central (Geraint Davies), is that it may be possible to find some answers to these problems, or even to produce a scheme that would be acceptable to some extent, although many of my constituents will never accept it however good the package on offer. However, the costs are enhanced each time a difficulty is identified and addressed. My greatest fear, especially with the hybrid Bill procedure, is that the Government must stand behind the scheme. If it runs into financial difficulties with its private sector backers, the Government will have to step in and finish it off or be left with a half-finished scheme. There is the danger of having an environmental impact, but no benefits. That is far too high a cost to pay at present.

I congratulate my hon. Friend the Member for Reigate (Mr. Blunt) on introducing the debate on a matter of great concern to my constituents and those of other hon. Members here today.

There is no doubt that the idea of switching freight from road to rail is attractive. The problem, which we explored thoroughly today, is that the scheme does not and will not work. My hon. Friend the Member for Bosworth (Mr. Tredinnick) says that there is an inevitability about the scheme, but the only inevitability is that it will fail. It would be better for it to fail at an early stage—although we cannot describe the stage as early even now as it has been going on for seven years—rather than for it to lumber on causing further blight and unhappiness along the way before finally petering out. The financial case for the project is extremely weak. I speak as someone who in a previous incarnation acted as an adviser to Eurotunnel. We all know that the project encountered significant financial difficulties despite the huge amount of backing and careful planning, and the Government's full support. This project has none of that. It is weakly thought through, under-capitalised, and based on a wing and a prayer. A survey of 200 businesses is not a sound basis on which to construct a business case for a project that could cost £6 billion and affect freight movements across Europe.

I am also concerned about the project because of its impact on my constituents, particularly those in South Godstone, South Nutfield and Bletchingly. I have been formally approached by the director of environmental protection for Tandridge district council to express its grave concern about the impact that the project would have in an area of both green belt and outstanding natural beauty. I had hoped that the project had died in 1996, but someone forgot to put a stake through its heart. I hope that the Minister will do that at the earliest opportunity.

I should like to make three points. First, on blight, the Government must do something about the situation that our constituents have experienced as a result of the Central Railway proposal. It appears as though a relatively small company can propose a scheme that creates a blight, which is revealed on local authority searches and makes it virtually impossible to dispose of property, with absolutely no obligation to make progress with the scheme. The Deputy Prime Minister said in 2000 that he hoped that an application under the Transport and Works Act 1992 would be made imminently, but we still have not seen any progress. It offends my sense of natural justice—as it must do the Minister's—that this blight can be imposed without any obligation on the scheme's promoter to move things forward.

My second point relates to the scheme's substance. If the Government are considering using a hybrid Bill, the scheme that is covered must optimise the proposals in public policy terms. As I suggested earlier, the alignment of Central Railway's proposal around the southwestern quadrant of the M25 runs contrary to Government policy to promote development in the Thames gateway. If it were a purely private scheme going through the planning process, it would be up to the promoters to decide which scheme they wanted to introduce. If the Government are going to support the scheme actively through a hybrid Bill, it is incumbent on them to ensure that it is the most appropriate in terms of public policy.

My third point concerns the appropriateness of the hybrid Bill mechanism. It is not appropriate for the Government to offer shelter and protection to such a scheme. They should not actively support a private scheme that runs counter to public policy in some respects and will effectively put them in the position of promoting one company's proposal rather than opening the field for competitive bids for a north-south rail freight scheme, which my hon. Friends and I would recognise as a good idea in principle. There is a perfectly good mechanism for determining the planning aspects of such a scheme, which is the 1992 Act. The Government introduced a consultation paper on planning for major infrastructure projects, and their approach is to build on what is currently made available by the 1992 Act. It would be wholly inappropriate for the Government to allow this scheme to bypass the proper controls and mechanisms that already exist.

The Government have it in their power to relieve the misery of my constituents and to put an end to the blight that they have suffered during the past three years. I urge them to do so without further delay.

I totally agree with the hon. Member for Luton, North (Mr. Hopkins) about the general desirability of a scheme to take freight off the roads and put it on to rail, but it must be matched against the reality of the project's details. It may be right and necessary for individuals in my constituency to suffer a diminution in their quality of life for some greater good, but we must consider the scheme's details. They are incompatible with the current use of the Chiltern line, which has been encouraged by the Government and is likely to take many road users off the road and on to the train service to London. That alone should encourage the view that the current proposals are fatally flawed. Furthermore, the location of the freight terminal proposed for my constituency, which remains obscure under present proposals, is truly extraordinary in view of the saturation of the road network, amply demonstrated in a recent planning inquiry into another road/rail depot to be located close by.

That is why we should be deeply sceptical about the proposal. It is not an ordinary proposal, but one seeking Government backing. As I tell my constituents, it is no good blaming the proposers. I may believe that the proposal is flawed, but in a free country anyone is entitled to suggest it. However, the proposers want a hybrid Bill, which places a serious responsibility on the Government to determine their view of the scheme. I hope that the Minister's response today will demonstrate that, in the absence of detailed planning, the Government will be hostile to the scheme and that they will reassure us about the need to remove the planning blight that is harming my constituents and others.

I thank hon. Members for their co-operation.

I congratulate the hon. Member for Reigate (Mr. Blunt) on securing the debate. In the eight or so minutes available, I hope to do justice to this serious issue.

The Liberal Democrats support the principle of moving freight off roads and on to rail. On paper, the Central Railway proposal looks attractive. We agree that using rail for freight is a good idea, but the implementation and impact of the proposals is the key issue. Hon. Members on both sides have raised important questions, to which I hope the Minister will respond shortly.

The proposal should not be allowed to proceed without a satisfactory and full environmental impact assessment. It should not allow the Government to escape from improving the national rail infrastructure, but the proposal is certainly preferable to the six-lane Birtway floated a few weeks ago.

If the proposal goes ahead, will the Government ensure that a full environmental impact assessment is carried out? To what extent will the Government accept financial exposure for the project if it first succeeds but subsequently fails? Many environmental claims have been made about the proposal. Apparently, 3 million lorry movements per year will be removed from the roads. Central Railway has a memorandum of understanding with several national environmental agencies that will ensure that agreed proceedings for assessing and managing environmental impacts are followed. Will the memorandum of understanding be binding?

The proposal suggests seven terminals, perhaps five of which could be located in industrial or brownfield areas, leaving at least two on greenfield sites. Will that contravene any of the Government's greenfield or green belt policies?

Hon. Members have referred to the hybrid Bill. Do the Government support that route or the Transport and Works Act 1992 route? Given the level of concern across the country, proceeding with a hybrid Bill would be a risky venture for the Government, so I hope that they will reflect further on the Transport and Works Act, which would allow more detailed consideration of the proposals. The timing of the Government's plans to overhaul planning procedures for major infrastructure projects might enable them to follow that route in preference to a hybrid Bill.

Many hon. Members have referred to the proposal's impact on rural areas. What can the Government do to alleviate such anxieties if Central Railway's scheme goes ahead?

What consideration have the Government given to one of the greatest matters of concern: the proposed railway's integration with the rest of the network and its compatibility with Chiltern Railways? Is it possible to run a dedicated rail freight line alongside that railway or along the same line as the passenger services, given the impact that the proposed scheme will have on stations along the route?

Many hon. Members have called for much more detailed work to be done on the business case. Central Railway estimates that the total capital cost will be £4.5 billion, although other consultants suggest that the cost will be closer to £8 billion. Have the Government assessed those estimates and what is their view of the potential cost of the proposal? What will be their financial exposure if they provide support for the proposal?

The Liberal Democrats would support the project in principle if the environmental concerns were addressed, if the economics added up and if the new capacity that is promised with the proposal materialised. That is not an inconsistent position; it is much better to ask searching questions and to await responses than to draw conclusions on whether the project is sound from the scant details available. Hon. Members refer time and again to the fact that details are not available but then draw conclusions about whether the project is viable. It is better to press for information on which to take a decision rather than to draw rapid conclusions.

It is too early to say whether the economics stack up and whether the environmental impact can be negated. I hope that the Minister will be able to answer my questions in his response.

I congratulate my hon. Friend the Member for Reigate (Mr. Blunt) on securing the debate on this important proposal, which will have a dramatic impact on the constituencies of many of my hon. Friends.

I shall be brief, and ask one or two questions, as it is important that the Minister and the Government come clean on the issue once and for all. Do the Government support the scheme? Do they support the use of a hybrid Bill? How many times do they intend to send the proposal backwards and forwards like a yo-yo to the Strategic Rail Authority, which will pronounce on the matter in September? May we have the Minister's assurance that the Government will make a final decision as soon as possible after that date?

The Government must take a view on whether they want the difficulties of a hybrid Bill if they are not convinced that the private sector, in the guise of Central Railway or a successor company, will deliver money from that sector.

As my hon. Friend the Member for Daventry (Mr. Boswell) said, by taking the hybrid Bill route the Government, may, by association, be implicated in the scheme. If at a future date the private sector runs into difficulties and the scheme does not have the finances expected, the Government may be duty bound to bail it out. Are there not therefore considerable implications for the public purse?

I congratulate the hon. Member for Reigate (Mr. Blunt) on securing this debate and on his contribution to it. He rightly made many points on behalf of his constituents, as did all hon. Members who contributed. The debate has shown that there are differences on the Labour Benches and on the Conservative Benches—the hon. Member for North-East Cambridgeshire (Mr. Moss) shakes his head, but there are differences. For example, the hon. Member for Bosworth (Mr. Tredinnick), who I thought was getting applause at one stage, has a very different view of the matter. It is good that there has been such interest on both sides of the Chamber—the Government are being pressed hard and therefore we must consider the matter most carefully and in detail.

I was pleased to note that I am the fourth Minister to have answered a debate on this subject. We live in interesting times and who knows how many others may yet have to do so. The hon. Member for Reigate gave an interesting analysis of what he considers to be the points against the project. I will not go into those points, but they and those made by other hon. Members both for and against the project will be given the most careful consideration when the Government decide whether to support the scheme. I can assure him that those points are not new to us and are being given careful consideration.

Several hon. Members raised the issue of blight. That is a regrettable but inevitable consequence of any major scheme. I hope that the matter can be resolved, particularly on behalf of the constituents of those hon. Members who have raised the matter today. That is why we have placed a time scale on the SRA's consideration of the scheme on our behalf. The hon. Member for Runnymede and Weybridge (Mr. Hammond) talked about natural justice being served. Natural justice is served in such matters by first giving careful consideration to any proposal and then deciding on it as expeditiously as possible so that people get an outcome.

The hon. Member for Reigate asked two questions, which were reinforced by his hon. Friends. He asked whether we support the scheme and whether we support the hybrid Bill. Those questions were put on 6 March 2001 by the hon. Member for Runnymede and Weybridge to one of the previous Ministers answering on the matter. They were recycled from that debate, so I will recycle the answers as well, in my own way. We certainly support, in principle, a move from road to rail. [Interruption.] It needs to be said—if the hon. Member for Reigate wants an answer to his questions, he will have to bear with me.

If a totally viable and sustainable case were made that met the terms of reference in the SRA review, we would have to make an informed decision at the end of the process. Do we support the scheme? We will have to await the outcome of the SRA review to find out whether it meets the criteria that have been mentioned and that were set out in the previous debate.

Do we support the proposed hybrid Bill? In the end, the approach is up to the proposer. If the scheme were to meet all the very rigorous criteria, we would support it. If it were not to meet those criteria, we would not. I hope that that answers the hon. Gentleman's questions and is helpful to the hon. Member for Runnymede and Weybridge, who originally asked the questions more than a year ago.

Since that debate in March 2001 the Government's proposals for infrastructure planning decisions have come on a long way. Will the Minister explain in what circumstances a hybrid Bill is appropriate when the Government have proposed an elaborate scheme of their own for dealing with such infrastructure proposals? Why should a hybrid Bill be used to evade or avoid the procedures that the Government are promoting?

The hon. Gentleman suggests that proper discussion and examination might be prevented, depending on whether we take a Transport and Works Act 1992 route or a hybrid Bill route. Both routes would, however, require proper examination in the House, and hon. Members would have an opportunity to speak on behalf of their constituents in a debate, as they have done today.

Will the hon. Gentleman give way?

I will, although it will inhibit my ability to answer some of the questions that other hon. Members have quite properly raised.

This is important. There is a perception that going down the hybrid Bill route will mean that the scheme has Government support and, given the parliamentary arithmetic, that it will be approved. Is the Minister prepared to say that there would not be a whipped vote if a hybrid Bill came before the House?

The hon. Gentleman is jumping to the next phase. He assumes that the scheme has Government support, but I am saying that we must weigh the matter up. If the scheme gets Government backing, it will have all the support that we normally give Bills as they go through Parliament. If it does not get our backing, it will not have that support. I hope that that helps the hon. Gentleman, and lays the matter to rest.

My hon. Friend the Member for Luton, North (Mr. Hopkins) made some good points about developing the economy and employment, and about why we must consider such schemes carefully. They can be important for economic development, and they are certainly important in parts of the country well to the north of his constituency. I am glad that he made those points. The hon. Member for Bosworth made similar points about his area, which I know quite well.

We must weigh the issues carefully. There are strong economic arguments for such schemes, and there are the arguments about moving freight from road to rail. We must, however, balance those against all the environmental and other issues that have been raised today.

Let me answer one of the many questions from the hon. Member for Carshalton and Wallington (Tom Brake) so that he does not accuse me of not answering any of them. He asked whether there would be an environmental assessment, and the answer is, of course, yes. He asked many other questions, and they are the very sorts of question that we shall ask when we consider the SRA review.

The hon. Member for Reigate has been following the Government's consideration of Central Railway's hybrid Bill proposals and the SRA's high-level review, and he will be aware that my right hon. Friend the Minister for Transport has written to the chairman of Central Railway about the review's conclusions. I welcome this opportunity to explain the current position to other hon. Members.

As several contributors to the debate have said, encouraging more rail freight remains at the heart of the Government's integrated transport policy, and we are committed to working with the industry to achieve that. After many years of decline, rail freight has made an impressive recovery. Indeed, the figures that the SRA released last week show that the amount of freight moved by rail has increased by 30 per cent. in the past five years. We welcome that growth, and want it to continue. Transferring more freight off the roads and on to more sustainable modes of transport is a key component of our long-term vision for transport. Hon. Members will know that our 10-year plan sets out a framework for further growth in rail freight by 2010.

My hon. Friend talks about the percentage increases in rail freight, but the amounts involved are relatively small, and we need more infrastructure investment to achieve a substantial increase. Central Railway could quadruple present levels of rail freight.

My hon. Friend makes a good point. Although there has been an increase, the base was very low, and our ambition is that it should be raised considerably.

Through its freight strategy, the SRA is working in partnership with Railtrack and the freight operators to deliver the details of the investment programme set out in our 10-year plan, including improvements to the capacity and capability of the network, better targeted funding for rail freight developments and more freight interchanges. The Government have made it clear that they are committed to rail freight growth as a key element of sustainable distribution. To that end we shall support, in principle, projects that offer value for money and bring economic and environmental benefits to the country. With that in mind, the Government would not wish to obstruct the progress of privately led and privately financed initiatives such as that proposed by Central Railway.

I am aware of the history of the project and of the results of previous attempts by Central Railway to gain the approval of this House for the scheme. In considering the company's request for Government support for a Bill to promote its project, we have taken a number of factors into account and have listened to representations from many interested parties—both those in favour of the scheme and those opposed to it. As a result of the SRA's high-level review, and given other information, it is clear that were it to succeed, the Central Railway proposal would meet a significant part of the freight market's need in the long term. However, it is also clear that important questions remain. Those were considered by the SRA's review but, due to its scope, it was not able to test them in sufficient depth to reach clear-cut conclusions.

The Government recognise the wider public interest, which the hon. Member for Reigate illustrated. We must be satisfied that Central Railway's proposals offer viable solutions for rail freight that are compatible with our long-term vision for transport and the environment. I think that that covers some of the points made by the hon. Members for Runnymede and Weybridge and for Carshalton and Wallington.

Interoperability is of key importance to my constituents served by the Chiltern line. Can the Minister give me an assurance that, in its new review, the SRA will consult Railtrack and the rail operators that would be affected by the Central Railway proposals? Chiltern Railways told me last weekend that it had still had no proper approach from Central Railway to discuss problems. As the Minister knows, Chiltern Railways says that Central Railway's proposal is utterly incompatible with the present level of passenger services, let alone those that it is contractually obliged to provide under the terms of the new franchise.

I can give the hon. Gentleman an assurance that, of course, that would be part of our consideration. The availability of channel tunnel paths will be an important factor in underpinning the robustness of Central Railway's revenue assumptions. We shall therefore consider that, too.

Some hon. Members, particularly those whose constituencies are directly affected by the scheme, have urged an early response to the hybrid Bill proposal. Given the scale of the project, it is quite right that the SRA should have wished to learn more about the proposals before taking a view. It was also appropriate that it should have carried out its high-level review within the context of its overall freight strategy and the Government's 10-year plan. Inevitably, that has taken time.

My right hon. Friend the Minister for Transport has made it clear that there is insufficient evidence to enable the Government to support a hybrid Bill. In order to reach a point at which we can take an informed decision about the proposals, further work is necessary. I can assure the hon. Member for Reigate and others who have contributed to the debate that that does not mean that the Government intend to continue to work the proposals until we find good reason to support the scheme. We believe that it is important to give the scheme a fair and thorough hearing, and that is what we shall do.

That is why, with the help of consultants and the co-operation of Central Railway, the SRA is carrying out a further detailed assessment in order to test key remaining areas of the proposals. That will not simply be a repeat of the high-level review; it will test more closely those key areas where the earlier review could not provide sufficient confidence in the proposals. We expect that the SRA's review will be completed in September. When we receive it, we will give it careful and due consideration.

That is appalling.

The hon. Gentleman says that that is appalling but before we make a decision, given that the scheme is of such importance and has aroused many conflicting views, it is incumbent on the Government to listen to and consider those views carefully, including those that he has aired today. If the Government did anything other than that, we would be irresponsible.

Some of my colleagues suggested that a debate on the integrity of the financial services industry would be a brief affair. Perhaps the full title should have a question mark, as we will debate the quest to find integrity in the industry rather than concentrating on something that is a rare commodity in the relevant companies.

I do not introduce the debate because I have specialist knowledge in the subject, although many distinguished colleagues are present who have contributed to such debates from their knowledge. My interest is as a Member of the House for 15 years. In that period, I have seen a procession of constituents whose financial lives have been damaged by the work of the financial services industry. This morning, I want to detail many of the scandals that have taken place, because millions of people have been cheated and bamboozled by commission-hungry salesmen who have mis-sold poor-value pensions, mortgages and insurances.

Having checked the numbers of robberies and muggings in the past year, I can say with certainty that the public are much more likely to be robbed by the financial services industry than by burglars or muggers. The difference is that criminal theft is usually a single event, but robbery by financial institutions continues every week for decades.

There is a seemingly endless litany of scandals. Millions of people have been cheated by the mis-selling of personal pensions, with compensation of £15 billion and rising. About 6 million endowment mortgages face certain shortfalls. Then there are the scandals of the Bank of Credit and Commerce International, Maxwell, the West Bromwich building society's home income bonds—you will remember them well, Mr. Deputy Speaker—the Independent Insurance Company, Barings Bank, Equitable Life, Chester Street Insurance Holdings and the AXA orphan assets. Now there is the split capital investment trust. Recent events form the background to that, including the collapses of Enron, Andersen and Marconi, which have dangerously shaken public confidence in the market.

An industry that manages £1,900 billion of Britain's savings is haemorrhaging confidence. Individuals and families have suffered huge losses. The well-off are often cushioned against such losses and can recover from them. The casualties are the people whom we see in our surgeries, who have tried to organise their lives so that they have a comfortable old age with an adequate income. Given the activities of organisations that behave disreputably, they now face a future on the edge of poverty.

If confidence is to be restored, I hope that we can persuade the Government to take a more active role. This and the previous Government have creditable records, but this Government must ensure that the industry simplifies its products, establishes a network of genuinely independent financial advice, nurtures the good value of the credit unions and restores faith in the national insurance system, a system that was brought about by the last Liberal Government. We want to say with some force that we are not all Thatcherites now. There is still a belief in the simplicity and good value of the national insurance system.

Let us start with the bottom feeders in the murky pond of the financial services industry: debt management companies and non-status lenders. Debt management companies infest daytime television with advertisements that promise that all one's debts can be rolled up into one manageable payment and that, somehow, the burden and anxiety of debt can be magicked away. Debt management companies take on the debts, routinely add 15 per cent. to the total debt and then pocket a whole month's repayments. Then, with one exception—Firstplus is a reasonably efficient firm—they are inefficient when it comes to paying the debts on time. They actually increase the debt and lengthen the period of indebtedness. Even more damaging is the impression they give that, by going along to such a company, debts can be magicked away. That encourages people who are not in serious debt to take on debts in the belief that, if they get into serious trouble, they need only phone the nice people on the television, who will solve all their problems for them.

There is no painless escape from debt. The average adult in Britain is now a record £3,000 in debt, and that figure is growing rapidly. In the past year alone, it has risen by 12 per cent. to a massive £130 billion, and I believe that the activities of debt management companies have played a significant part in that increase. Good advice on debt is available free from citizens advice bureaux or the Foundation for Credit Counselling. Debt management firms say that their job is loan consolidation, but it is not: it is debt multiplication.

The main non-status mortgage provider was once known as the City Mortgage Corporation. It then became Ocwen and is now known as the igroup. Many Members will have spent hours talking about the activities of that body. At least nine years ago, there was a scandal involving the City Mortgage Corporation. It seeks out people who cannot afford mortgages and offers them mortgages, in the almost certain knowledge that the loans will never be paid off. It routinely adds 2 per cent. to the interest rates charged in the high street, and it certainly used to double the interest rate if there were any question of a payment arriving late, or for almost any other reason. Borrowers would rapidly get into serious debt. The company charges enormous fees for its services and for redemption charges, with the result that a loan of £20,000 would increase to £40,000 in a short time, and the house was often lost.

I remember one constituent who was in desperate financial trouble, but he had built his own house and was determined to stay there by hook or by crook. He became involved with that company, eventually lost his beloved house and ended up in serious debt. I thought that the problem had been solved or at least reduced, but I am informed by the CAB that it has increasing evidence of bad practice by non-status companies. New regulations, which have been promised for some time, are due this year, but the wheels of reform grind slowly, often obstructed by the inertia and lobbying power of the companies involved. In one incident, the City Mortgage Corporation had the backing of certain Members and action was taken as a result. I do not want to unearth past scandals, but that incident gives no credit to certain Opposition Members.

It was not those disreputable companies that contributed to what was probably the worst scandal: personal pensions. It is hard for those who were not Members at the time to realise how we got into the scandal of personal pensions. It was a strange, surreal period. It was not the small companies but the Government and the high street banks who advertised personal pensions. One advertisement showed a person in chains saying, "Escape from the chains of SERPS"—the state earnings-related pension scheme—"to the—freedom of your own personal pension." That was part of a £1 million advertising campaign paid for by the Government. An advertisement by the Midland bank said that people should not be SERPS—a SERPS was represented as a oleaginous blob that no one would want to be associated with—when they could get a £5,500 gift from the Government. Another equally misleading advert was made by Barclays bank.

The result of that activity was that unsophisticated people—most people felt thoroughly inadequate in the face of salesmen from the pensions industry—were convinced that they should leave their good-value occupational final salary pensions and plunge into the gamble of personal pensions, which are now proving to be such "good" value. Of those pensions, 40 per cent. were allowed to lapse or were transferred within the first four years; and, given the present annuity rates, those who bought money purchase schemes must be regretting that they took that advice.

I treasure one moment from 1988, when I had the effrontery to criticise the then Prime Minister on her policy on personal pensions. She told to me that, as a socialist, I was obviously against choice. However, it was Hobson's choice for those who took out personal pensions. Many people were pushed into them by firms which employed wicked tactics. For instance, when a company made workers redundant or suffered a major upset, those firms would move in. However, they employed not their own salespeople but former workers—ex-miners or ex-steelworkers who were mates, many of whom knew nothing about pensions except what they learned in a session lasting a couple of hours.

It was those trusted people who sold personal pensions to their pals and family—until they had no friends left. They were employed in selling personal pensions for an average of six months. It was a wicked way to manipulate people, but it was a bonanza for the financial services industry, which greedily and irresponsibly pushed those poor-value pensions. The scandal of the marketing of endowment mortgages proves the scarcity of integrity in the financial services industry.

The Financial Services Authority has confirmed that 60 per cent. of those who responded to its survey said that they were told that their endowment policies were guaranteed to pay off their mortgages; and a further 26 per cent. said that they were told that the policies would "probably" pay off their mortgages. Many people were told that they would receive a nest egg at the end of it; no one can determine what was said by the sales staff, but commission-hungry salesmen will say such things. Few people would risk the gamble of an endowment mortgage that depended on what would happen in the stock markets in 20, 30 or 40 years' time when, most of all, they wanted security in their homes. The only people whose interests were being served by the use of endowment mortgages were those who sold them—and it is still going on.

I first raised the issue some four years ago, and I remember being hammered by my local newspaper. The local endowment mortgage sellers got together and denounced me for such terrible scaremongering. I called for a Government inquiry into endowment mortgages in 1998, because millions of people had been sold poor policies and the sellers were more interested in collecting hefty commissions than in selling the most suitable products. I was condemned, and not only by the Newport and Cwmbran Weekly Argus. In August 1999, I said that those who were offered endowment policies should say no, and that they should have nothing to do with them; but on 10 August 1999, the FSA dismissed claims of mis-selling of endowment mortgages, saying that the

"overwhelming majority of endowment policies pay out adequately and that there is no question of their being banned."

Sue Anderson of the Council of Mortgage Lenders said it was not correct to say that endowments were "inappropriate."

On 13 May 2002, the FSA said:

"About 60 per cent. of endowment holders, or 3.6 million people, are now in danger of failing to cover their mortgage debt. Several leading United Kingdom insurance companies could face heavy fines for having mis-sold endowment policies".

The truth is that almost 6 million have had red or amber warning letters.

The regulator has identified a number of well-known insurance companies that systematically mis-sold endowment policies by mispricing them. One or two firms will be named and shamed. There should be transparency on the matter, and we should be told which companies carried out such sales despite knowing that they were likely to end in tears.

There is a way of finding out about this practice and correcting it. The FSA figures show that only 100,000 people have complained to companies, with approximately one third of complaints being upheld. However, 218,000 policies were redressed when the FSA initiated investigations into companies. It is only right that the FSA should take a more active role to widen the focus of investigation and force more companies to take action.

I was under the impression that sales had collapsed, given all the publicity and the fact that most main high street companies no longer sell endowment mortgages. However, a letter that I received from the Council of Mortgage Lenders states that 10 per cent. of all new mortgages sold in the first quarter of this year were endowments. If the main companies that were the principal sellers have not sold those mortgages, other companies must have vastly increased their sales.

A newspaper report quoted a salesman as saying that he would need to sell 140 stakeholder pensions to earn the commission he gets from selling 14 endowment mortgages. Those who have made profits in the past continue to do so, and some companies seem to be intensifying their activities in selling to ill-informed customers mortgages that will almost certainly fail. I suggest that the most sophisticated of customers would run a mile if someone offered them an endowment these days.

The next scandal that will emerge will be with general insurance, especially for accident, sickness and unemployment. In the early 1990s, when it was clear that the bonanza days of selling personal pensions were over, there was great excitement about the idea that companies might make a killing by selling accident, sickness and unemployment insurance. The commissions charged on those products are enormous, and they are sold with virtually no controls.

I can give an example of the scandalous practices of some companies in that market. I was visited by a gentleman who had a distinguished career in public service and who went to work as an inspector for the Combined Insurance Company of America, which is very active in this country. He was a man of undoubted integrity and probity, and he was so horrified by what he saw that he came all the way down from the north of England to visit me. I arranged several meetings with the General Insurance Standards Council, the industry regulator, which he attended carrying a huge sheaf of papers. His information showed that appalling corruption was taking place—I use the word "corruption" advisedly. The company is corrupt and is corrupting its staff. It pays no wages, and the staff are so desperate to earn money to pay for their cars and expenses at the end of the week that they are forced to sell hopelessly unsuitable policies, sometimes to people with illnesses, some of which are terminal, that would debar them from claiming benefits from other policies. Life insurance policies have been sold to elderly people who could not possibly benefit from them. Many such cases have been brought before the General Insurance Standards Council.

One anecdote about the company struck me in particular. A gentleman went to work for it armed with a conscience, but found that he was not producing the required volume of work. At a social event, the Europe president of the company, Mr. John E. Johnson, asked three of the 50 managers present to stand up at the end of the meal. One of the three was the gentleman in question. To improve the morale of the staff, he explained to them that he had asked the managers to stand up because he wanted not to embarrass them, but to humiliate them. The average turnover of the company was 400 per cent. a year. Those who went to work for the company were forced to do things that they were ashamed of and that were damaging to them. Such activities create casualties among staff as well as the policyholders. However, it was made clear to them that it was a question of "no deal, no meal".

There are many such cases, and I will not burden the Chamber with all of them. I last heard from the supervisory body some 15 months ago, and I recently got back to it to ask what was being done. There has been a series of meetings to try to correct the excesses of such companies, but I understand that there has been no real improvement.

With-profits policies should be known more accurately as with-losses policies. Some 10 million policyholders hold investments worth £350 billion. Those policies are at the heart of most of the financial scandals of the past two decades. The FSA has a statutory duty to protect consumers, yet it has failed to produce any robust review of the market or to take action to ensure that the millions of consumers who are mis-sold mortgage endowments receive the redress that they deserve. I pay tribute to the work of the Consumers Association, which has called for the ring fencing of policyholders' funds to protect them from director and shareholder raids and to ensure that directors have the same legal duty to policyholders as they do to shareholders. It is extraordinary that directors have a fiduciary duty to shareholders, but not to policyholders.

Orphan assets also involve an enormous sum of money—£45 billion—which has accumulated as a result of very low annual payments on policies and the companies' ludicrously pessimistic forecasts. There is no reason why such funds should not be used to assist the casualties of mis-selling and other scandals over recent years. The power that directors and actuaries wield in these spheres has been abused to the detriment of policyholders. The AXA High Court case is an example. If we are to prevent another AXA case, we need new regulations that decree that asset shares should include 90 per cent. of orphan assets. There is little transparency in the business, and in many cases there has been a lack of action from the FSA—although it is a good body that is far better than the ragbag of self-regulating bodies set up by the previous Government in the late 1980s and 1990s, which were absorbed into the industry if they were not already a functioning part of it. I met many of those bodies at various times; they saw themselves as the mouthpiece of the industry.

The incestuous nature of the financial services industry is also disturbing. Many of the staff of the ombudsman's office and the FSA have worked in the industry. There is an identification of interests, and the attitude is, "We are right and everyone else—policyholders, customers, the Government—is outside us and should not interfere with anything we do".

Would the hon. Gentleman regard as incestuous the fact that Howard Davies was made chairman of the FSA without much consultation?

I have some regard for Howard Davies and I do not want to personalise the issue. However, last August, when Howard Davies was to make an announcement for the FSA, I had an interview with the spokesperson of the Association of British Insurers, a lady who once worked for Her Majesty the Queen. She was a splendid communicator, and it emerged from the conversation that the previous night she had had dinner with Howard Davies. That seemed to me a little close and cosy, if not incestuous. On another occasion I attended a meeting, under Chatham House rules, involving the ombudsman's department, financial journalists, people from the industry and from the Consumers Association. The person from the Consumers Association and I went away feeling angry about the sentiment that had been expressed that Government of any colour should not get involved in such matters because they were not independent. The industry itself was apparently independent.

I heartily agree with the comment made by Colin Brown, the recently appointed chairman of a new body of the FSA, the consumer panel:

"The ability of this industry to behave as though it is dealing with its own money and has a God-given right to a profit without thinking about what it is doing to consumers is unbelievable."

Such views represent an encouraging trend. The consumer panel is doing a splendid job in practising what it preaches. We are moving away from an incestuous situation.

As for the scandal involving the split capital investment trust, another product was advertised as having more safety features than a Volvo—this does not end, but goes on and on. In one case quoted in the press, an unfortunate gentleman from Glasgow invested his nest egg of £12,000 in the scheme in 1974; it was vastly over-sold, with huge commissions and poor returns, and the original sum has now shrunk to £27—not so much safe as a Volvo as dangerous as an old banger.

Colin Brown went on to say that no other industry is like the financial services industry, in which "consumer" is a dirty word, and that there is no real opportunity for the industry to grow up and behave like other industries. Brown and his board are urging the regulator to require companies known to be in financial difficulties to give public warnings much earlier than has happened in past scandals. That would have been valuable in the case of Equitable Life.

There is a great gap in what the regulation provides. It does not provide a completely safe environment for ignorant consumers, which includes the majority of us. The question is how far down the regulations should be brought to help such people and how far up we can bring their awareness. If we create better educated and more skilled financial advisers, we increase the gap between them and their potential customers. The only way forward is to simplify products, because their complexity is one of the main ways of ensuring that the public are bamboozled.

In "Star Trek", which is one of my favourite television programmes, the Ferengi are a dire warning of what the future is likely to be. They are based on a nightmare view of Thatcherism. My right hon. Friend the Member for Hartlepool (Mr. Mandelson) should be shown tapes of the programme so he knows what he is really suggesting. The Ferengi are the likely result if the daughters of financial advisers marry the sons of bankers and breed a generation instilled in their philosophy. They have 250 laws of acquisition, including never cheat a man who is wearing a better suit than you are; treat people in your debt like family; and employees are the rungs on the ladder of success, so step on them. Those laws would not be out of place in the boardrooms of many insurance and banking companies. Two precepts of acquisition—rules 239 and 59—strike a chord. They are: never be afraid to mislabel a product, and free advice is never cheap. The word "integrity" does not occur in the Ferengi language.

The remedy is independent financial advice, which is a matter that I have raised in early-day motions tabled under successive Governments, in 1994, 1997 and 1999. The only way to restore confidence in financial products is to provide advice that is genuinely independent and free from anyone seeking commission or sales. Fifty per cent. of people questioned in a survey carried out by the Consumers Association said that they were not saving because they could not trust advice from anyone. They had learned to distrust independent financial advisers—they are not always independent—banks and insurance companies. The accretion of scandal has convinced them that they should not get involved in anything, so they do nothing, which is bad news.

The original suggestion in a leaflet produced by the Consumers Association was to establish a body on the lines of citizen advice bureaux that can give competent advice on a simple and a sophisticated level, which may have to be paid for, but which has nothing to do with the financial services industry.

Credit unions, which have had enormous success in Ireland and Canada, should be nurtured. There is a very successful credit union in my constituency, which provides simple banking. It is grassroots based, accessible and understood by everyone. It is entirely transparent and provides the best possible value.

New Labour's favourite think tank, the Institute for Public Policy Research, recently published a splendid report pointing out the virtues of the national insurance system.

One conclusion of the IPPR's report was that the retirement age should be increased by one, two or three years to create a decent pension in retirement. Does my hon. Friend support that proposal?

With great enthusiasm. I hope that my hon. Friend will write to my constituents when the matter of selection is discussed in a few years' time to say that I am about eight years younger than Her Majesty. Those of us who are now in our late 60s know that we seem young compared with our parents and grandparents at that age. It is cruel nonsense to force people to retire at 60 or any other age.

If we are to clear up the wreckage of the past 20 years, it will be essential to introduce compulsion into pensions. Young people think that they will never grow old and need a pension, but they will. The only way to provide an adequate pension is through a universal and compulsory scheme.

Like all MPs concerned about this issue, I am most alarmed when I see the faces of people who have done everything right in organising their lives, have been prudent and careful in setting aside money for the future, but find to their horror that they have been cheated and robbed by a system that they do not understand. Such people are now looking forward to an old age of anxiety, worry and near poverty. I recall in my mind's eye the face of one such constituent. If I multiply that by a hundred, then by another hundred, I can continue until I see the faces of nearly 10 million people who have been badly treated by the financial services industry. That should lead us to ask about that industry's integrity, and to think about what we can do as politicians to ensure that the people who have suffered receive some compensation. No generation should be robbed in the shameful way that this generation has been.

rose—

Order. Six hon. Members have indicated their wish to speak in the debate, but we now have fewer than 25 minutes before the winding-up speeches commence. I hope that hon. Members who are successful in catching my eye will be self-disciplined and understand that others wish to speak after them.

I congratulate the hon. Member for Newport, West (Paul Flynn) on securing the debate, which I greatly welcome. I suspect that it will be the first of many on the subject. I also take the opportunity in this post-Thatcherite and pre-Ferengi world to congratulate the Chief Secretary to the Treasury on his promotion. He always wears a better suit than I do, so I have little chance of cheating him—but we shall see.

As hon. Members know, I am fortunate enough to represent the City of London, home for much of the financial services industry in this country. Rest assured, however, that I am here neither to praise nor to bury that industry. The hon. Gentleman raised issues that will be debated for a long time to come. However, it is important to differentiate, which the hon. Gentleman failed to do, between imprudent conduct and recklessness or fraud. We should not imply criminal intent to all aspects of failure. It is important also to instil and reinforce a culture whereby transparency, integrity and good business practice are the norm. I accept that that has not always applied to all aspects of the financial services industry. The Financial Services Authority has a tight, perhaps worryingly over-tight, regulatory regime and it is important to ensure the right balance.

A decade or so ago, the subject of pensions aroused little passion. The young did not consider it; single women ignored it; and the main pensions planners were couples over 40. That may be a generalisation, but the public's lack of detailed interest and knowledge left this country's financial services industry in a mess.

I recently listened to an executive from a major pensions company who exhorted that everyone should consider taking out a pension now—not entirely a hard sell, but largely along the lines that the hon. Gentleman suggested. We had to start planning earlier and invest 15 per cent. of our current salaries from our mid-20s onwards towards a retirement pension. No doubt it is something of a farce. The industry has proved itself incompetent to handle the public's money and the mis-selling scandals, including the ongoing disaster of Equitable Life and the mess of annuities, have virtually wrecked public confidence in pension savings. That has rightly been viewed as a potential horror story, and we should devote our collective energies to regaining the public's trust.

The more I speak to younger constituents, the more I realise that they are guided to buy property as the only safe haven for their money in the longer term. If that continues, it has all the hallmarks of a long-term disaster for this country.

I recently sought reactions and advice on the current pension needs from some of my constituents. They comprised what might be called a focus group, although not the most obvious one as they were in Knightsbridge. They made some interesting points. My wife and I worked in the City until I was elected last year, and it is clear that many of us relatively educated folk have little idea of how the pensions industry works. We simply put aside many hundreds of pounds every month, paying little thought as to what would arise from it. As someone who has always strongly believed in the idea of business probity and the importance of that within the financial services sector, I was saddened by the individual experiences described by many of my constituents.

It is clear that we have allowed ourselves to be lulled into a false sense of security by the enthusiasm of pension providers and politicians' attempts to ensure that everyone has a good life style in the longer term. The adverse publicity and the reduction in so many of the fund payouts has left the young, and especially people in the lower income brackets, with little confidence in such late life provision. By the same token, more and more employees have little expectation of a job for life and do not expect to have a long-term pension commitment from their employers. In exhorting everyone to try to save properly for their old age, it is up to us as politicians to ensure that as far as possible those savings stay safe and that no one who has saved responsibly should be left impoverished by the failure of the pensions industry.

My namesake, the right hon. Member for Birkenhead (Mr. Field), and the hon. Member for Newport, West spoke persuasively about compulsion. However, only if the pensions industry is made far safer can we possibly contemplate compelling people to put their trust in it. If a law effectively forces us to hand over an unspent surplus of our hard-earned cash to those who are either unqualified or incompetent, there is little incentive for any of us to save. That will lead to another long-term problem.

I appreciate that the proposals to force us to put money away are not yet Government proposals, although many items have been flagged up in the financial press in recent months. Behind them lies an instinctive bossiness and intolerance, as well as a lack of appreciation why so many people fail to make provision for their future. In reality, and again this goes back to the point made by the hon. Gentleman, no amount of new legislation will overcome the fact that many of our fellow countrymen are simply too poor to save adequately for their long-term future.

In 1988, the Conservative Government took away the right of an employer to make joining a pension scheme a condition of employment. Would the hon. Gentleman like to see that facet of pensions legislation changed?

It is a valid point. To be fair, I have not conclusively determined where I stand on that. Clearly 14 years ago choice was seen to offer a great advantage. That choice has been something of a two-edged sword at the very best. We must therefore be open-minded about the proposals that are being put forward and are likely to be come into force following the Pickering report.

I have spoken for quite some time. I should like to say more, but other hon. Members want to contribute. I shall be interested to hear what the Chief Secretary has to say. I hope to take part in debates on these matters in the months and years ahead.

I am happy to follow the hon. Member for Cities of London and Westminster (Mr. Field). As such I will perhaps be regarded as a tail of two cities. I follow him also in offering my sincere and heartfelt congratulations to the Chief Secretary. His appointment was a great source of joy to many. Indeed, I recall first meeting my right hon. Friend 10 or more years ago when he was shadow Minister with responsibilities for banking. It has been a long and well-merited track upwards.

Today is a pregnant time for the financial services industry. I refer to the expectation with which the market anticipates the Pickering report on pensions, the Inland Revenue's report on pension taxation and Ron Sandler's report on improvements to the long-term savings market. I will return to them later in my remarks if I have time, but I first want to draw the Chief Secretary's attention to a report published last week by RSM Robson Rhodes, which is a leading accounting and actuarial consultancy company.

The report demands a thorough overhaul of corporate governance to prevent an Enron-type collapse of a major corporation in the UK. The Chief Secretary will recall that in two previous debates—on Equitable Life and independent insurance—I urged tighter controls on accounting companies that use the audit function as a loss leader to sell consultancy services to their clients. Prior to Arthur Andersen coming under the spotlight at Enron, many in the Financial Services Authority saw my calls as unwarranted and alarmist, but RSM's report now urges clear restrictions on the consultancy work offered by accountancy firms to clients to which they already provide audit services. It calls further for the combined code on corporate governance to be a compulsory requirement for firms listed on the London stock exchange. Is the Chief Secretary prepared to accept those findings and take action to implement them?

A further recommendation is to raise the present requirement that one sixth of the members of listed companies' boards should be made up of independent directors so that at least half become independent directors. My right hon. Friend will be aware that those recommendations echo the proposals that the New York stock exchange introduced last week to beef up board independence and strengthen the role of the audit committee, giving it sole responsibility for the hiring and firing of auditors. The RSM report points out that we need a corporate governance system that prevents problems starting, rather than one that tries to correct them once they have happened.

That brings us back to Pickering and Sandler and what the public know as endowment mortgages. In fact, those mortgages are a bundling of two things—an interest-only mortgage and, behind it, a with-profits endowment life policy. The policy is set up to repay the capital borrowed to purchase the property when the policy matures. The borrower therefore pays off each month only the interest on the loan coupled with the premium due on his endowment policy.

That is the theory, but the practice has been somewhat different. I was sent a letter by Mr. Hardgrave, who due to ill health had to remortgage more than 10 years ago. He says:

"My financial adviser introduced a package of investments—a pension with Friends Provident, insurance with Norwich Union, PEPs with Schroeder and Perpetual, plus life cover only for myself and my wife with Scots Amicable. Upon reaching June 2002, shortly after my 70th birthday, the mortgage to C&G would be paid off leaving an £8,000 'bonus'! In reality, we are £4,000 short of the necessary repayment figure. But what is more significant, never at any time, where I am now aware, was there any warning of a shortfall. Over the ten year period I needed to earn £2,000 per month just to keep afloat … I enclose my adviser's letter which encourages me to bat on for a further six months. I never imagined in the heady carefree days of my apprenticeship in 1948 that I would still be working in 2002."

He goes on to say:

"I thank you for reading my letter and I would be most obliged to receive your comments",

but it gets better. He adds:

"Incidentally I joined the Labour Party in 1997 from sheer pleasure and relief at your ending eighteen years of crippling Tory misrule!"

What is so disturbing about Mr. Hardgrave's case is that his financial adviser was encouraging a man who was recovering from ill health and who was then aged 61—within four years of the state retirement age—to take out an endowment mortgage over a period as short as 10 years.

I do not know the details of the commission that the adviser received, but I am sure that my right hon. Friend the Chief Secretary will be aware that the first year's payment of premium on such policies is often consumed entirely by commission and administrative costs. It is hard to conceive that Mr. Hardgrave was sold a suitable financial product. Instead of the with-profits windfall of £8,000 that he believed he was promised, he was left with a shortfall of £4,000. How does the industry explain such cases?

How does the industry explain also that it has had to issue red traffic light warnings to 35 per cent. of all endowment policyholders so far reviewed? There is a high risk that their policy will not pay out the target amount at the end of the term. The figure of 35 per cent. of the 6 million endowment policyholders in the UK means that more than 2 million people live in real anxiety about their financial future and the security of their family home. Amber notices to a further 26 per cent. mean that almost 4 million people face a potential shortfall on their mortgage.

The industry tries to explain the project shortfalls as the result of a two-year fall in the equities market. That is nonsense. Before the current downward trend, there was unprecedented growth in equities for 10 years, and the current fall has clawed back only a third of that growth. Where has all the money gone? With-profits policies are precisely intended to smooth out market conditions. Profits made in a rising market are withheld from bonuses precisely to even up bonuses in falling market conditions.

The suspicion is that companies have not withheld profits from bonuses for smoothing purposes, but have withheld them to pass on to shareholders. That is why they do not have the resources to make up the shortfall in lean years. That point can be checked, and I urge my right hon. Friend the Chief Secretary to consider launching an investigation into the relative performance of mutuals and plcs in the percentage of policyholders issued with red and amber warning notices. That would need to be done by a year-by-year comparison from when the policy was taken out to show a parity. However, it could easily be done, and would provide compelling evidence of the practice of transferring funds properly due to policyholders over to shareholders.

Many insurance polices were issued by mutuals that do not have shareholders or make profits. Their overall performance is not that different. The view that the money has gone to shareholders is not realistic.

The hon. Gentleman forestalls what I was about to say. I had anticipated that point and, in the light of his remarks, I caution that the investigation should also examine the transfers that both sectors—mutuals and plcs—have made to their general funds. I do not wish to replay the debate on orphan assets that we held in this Chamber, but my right hon. Friend will recognise the need to ensure that, contrary to the AXA deal, policyholders receive their 90 per cent. entitlement to their company's orphan assets, particularly when they may have been boosted by the retained profits not added to annual bonuses in rising markets. That may account for the parity between mutuals and plcs if, indeed, there is one.

I draw attention to a further absurdity of the market's response to the present endowment mortgage scandal. It says that people should have recognised that they were saving in interest payments because of low interest rates, and they should have used that saving to increase their policy premium payments. That attempts to use the public's confusion about the two elements of an endowment mortgage to cover the industry's own malpractice. It is the same as telling people not to worry about the cost of petrol increasing because the price of bananas has become cheaper.

My hon. Friend is really getting at the lack of adequate disclosure by pensions companies of exactly how with-profits schemes operate. We must consider carefully, as Sandler needs to, how we can ensure that a policyholder knows exactly what is happening.

Again, my hon. Friend anticipates exactly the direction of my speech. Low interest rates are neither the cause of nor the solution to the endowment problem. The cause is company and shareholder greed, and a culture of excessive commission for agents. The solution, we hope, will come with the Sandler report, but a minimum requirement is the imposition of transparency about the way in which companies decide on their profit allocation to annual and final bonuses as well as to shareholders and the general fund.

I wanted to speak about polarisation, financial advice bureaux—to which my hon. Friend the Member for Newport, West (Paul Flynn) alluded—and bridging the savings gap of £27 billion in our pension projections. Alas, time precludes that, but I congratulate my hon. Friend on securing the debate.

I seek to be as helpful to hon. Members as I can. If contributions are very brief, and the winding-up speakers are prepared to surrender a moment or two, we may be able to hear two further speakers before the winding-up speeches.

I, too, congratulate the Chief Secretary to the Treasury on his position and the hon. Member for Newport, West (Paul Flynn) on securing the debate. He painted a pretty bleak picture, with a fairly broad brush, of the whole industry. Without wishing to turn the debate into a Trekkie convention, I should point out that he omitted to mention, in a speech more than 30 minutes long, that the starship was called the Starship Enterprise. Indeed, enterprise was notably lacking from anything that he said.

It is perhaps worth remembering that financial services remain our most successful export, and London, despite—or should I say in spite of—the euro, is still one of the most important financial markets internationally. That is probably why NASDAQ is seeking to come here to do a deal with the London stock exchange. I caution against over-regulation. I believe in regulation, but with an industry suffering from overregulation, we should proceed with extreme caution.

The integrity of the financial industry has been called into question—rightly or wrongly—on a number of key issues. Like many hon. Members—I doubt whether there is an exception in the Chamber this morning—I have received much correspondence about Equitable Life. I note that my colleagues were successful in securing a change of heart from the parliamentary ombudsman about his original decision not to investigate Equitable Life cases following claims of maladministration. However, Equitable Life has been raised on other occasions, including in debates secured by my hon. Friends, so I shall concentrate on two other key issues if I have time.

The most important issue is endowment mortgages. According to the Association of British Insurers, 6 million homeowners with such mortgages may not now be able to pay off their mortgage loans in full with the proceeds of their endowment insurance policies. As we have heard, the proportion of those with endowment mortgages who face that problem has risen from 46 to more than 60 per cent. in the past two years.

In the recent past, when inflation and nominal interest rates were higher, endowment policies typically provided an attractive savings route to repay mortgage loans. Nominal interest rates on mortgage loans were much higher, effectively compensating lenders for the decline in real terms in the outstanding loan. Similarly, the nominal returns on endowment insurance policies were higher, reflecting higher nominal interest rates earned by the insurance companies, and the tendency for equity markets to rise in nominal terms following the nominal increase in company profits resulting from inflation. That has ended over the past decade, however, because of the climate of low inflation that has been in place since the early 1990s. On the one hand, nominal interest rates on mortgage loans have fallen, but on the other, the nominal returns on endowment insurance policies have also fallen.

The Financial Services Authority is investigating the extent to which insurance companies and others who advise on and sell endowment-linked mortgages mis-sold policies. It is focusing particularly on situations in which consumers were advised that their stock market-linked endowments were, effectively, guaranteed to pay off their mortgages. Three United Kingdom life insurers have already been fined over endowment mortgage mis-selling, and the insurance industry has set aside £325 million for endowment-related redress.

It is not for me to say whether the mis-selling of endowments took place, but the FSA has made it clear that it does not intend to launch a formal review of endowment mortgages. It has also advised that it has no evidence of widespread mis-selling, notwithstanding the escalation of problems with endowment mortgages over the past year. I would therefore be grateful if the Chief Secretary could confirm whether the Government intend to launch such an inquiry.

For its part, the Association of British Insurers does not accept that widespread mis-selling took place, and argues that the main issue is the fall in nominal investment returns. Millions of endowment policies must grow by at least 8 per cent. per annum for the mortgage to be fully repaid. Although that was widely accepted as a realistic and likely prospect in the recent past, it is simply not likely in present economic and stock market conditions. Those involved must clearly tread a delicate line. On the one hand, consumers must take responsibility for their financial decisions, and the principle of buyer beware is embodied in the Financial Services and Markets Act 2000. On the other hand, there is the issue of mis-selling.

I do not have time to refer to split capital investment trusts, or splits. I should say, however, that the bottom line in the case of endowments and splits is that while none of us can control what happens in the markets, none of us would condone malpractice. The task is, therefore, to root out malpractice and to provide consumers with the reassurance that they will receive fair redress should their case merit it.

rose—

Order. I realise that several hon. Members still want to speak, but it is now two minutes past 12, so we shall move on to the summings-up.

I, too, congratulate the hon. Member for Newport, West (Paul Flynn) and the Chief Secretary, whom I first encountered a few years ago, when he was a very junior Minister. He took on an extremely complicated adoption case of mine, and I am pleased to say that he overruled his officials. I hope that he maintains that independence of mind in the Treasury, where it is badly needed.

The key issue is that we are dealing not with scattered scandals, but with a systemic problem. The Financial Times—the newspaper of the City—talked about a toxic legacy of mis-selling, while the chairman of the Financial Services Authority recently talked about the disgrace of the financial services industry. Those are strong words.

There has now been a cumulative loss of basic trust in financial products, which is important not only for customers, but for the Government. We have a savings gap of £27 billion a year, which will not be filled unless financial products can be sold, and that requires trust.

The hon. Member for Cities of London and Westminster (Mr. Field) made a distinction between crooks—the Maxwell, BCCI-type problem—and honest failure. There is, however, something in between. It is not crooked behaviour or honest failure, but sharp practice. A common element in many of the scandals is the prevalence of sharp practice and the industry's inability to get on top of it.

The pensions mis-selling scandal has largely been dealt with through compensation, but I hope that the Government will produce an evaluation of what has been achieved, because this is a Government, not an FSA issue. My concern is about who paid the £15 billion restitution. We know from Sandler and others that there is a lack of control over funds in the with-profits industry, so I suspect that much of the restitution was paid not by shareholders but by other policyholders. We need a thorough evaluation of how that exercise panned out.

We need to distinguish between the different types of mis-selling that occurred in relation to endowments. There was that by people who claimed that there was a guarantee when there was not one, and the mis-selling to people who were told that they could not have a mortgage unless they had an endowment with it. There is nothing inherently wrong with endowment mortgages; that point has not been made. I paid off my mortgage three or four years ago and received quite a large bonus on the back of the endowment that was linked to it. A number of people have had favourable experiences. However, the point is that when the market began to turn sour, the industry, which had pocketed its commissions, did not exercise a duty of care. That is not mis-selling, but it is a form of negligence. There is a responsibility involved. As interest rates fell, people with endowments became better off; they were not losing money. Somebody needed to tell them then to put money aside to compensate for the lack of value of the endowment. Nobody did, and that was the failure in the system.

We must ask whether the scope of the FSA inquiry is sufficient; it seems to have been drawn very narrowly, especially compared with that for pension mis-selling. If the FSA is not willing to look at the matter more comprehensively, are the Government? The second question, which is asked less often, is whether there was a regulatory failure. This happened pre-FSA. I suspect that the regulator was within the old structure. Did somebody in the regulatory system fail to alert the industry to the fact that customers needed to be warned to save more? Thirdly, two serious things seem to have happened in the small but important split trusts segment of the market. There has been extreme mis-selling. Customers were sold what were presented as very low-risk investments but were nothing of the kind. The other thing, not mis-selling but probably more serious, was the collusion between the so-called magic circle of companies, which were investing in each other's operations to create what was known as exponential risk. That highly irresponsible and dangerous behaviour produced a subsequent collapse and a large-scale loss of savings. The splits issue is important because it is a test of the FSA's credibility. Is it willing to insist on full restitution and to get to the bottom of what seems to have been serious market abuse?

I hope that the Minister will touch briefly on the failure of professional self-regulation, which has been exposed by recent events. The Equitable Life scandal revealed that we had actuaries who could not count and auditors who were blind and deaf. The worst thing about the Equitable Life situation was the conduct of the auditors, Ernst and Young. To the credit of the accountancy profession, it has recently shown signs of being willing to make radical changes to improve its performance. However, the ultimate responsibility is the Government's. The Department of Trade and Industry rather than the Treasury should insist on changes in audit practice to prevent that kind of thing from happening again.

Finally, nobody has mentioned an issue that is central to a discussion about lack of confidence in the financial system: the role of the banks. I mention this because it is a responsibility of the Government rather than of the FSA. As I always ask in debates on financial services, where is the follow-up to the Cruickshank report? The Government accepted that report, which suggested that there were very large "excess profits" in the banking system at the expense of personal customers, and promised us a payment regulator. That has not happened. Where is it?

A few months ago, the Chancellor presented to the House of Commons the report of the competition authorities on business lending. The Chancellor was very tough. He wanted full implementation. We discovered this morning that the banks are not implementing his instructions. Interest on deposits, which was due to be paid from the beginning of June, will not be paid—the banks are withholding it at a cost of £500 million a year to small businesses. Will the Government force through the competition authorities' recommendation? The banks are cocking a snook at the Government and the competition authorities and something should be done. Will the Government do anything about it?

The hon. Gentleman refers to the debate that took place on the Floor of the House. He will remember my intervention on my right hon. Friend the Chancellor on that occasion, when I asked him whether he would use the threat of a windfall tax if the banks did not comply with the recommendations. Would the hon. Gentleman support that measure?

I thought at the time that that would be excessive, but it is now beginning to seem necessary, in order to show the seriousness of the problem.

In the last minute of my speech I shall make some specific points that I hope the Government will follow up. I would like to talk about consumer protection, for which the FSA has responsibility and which it is now taking seriously. If the Minister has been following the debates on the Enterprise Bill, he will know that both Opposition parties, together with Labour Back Benchers, are urging the inclusion of a duty to trade fairly in the context of legislation affecting financial institutions that come under the Department of Trade and Industry rather than the FSA, which relates to issues such as consumer debt. Such a duty is an important omission from the Bill and I hope that the Government will address that.

The hon. Member for Newport. West and I—and, I think, the hon. Member for Brent, North (Mr. Gardiner)—have made the suggestion in the past that there should be some kind of pro bono system of financial advice. Confidence in financial advice has collapsed and the industry needs to find a totally independent system of advice that is not linked to commission. The Government might want to promote that.

Finally, as a result of that collapse of confidence, the Government will have to take responsibility for the production of more regulated products with. CAT standards. We currently have individual savings accounts and stakeholder pensions produced to such standards and I fear that many other products will have to be launched in that way in order to preserve minimum confidence in the financial system.

I have a great liking for the hon. Member for Newport, West (Paul Flynn), but I was disappointed by his speech and felt that much of what he said was not as responsible as it might have been. I was personally offended as—I declare an interest—I worked in the financial services industry for 30 years, building an investment management business of which I am still non-executive chairman. With transparent products such as unit trusts and open-ended funds investors know what is happening and—dare I say—most of the clients that we built up during 20 years were pretty satisfied with our service.

The fundamental issue is that all financial assets carry risk. If one keeps one's money in cash and inflation is rising, its real value can disappear—it is not safe. If one invests in equities, one incurs the risk of the stock markets. As the hon. Member for Twickenham (Dr. Cable) said, between 1980 and 2000 everyone was in the main extremely happy. Their endowment policies more than paid off their mortgages and bonuses paid out by with-profit bonds were high. They were probably too high, and that was partly because of regulations about the extent to which reserves can be built up.

Let us consider the matter another way. From 1945 until 1985, people who, on Government advice, bought gilts lost 90 per cent. of the real value of their money. Inflation eroded it and rising interest rates killed prices. The idea that everyone in the financial services industry is a cheating robber whereas the Government are wonderful and have all the solutions, as we heard from the hon. Member for Newport, West, is not fair. Risk is in the nature of financial markets.

Pensions were the great success of this country between 1950 and the 1990s. Not only were huge amounts—£800 billion or so—built up, but 65 per cent. of the population had some form of private sector pension saving. That was much more than anywhere else—even in America, the figure was only about 47 per cent. The huge taxes on employment to pay for state pay-as-you-go earnings-related pensions meant that continental European economies suffered from poor economic growth. They also suffered from capital outflows because they were bad places in which to invest.

Regrettably, occupational final salary schemes are in crisis, in part because the Chancellor thought that he could extract £5 billion a year from them. I remember him saying that stock markets would go up and that everything would be wonderful. When stock markets go down, the problem is unleashed. Not surprisingly in many ways, companies are increasingly unwilling to take the open-ended risks of having to fund final salary schemes, so they are closing them like fury.

Even money purchase pension schemes are affected. The issue of what pension people will receive, including stakeholders, will in part depend on the performance of financial markets and in part on inflation. A major problem for the generation approaching retirement is that the cost of annuities has more than doubled in the past decade, which has been the result of not only lower inflation, but a significant fall in real interest rates.

Does the hon. Gentleman accept that the companies that are closing their final salary schemes are, in many instances, the same companies that took superannuation holidays during the past 10 or 15 years? That has left those schemes underfunded to pay the final salaries that they were supposed to meet.

No, I do not. Obviously, that applies to some large established firms, but I am aware of many firms that did not take pension holidays, especially in the middle bracket. The hon. Gentleman will know the rules about the extent to which pension funds can be overfunded anyway, which has been a limitation, as the right hon. Member for Birkenhead (Mr. Field) pointed out.

As stakeholders move, along with everyone else, to money purchase schemes and the obligation to buy an annuity, my great worry is that we are in a period of low inflation. The guaranteed annuities one buys reflect that, with a low nominal as well as a low real interest rate. If inflation rises significantly over the next decade, as is perfectly possible, people who lock into schemes today will be screwed. Will the hon. Member for Newport, West blame the Government for forcing people to buy annuities? If that happens, it will be the result of many factors. People object to compulsion on the issue because they fundamentally know that there is huge risk in buying a guaranteed annuity when interest rates are extremely low.

Given what we have heard today, it might be surprising to know that the overwhelming majority of independent surveys show the clients of financial advisers to be quite satisfied with their services. The average income of independent financial advisers is about £25,000 a year. It is not a fat-cat profession, so it is unlike the great and good circles of large companies. There is no substantiation for the simple argument that the problem is excessive commissions and overpayments. Commissions are an issue, but there is no evidence for a rip-off argument that shows that financial advisers grow hugely wealthy on the back of them.

The problem with Equitable Life was about guaranteed annuities. It was about the Treasury in 1998 endorsing the mistaken decision of Equitable Life to believe that the law enabled it to force the owners of guaranteed annuities to pay the costs. When the House of Lords rejected that, trouble resulted. I remind hon. Members that Equitable Life was a mutual. Like a credit union, it was ultimately owned by its members. Credit unions are jolly useful when they work, but there are many problems with them. A great number of them are insolvent. One cannot think that they will be the solution to all our problems, given that standards of management are often not satisfactory, to be candid.

Regulation has been in place since 1986 to try to address the problems, and standards have risen in that time. There are now major problems, which largely reflect markets, and more transparency is needed. There is especially a further need to reform the insurance industry. However, talking about the financial services industry as if it is a load of cheating robbers does no good. We should be diagnosing and solving the problems; but we should remember that there will always be risk in all forms of financial investment.

There can be no better first outing for an incoming Chief Secretary to the Treasury than to appear in Westminster Hall, with so many experts speaking on a subject that is of interest not only to our constituents, some of whom have suffered as a result of failings in integrity of the financial services industry, but to everyone. It is an important subject. In the generality of things, UK plc stands to benefit from a financial services industry that is perceived to have integrity, because the economy and the nation are better able to gain from all that it has to offer. I am grateful for all the kind things that have been said today—and, in the case of the hon. Member for Arundel and South Downs (Mr. Flight), what was put in writing prior to the debate.

The market for financial advice is complex, and reform is required on both sides. On the demand side, we need educated consumers who are capable of making informed decisions on the products that are right for them. On the supply side, we need appropriate incentives for financial advisers, we need to extend the market in advice so that more people can benefit, and we need products that people can understand. That plea has been made by a number of hon. Members.

I am enormously grateful to my hon. Friend the Member for Newport, West (Paul Flynn) for sharing his experience of the financial services industry, and for giving us the opportunity to debate the subject. While my hon. Friend was speaking, I looked round the Chamber, and it seemed that apart from your distinguished predecessor in the Chair this morning, Miss Begg, whose memory and parliamentary longevity are positively elephantine, I was the only Member to have heard my hon. Friend put his question to the former Prime Minister, Baroness Thatcher. I remember that her answer was indeed to describe him as a socialist, which was her usual response to those who asked difficult questions. My hon. Friend has borne that as a badge of honour ever since.

My hon. Friend was good enough to recognise that the establishment of the Financial Services Authority signalled an end to the confusion caused by the overlapping agencies that presided over the scandals of the 1980s and 1990s. Indeed, the excellent chairmanship of Sir Howard Davies has strengthened the authority. We have gone beyond what my hon. Friend described as a ragbag; we are now in a different position, and it is, important that we should recognise the positive even as we debate the negative. We should remember that there are people in the financial services industry who possess integrity and who are concerned about the welfare of those to whom they sell products. We need to achieve a balance in the debate, because we want to ensure a successful industry. I hope that no one will take that as a sign that I have gone over to the Ferengi. I rather lost interest in "Star Trek" when Lieutenant Uhuru was subject to a compulsory redundancy: when she went, so did I. I have no doubt that lessons can be learned from the Ferengi—and my hon. Friend shared them with us.

Enhancing consumer education and increasing consumer understanding are essential components of our effort to offer appropriate protection for consumers and to enhance the efficiency of the financial services market. The FSA has a statutory duty to promote understanding of the financial system. It should aim to provide individuals with the knowledge, the aptitude and the skills to become effective consumers. It is working with schools to start financial education earlier, and it publishes a range of information on financial products in easy-to-understand flow charts and comparative tables. That is important.

Pension mis-selling and mortgage endowments have been identified during the debate as areas of concern. In each case, responsibility for the detailed operation of the regulatory system properly lies with the FSA while the Treasury retains responsibility for the overall framework. I or my hon. Friends the Paymaster General and Financial Secretary to the Treasury, who have day-to-day responsibility for these matters, will write to hon. Members in response to the specific questions that they have raised, but I shall make a few short points in the time that I have available.

I shall deal first with mortgage endowments. The Government have been successful in achieving low, stable inflation, the wider benefits of which include, for many borrowers, welcome reductions in monthly mortgage payments as the interest element has fallen. However, low inflation has also resulted in lower cash returns on investments, so, in some instances, the return on an endowment, in cash terms, may not be sufficient to cover the outstanding mortgage at the end of the term. We must recognise that that down side puts the issue of mortgage endowments into a different category from pension mis-selling, and so it requires a different response.

The role of the FSA is to regulate advice and sales of investments to protect consumers and help them make informed decisions. Clearly, it has a responsibility to regulate endowments. In his letter of 5 June to the Consumers Association, Sir Howard Davies referred to the FSA's overall strategy in that regard. I commend that letter to hon. Members as a sign of the welcome work that the FSA will be doing in this area.

Pension mis-selling is a scandal that still reverberates around the industry. No one should be in any doubt that there is much to learn from what has occurred. Two million cases of pension mis-selling have been examined, and offers of redress totalling £9 billion have been made in more than 1 million cases. The FSA has paid particular attention to laggard firms which have not given the review the priority that it deserves. They should be in no doubt about the FSA's determination to deal with them. Regulators have not been soft on the industry—far from it. Almost 350 firms have already been disciplined over pension mis-selling, with fines approaching £10 million. Most recently, in May this year, an IFA firm was fined £120,000 for serious failures in conducting the review. That is very different from the issue of mortgage endowments. The FSA published guidance to firms last year to ensure a consistent approach to their handling of mortgage endowment complaints.

The FSA has the right strategy. It must strike a balance between informing consumers, so that they can take the right decisions, and ensuring that firms do the right thing. Such an approach is also important in relation to accident, sickness and unemployment cover, to which some hon. Members have referred. In 1999, the last year of the independent Insurance Ombudsman Bureau, that office handled more than 450 complaints, 10 per cent. of the total of 4,645 complaints about payment protection policies linked to unemployment and sickness. It is interesting that only 12 of those complaints related to the selling process, so it is important to understand the distinction between the three different areas.

The right balance has now been struck and, learning from the past, we can build a more efficient system with proper processes in place for consumer protection and redress. The role of Members in highlighting those issues, as we have done during the debate, is an important contribution to that process. I and my colleagues in the Treasury will continue to listen and to respond with care to hon. Members' points, because we must learn and ensure that the market responds in the right way. We must do that if we are to do something about our constituents' concerns and about the terrible looks on their faces when they describe the impact on their lives of some of the scandals. We are determined to get to the bottom of such scandals and to improve the situation, because everyone should have confidence and trust in our financial services industry.

I welcome the opportunity to follow up a debate that I introduced a couple of years ago on silicone implants. Implants were introduced almost 40 years ago, and breast enlargement is now the most common cosmetic surgery procedure to be performed on women in the United Kingdom. It is estimated that 10,000 operations are performed each year, and 80 per cent. of those who receive implants opt for silicone gel implants. Significantly, 80 per cent. of operations are cosmetic, rather than for reconstruction purposes.

According to those who campaign on the issue, 60.000 women in the UK suffer from the effects of silicone implants, and the number of websites that provide information on the issue makes the point. Despite the debate held a couple of years ago, and the report by the Select Committee on Health in March last year, no decisive action has been taken. The Government have been slow to act, and I have no evidence that they have struck the right balance between the benefits and risks of breast implants.

It is worth going over some of the ministerial responses to the March 2000 debate. At the time, the independent review group recommended that all patients who underwent surgery should be able to obtain free, independent and comprehensive information from a designated body or from the Government. That information is now available, and there is a Department of Health booklet entitled "Breast Implants Information for women considering breast implants". As others have said, however, the information in that document is not as challenging as it should be. Furthermore, the Department's website address is incorrect, so women who want to visit the website to obtain a copy of the leaflet would be unable to do so. The information in the leaflet is quite bland, and does not put across the real impact of a breast implant that goes wrong.

It is worth returning to the case history of a constituent to show that the problems associated with breast implants are not merely tenderness or the shape not being quite correct. The medical implications can be very severe, but that does not come across in the leaflet. Implants may have to be removed, and some women are left with prominent scars or holes in the tissue. Infections can also arise. Furthermore, concern about the failure of a breast implant may lead to conditions related to stress, such as peptic ulcers.

There is also concern that women who have had silicone implants that have leaked or ruptured could develop other conditions further down the line, such as myalgic encephalomyelitis or rheumatoid arthritis. The Minister may say that there is no medical evidence to support that, but there is certainly anecdotal evidence. There is concern among a significant number of women that implants have such side effects, and the severity of their concerns should be reflected in the document, but it is not. The Health Committee believes that the document does not provide sufficient information about the risks of these products. Since its report, the document may have been reviewed and additional information provided, but the Consumers Association also said that it was disappointed with the leaflet and was concerned about its usefulness.

Informed consent for an operation is another issue. Will the Minister tell us how thorough and useful is the new consent form? Will she provide an update on progress made on implementation of the Health Committee's recommendation No. 8, which will make it mandatory to give women an identification card containing the make and model of their breast implant? That will give women a physical record to which they could refer if anything went wrong in the future.

Registration was another issue referred to two years ago, and I want to press the Minister on it now. The Government say that the registration process by which women place their details on a national breast implant register should be voluntary. Does not the Minister agree that it would be preferable to have a compulsory registration scheme in which the details of individuals were not available, but the details of the implants were? That would provide a mechanism for tracking and linking details to individual people if problems subsequently developed.

Surely we should keep proper information. When we use our cards in Tescos and Safeways, we give the supermarket chains a whole host of information about what we purchase and why, and few people bat an eyelid about that. As clear health concerns are involved with implants, compulsory registration with the data anonymised—and no means of identifying particular individuals—should not cause women any problems. If it were compulsory, we would have consistent and complete data on all the implants in the UK. Will the Minister respond to that point?

I checked with Liberty, and was told that it has no concerns from a human rights standpoint. As long as the data is anonymised, it is not worried about data protection issues. If the Minister believes that an important issue is at stake with compulsory registration, will she explain why Liberty—the organisation most likely to clamour against it—does not?

The register was established in 1993, but what research has the information been used for subsequently? The Minister will correct me if I am wrong, but it seems to me that no work has been done whatever. Nine years on, the Department of Health is commissioning a contract to establish whether the register can be used to assess the outcome of breast implants. When the register was set up, surely its main purpose was precisely that. I am alarmed that nine years after the register was established, research is being carried out to see whether it can be used for the purpose for which it was originally intended. Many women consider that, because the register has not been used to conduct detailed research into the outcomes of breast implants, women in the UK may have been used as guinea pigs in clinical trials, which would be unacceptable in countries where a moratorium on the use of implants for cosmetic reasons is in force.

Another area of concern is the apparent inconsistency in the approaches to the different types of implant. As there is insufficient evidence to show that trilucent implants are safe, the view is that they should be banned, but as there is insufficient evidence to show that silicone implants are unsafe the view is that we should allow them. Perhaps the Minister can explain that position, and why one implant is banned and another is not.

The Minister will, I am sure, be aware that a draft European Union directive will be adopted in September that will reclassify implants as class 3 highest risk medical devices. Does she think that will help? Is she worried that the Government are not concerned about silicone implants, whereas the EU is reclassifying them as class 3 devices, which will mean that more pre-market clinical testing of the products will be needed?

Associated with that at an EU level is the concept of CE marking. Everyone will have seen those two letters on products on sale in our shops and supermarkets. It is a badge of certification to show that they pass certain standards. The trilucent implants have received that badge. Is the Minister satisfied with that form of classification? Is she satisfied that the fact that a CE mark has been allocated ensures that a particular implant is safe?

Does the Minister have any concerns about the moratorium that other countries have imposed on implants, and does she feel that we should introduce one here under the precautionary principle? It is widely recognised by all quarters that silicone gel can be released into the tissue. Implants can rupture, and silicone oils can bleed through the shell into a woman's body. Silicone was found in my constituent's armpits. There is clearly concern about leakage. The associated risks, such as infection, are not spelled out clearly in the Department of Health leaflet. Perhaps some photographs of the affected women are needed. That might draw it to people's attention more than the rather bland text.

The implications for women's health need to be taken into account to a much greater extent. It is not good enough to explain the relative lack of action by saying that it takes a long time for illnesses that affect the whole of a woman's body to show up, and to argue that we need to wait for further evidence before we can conduct research into the health implications of implants. There is no conclusive evidence that they are 100 per cent. safe, and other countries have taken a harder line than the UK. It is therefore time that the UK Government erred on the side of caution and immediately banned the use of silicone implants for cosmetic purposes.

I congratulate the hon. Member for Carshalton and Wallington (Tom Brake) on securing a debate on an important issue that is of great concern to many women who have had, or are contemplating having, breast implants. Since the hon. Gentleman first raised the issue, there have been many developments in the safety of breast implants, whether they are filled with silicone gel or other materials. I welcome the opportunity to respond to the points that he made, and to put into the public domain further details about those developments.

The Government have always taken seriously the health of women who have had silicone gel breast implants. In the past 10 years, there have been several definitive expert reviews of the safety of those implants, and recent developments must be considered in the light of the fact that each review has firmly established the suitability of silicone for use as implant material.

In 1991, it was suggested that silicone gel breast implants might cause connective tissue disease. The Department of Health immediately initiated a detailed review of the relevant evidence, and convened an independent expert advisory group. In 1992 and 1994, the group concluded that there was no evidence of an increased incidence of connective tissue disease associated with silicone gel breast implants, and there was therefore no scientific case for changing practice or policy on breast implantation in the UK.

Despite those reassurances, some women remained convinced that silicone gel breast implants may have caused debilitating illnesses. As a result of those concerns, one of the Government's first actions in May 1997 was to ask the chief medical officer to take a fresh look at the safety of silicone gel breast implants. The chief medical officer set up an independent review group to examine pre-operative patient information and the possible health effects associated with the implants. The hon. Gentleman referred to the Department of Health leaflet, to which I will refer in detail in a moment.

In July 1998, the independent review group published its report, in which it concluded that silicone gel breast implants are not associated with any health risk greater than that associated with other surgical implants. The hon. Gentleman said that we should take steps to ban implants if we cannot be satisfied that they are 100 per cent. safe. I am sure that he will accept that no procedure will be 100 per cent. safe with any implant surgery. There will always be risks in any surgery, and therefore balancing those risks is an important consideration.

I entirely agree with the Minister. However, there is a slight difference in that a medical implant is being used for cosmetic purposes.

The Government and the independent review group must take into account the medical and scientific evidence, not the purpose for which the procedure is carried out. We are committed to developing a rigorous evidence base for everything that the Department of Health does. We must concentrate on that evidence base when we consider the risks to ensure that we get the balance right for people who are contemplating any implant surgery.

The hon. Gentleman referred to other countries and their views. Conclusions similar to those of the review group were reached by the American Medical Association, a Canadian independent advisory committee, the Institute of Medicine of the United States National Academy of Science, a national science panel appointed by the US Federal Court, and a scientific technological options assessment carried out on behalf of the European Parliament.

The UK is not alone in taking the advice of the independent review group, which concluded that silicone gel implants are as safe as any other surgical implant. The Government consider it important that the group continue to meet, and that this is not a one-off review. The group should consider any new evidence as it appears. It continues to meet about twice a year, and so far nothing has emerged that has caused it to alter its original conclusions.

However, although the review group was satisfied on the safety of silicone gel breast implants, it was concerned about a number of issues associated with their use. It felt that information provided to women undergoing breast implantation was often inadequate, and that that problem needed to be addressed. It made several important recommendations about information provided to women and clinicians, and about possible consequences.

Since the publication of that report, we have implemented various actions to try to ensure that clinicians and women have appropriate information. We have formed an advisory group to prepare an information booklet for women, which included representatives of women's support groups. It is crucial that patient advocates are involved in preparing the information. From October 2000, 80,000 copies of the booklet were circulated. It has recently been revised, taking into account the recommendations made by the Health Committee in March 2001, and a further 100,000 copies have been printed and are being distributed.

The leaflet includes a full section on the potential consequences and risks: the possibility of hardness, discomfort and changes in breast sensation. It talks about capsular contracture, whereby scar tissue is formed within the breast cavity, and about what happens when the scar tissue hardens and the effect of that on the implant. It refers to rupture rates and life expectancy of implants. A section makes clear that breast implants are a long-term commitment. It states:

"Remember that breast implants do not come with a lifetime guarantee. They are likely to need replacing with consequent further surgery and expense. A young woman who has implants may expect to have further operations in her lifetime".

That is very clear. The section on risk is graphic.

"Occasionally, the silicone can spread outside the capsule and create a series of lumps known as siliconomas. These may give rise to local symptoms such as tenderness…Breast tissue may be lost when the implants are removed."

On scarring, it says that

"in a small number of women (up to 1 in 20) as with any surgical procedure, scars will be red, or highly coloured, thick, painful and will take several years before they improve."

On creasing and folds in the breasts, it states:

"The nature of the implant capsule may enhance less desirable characteristics such as creasing, kinking, vertical ripple folds and rippling in the breast."

The leaflet does not underplay the likely effects of the surgery. It tries to set out for women what the decision involves. It refers to the silicone controversy, to the independent review group and to some of the symptoms that have become apparent. It says that some people believe that symptoms include muscle spasm, swollen and painful joints, rashes, changed eye and saliva fluid and hair loss. It contains some photographs, and if any woman contemplating breast implantation read it, it would give her a pretty good tour around the issues.

I am in favour of informed consent and of anyone undertaking operations having full knowledge. The hon. Gentleman asked about the consent form and about the data registry. We want to ensure that when people are entered on the registry they get a copy of the entry, with all the details about the batch and the manufacturer of the implants so that the woman is in possession of those important details.

The Minister has correctly pointed out that there are photographs in the leaflet, but they would not do anything to dissuade women from having implants—I suspect that they would have the opposite effect. The Minister pointed out the uncertainty of the life expectancy of implants, and said that women would know that they would have something inside them with an unknown life expectancy. She has also set out some of the many problems associated with implants. Does not she consider that the problems outlined in the leaflet are sufficient to introduce a moratorium on the cosmetic use of implants?

No. It is for patients to decide, on the basis of information and knowledge about the likely implications, whether they want to proceed. We are in the business of assessing and balancing risk and ensuring that people are empowered to make those decisions themselves, not making those decisions for them. That is a fundamental principle, and the information in that leaflet is accurate and graphic enough to outline the risks. The hon. Gentleman's point was that the information was bland and did not really draw out the details, but I disagree.

The hon. Gentleman also raised the specific issue of the reclassification of devices under the European directive from class 2b to class 3. The UK has been at the forefront of the push for devices to be in class 3, which will require a more detailed assessment of individual dossiers of each device. Indeed, many of the EU's recommendations have been made on the basis of actions that we have already implemented in the UK, and I can reassure him that we are at the forefront in clinical practice. He will also know that with the introduction of the National Care Standards Commission, we now have the opportunity to regulate, inspect and monitor standards in the private health care sector. That will be in the best interests of women undertaking such surgery.

The hon. Gentleman asked about research and the length of time that it has taken to use the registry to support research. The National Breast Implant Registry was set up in 1993, and it takes about five or six years to gain the necessary information. Our studies will be five years on from implantation and will consider the epidemiological implications for women. It takes time to gather the data and then to conduct the studies. Almost two years ago, a particular company proposed a study that met the quality issues for research, but it proved impossible in the negotiations to reach an agreed contract on the terms and conditions. The company raised concerns about indemnities and liability.

However, I am pleased to say that we have been able to agree a research project that will use information from the breast registry to examine epidemiological implications. The contracts are just about to be agreed, so we should be able to get on with it soon. The hon. Gentleman is right, as there has been a delay because of the difficult contract negotiations with the original research body, but that has now been resolved. I want to ensure that we press on and get research on this important topic.

The hon. Gentleman raised the point about trilucent breast implants, which have soya bean oil fillings. They were withdrawn in March 1999 as a precautionary measure, and since then we have learned more about the risks that they pose. In June 2001, the Medical Devices Agency issued a hazard notice that advised women with the implants to have them removed, because of concerns about the toxicity of the filling. When the soya bean oil starts to break down, it can have toxic effects. There is no such evidence with silicone gel or saline, which are other currently approved implants. In the trilucent case, the manufacturer organised an implant removal programme, and I understand that 95 per cent. of women who received the implants have had them removed and there are only about 200 women in the country who still have them.

There have been a number of developments in breast implants. The hon. Gentleman is right to raise the concerns of his constituent, but the UK is at the forefront of ensuring that the issues are considered in this country and throughout the European Union. When devices are approved for use in any European country, they can be used here. We are trying to get as much information and scientific evidence as possible so that women's health is protected. It is fundamental that women should be able to make the decision themselves in the light of the best available scientific knowledge. That is our current position on this extremely important issue.

I am pleased to have the opportunity to deal with this subject in an Adjournment debate, but first may I welcome the Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister, my hon. Friend the Member for Harrow, East (Mr. McNulty), to his first appearance at the Dispatch Box? I am aware of his Irish antecedents, so I apologise to him for securing this debate at the time of the Ireland game. I hope that he will not hold that against me.

I am pursuing the issue because the problems posed by unauthorised encampments are a real concern to my constituents in Harlow, Roydon, Sheering and Nazeing. However, I wish to make it clear that bigoted prejudice against travellers is simply wrong. My criticisms of unauthorised encampments are not criticisms of all travellers, but of that minority that persistently ignore the laws of the land. Everyone should have the right freely and peacefully to live their life in a manner of their choosing. However, as well as rights, in this society we have responsibilities. I simply do not believe that someone has the right to live their life regardless of the consequences for others. Some travellers cause nuisance and vandalism and engage in antisocial behaviour and criminal damage, and that is wholly unacceptable and unjustifiable.

I also wish to make the point strongly that unauthorised encampments and the problems that they bring disproportionately affect my constituency and the areas surrounding it. The Department's last count of unauthorised traveller caravans was undertaken in January this year, and it shows that the eastern region had by far the largest number of unauthorised encampments, with 25 per cent. of the English total. Within the eastern region itself, Essex, within which my constituency comes, had by far the highest total. Indeed, Epping Forest, which part of my Harlow constituency falls within, had the highest number, with a whacking 32 per cent. of all the Essex unauthorised encampments. I do not quote the figures to bore people with statistics, but to try to hammer home the message that the problem disproportionately affects my constituents compared with people in the country as a whole.

Every summer, Harlow is affected by numerous unauthorised encampments that often bring rubbish, antisocial behaviour and crime in their wake. Two summers ago, on Harlow common, we had a 100-caravan illegal encampment, which after much pressing from me and local councillors was removed by the police using section 61 powers under the Criminal Justice and Public Order Act 1994. However, the clean-up costs to the community, which were borne by the local taxpayer, were a staggering £20,000.

In the three villages that make up the rest of my constituency but that come within Epping Forest district council, matters are, if anything, more serious. As I said, we now have the largest number of unauthorised traveller encampments, with 32 per cent. of the Essex total. In Roydon and Nazeing in particular, it seems as though barely a week goes by without an additional unauthorised encampment. In Hamlet Hill in Roydon, 30 travellers have been encamped illegally since the new year. Residents are rightly concerned about the impact on the green belt, local wildlife, the local environment and the security of their properties. In Bumbles Green, a 22-family encampment has been proposed, but it is green belt land and totally unsuitable for development.

Perhaps the worst current example is Payne's lane, where the problem has been going on for a staggering 10 years or more. The land is owned by travellers but has consistently been deemed unsuitable by the planning authority for permanent encampments. When an enforcement notice is issued, the travellers submit another planning application—usually a slightly amended version of the original—and that prevents the enforcement procedure from taking place. Alternatively, after the enforcement notice has been issued, the travellers move off the site for a few months and then return, and the council has to start the whole process over again.

I can give a flavour of what has been happening. An application for a stable block on that site was first submitted to facilitate the travellers' encampment as long ago as 1990. The case went to court, injunctions were served and travellers were brought before the court for contempt. All the while, the unauthorised encampment continued in one form or another and the issue still has not been resolved. Matters were brought to a head in January when the unauthorised encampment increased in size significantly. It is no exaggeration to say that the lives of residents who live in the narrow lane, which is the only access route to the illegal encampment, have been made a misery.

Some residents have been physically assaulted; the travellers have pushed garden refuse and gas cylinders into the flood ditch, forcing local residents to dig a new one; the area has become infested with rats; the travellers regularly bring hardcore to the site in large lorries, which the lane was not designed to accommodate, sometimes in the early hours of the morning, disturbing residents and causing houses to vibrate; and they park on residents' properties and abuse them when asked to remove their vehicles. It genuinely is a living hell.

To give hon. Members a flavour of the situation, I shall quote from a constituent, Mrs. Sally Cooper.

"My life and the lives of my children and the rest of the family are not the same any more. I have been scared to leave the house because of getting out of the lane, then getting home again and what I may find on my return. If we were able to sell our cottage we would to lead a normal life again. But we couldn't currently give it away so we are stuck with this hell on earth."

I hope that the Minister will agree with me that people should not have to live like that.

My constituents need to be reassured that the Government recognise the scale of the problem and will act to strengthen enforcement provisions against unauthorised encampments. I would welcome the Minister's confirmation, on the record, that the Government have not weakened the regulatory framework to deter traveller encampments, as some have erroneously suggested.

What more can be done to relieve the misery that my constituents have to suffer? Local councils and the police should make vigorous use of the powers already available to them. In a previous Adjournment debate on the subject, the hon. and learned Member for Harborough (Mr. Garnier) argued that the police could use the Criminal Justice and Public Order Act 1994 more often than they do currently to deal with unauthorised encampments. He argued that section 61 of that Act, which gives the police powers to direct trespassers to vacate the land, could be used when the landowner has taken reasonable steps to ask the trespassers to leave and when trespassers have six or more vehicles on the land. I would welcome the Minister confirming that interpretation of the Act, even if it is done with the caveat that the provisions of the Children Act 1989 and the Human Rights Act 1998 must also be assessed when children are involved. Such an interpretation would greatly clarify the ability of the police to use section 61 to deal speedily with large, unauthorised encampments such as that in Harlow two summers ago. At present, my advice from the local police is that section 61 should not necessarily be considered, even when the number of caravans exceeds six. The Minister's guidance on the issue would thus be helpful.

I hope that the Minister will confirm that the Human Rights Act is a two-way street. Yes, it enforces the human rights of travellers, but it also enforces the human rights of the settled population to have their property protected and to ensure respect for their private and family life. The Human Rights Act does not give anyone, settled resident or traveller, the right to act in an antisocial or criminal manner. I would welcome the Minister making that abundantly clear.

The Porter case, concerning planning enforcement against unauthorised encampments, which went before the Court of Appeal in October 2001, led some police forces and local councils to the erroneous view that the Human Rights Act has blocked effective planning enforcement through the courts. I strongly urge the Minister to confirm that the case hinged on a technicality. The issue before the Court of Appeal was not whether the original court judgment should have been granted, but whether the original judge had properly directed himself in making his judgment. It would greatly help police forces and local authorities if the Minister confirmed that Porter did not establish a hard and fast principle, and that as long as a judge assesses the human rights issues he can still reach a judgment that results in planning enforcement against an unauthorised encampment.

I am convinced that, as well as properly using the powers already available, we must consider further changes to help communities to tackle unauthorised encampments much more quickly and effectively. I shall set out some of the ways in which I believe that can be done.

As I have said, the cost to the community of cleaning up after an unauthorised encampment can be significant: it was a staggering £20,000 two summers ago in Harlow. I simply do not understand why the general public, through their council tax, have to bear that burden. I strongly urge the Government to consider making travellers, or any other trespassers, legally and individually responsible for damage caused during an illegal occupation. Such a penalty would act as a powerful deterrent against the antisocial dumping of rubbish that often accompanies an unauthorised encampment.

Another problem occurs when travellers seek planning permission that is ultimately refused. Planning decisions and enforcement can sometimes take years, and all the while the unauthorised encampment continues. In those circumstances, I urge the Minister to allow councils to be granted an injunction coupled with the power of arrest, which would allow the police, with bailiff support, to remove an unauthorised encampment until the planning decision had been determined. Such a change would provide enormous relief to my constituents.

I urge the Government to consider fast tracking planning enforcement decisions that deal with unauthorised encampments. We have been told that the case of Payne's lane has been fast tracked, yet the original problem occurred in January, when the injunction was sought, and the case has gone to the High Court only this week. That does not represent fast tracking in any meaningful sense of the phrase as my constituents and I understand it. Surely there is a case for a specialist court, with a specialist planning judiciary, dedicated to making quicker and tighter decisions on unauthorised encampments.

The court procedures often appear to be abused and drawn out by the lawyers representing travellers to put off enforcement decisions that would otherwise be taken. The history of the Payne's lane site is beset with legalistic ruses that have no intrinsic merit, but serve to string out the court or local authority procedures. One example is planning application forms that are filled in incorrectly or incompletely time after time to delay the process. Surely there should be a limit on the number of times that that is permitted without nullifying the application. I strongly urge my hon. Friend to consider the whole planning and enforcement process, and to introduce changes that stop the legalistic filibustering that is greatly slowing down the legal redress available to my constituents.

In considering the situation, I am tempted to draw the conclusion that if every local authority provided a minimum number of permanent authorised sites, as both Epping Forest and Harlow do, we would not be facing anything like the current scale of the problem. The previous Government made a mistake in 1994, when the statutory duty on local authorities to provide an authorised site was removed. We need to reconsider that issue, and I strongly urge the Government to do so.

Many of my constituents are suffering a living hell because of the actions of some travellers. I do not exaggerate; I have been on sites and seen the impact on their lives. I hope that the Minister will reassure us that he understands the problem, that he shares our concern and that the Government will introduce changes to help my constituents. They desperately need it.

I am grateful for the welcoming comments from my hon. Friend the Member for Harlow (Mr. Rammell), and I congratulate him on securing this important debate. For reasons that most people are aware of, I am a little surprised to be responding to it, but the slot became vacant because of the elevation of my hon. Friend the Member for Tottenham (Mr. Lammy). My hon. Friend the Member for Harlow is a lifelong Spurs fan, and I am sure that this is the first time in a long while that anything from Tottenham has made him so happy. The subject is important for many hon. Members, and I shall deal with the serious points that he made.

I am grateful for the fact that my hon. Friend did not criticise all travellers. Clearly, only a minority ignore the law of the land, but that attitude must not prevail. Travellers have a right to pursue a nomadic lifestyle, with many gypsies living peaceably next to settled communities. Gypsies and travellers are the largest group among travelling communities in the United Kingdom, and form a recognised minority ethnic group. They also have the same right to access education and welfare as everyone else.

The Government are aware of the settled community's perception of travellers, and we want to dispel such prejudices and enhance toleration of the traveller's way of life. However, that is a two-way process. Travellers are often at the receiving end of bad publicity, some of which is caused by their own behaviour. We have heard reports about the amount of rubbish left behind on sites in Harlow common and Epping Forest, but we should be aware that not all travellers make trouble. That is why I was grateful for my hon. Friend's opening remarks.

Travellers excite much prejudice, but it is often ill-founded and based on knee-jerk reactions. None the less, local communities and the Government can and should expect the standard of behaviour of travellers to be the same as that of the settled community. Any antisocial behaviour must be dealt with in the same way for both communities.

The Government are fully aware that nuisance and disorder at some sites, especially unauthorised encampments on local authority or privately owned land, cause misery and distress. The typical consequences of unauthorised encampments include unacceptable behaviour, sometimes of a criminal nature, and a lack of respect for other people's property, the general environment and the amenities and quality of life of surrounding residents—not least those eloquently described by my hon. Friend when he talked of the residents of Payne's lane. He and the resident he quoted are entirely right that no one should have to live like that.

The Office of the Deputy Prime Minister receives a huge postbag from hon. Members, local authorities and the settled and business communities regarding unauthorised encampments by travellers. The Department has responsibility with the local authority to manage unauthorised camping, and Ministers in the Office of the Deputy Prime Minister and the Home Office work closely together to ensure that any criminal activity is dealt with.

The police and local authorities have powers under the Criminal Justice and Public Order Act 1994 to direct travellers to leave land if they are camped without consent. The police can use their powers under section 61 of that Act. If reasonable efforts have been made to ask travellers to leave an unauthorised site and they have refused, the senior police officer present may direct them to leave if certain statutory conditions have been fulfilled. Travellers must have been abusive to the landowner or his or her agent, caused damage or brought six or more vehicles on the land. The powers do not apply to land forming part of a highway.

Can my hon. Friend make it clear that it is necessary for only one of those criteria to apply, not all three of them?

That is the situation, as far as I know. I shall inform my hon. Friend if I am wrong.

The decision to use section 61 remains an operational matter for the senior police officer on the ground, but Home Office Ministers have made it clear that police powers should be used at an early stage, where necessary. As part of any decent society, even within the context of unauthorised camping, an effective strategy must also address the welfare and educational needs of travellers and their children. In exchange for better site provision, travellers must respect the settled community. When using the services provided, travellers should leave sites clean and tidy and adhere to acceptable standards of behaviour.

The new Office of the Deputy Prime Minister is working closely with other Departments to develop our policies and initiatives. My hon. Friend spoke about stronger eviction powers and enforcement. The ODPM is working jointly with the Home Office to produce new guidance on managing unauthorised camping, with a view to publishing it later in the year. That new guidance will be informed by the view of stakeholders from the settled, business, farming and travelling communities. It will emphasise the need for effective local strategies that clearly set out lead responsibilities for taking action between local authorities and the police.

The guidance will also emphasise that the same standards of behaviour and regard for the law are expected from all sectors of the community, including regard for public health, proper disposal of waste and the conduct of business activities. However, the Department for Environment, Food and Rural Affairs has policy responsibility for waste management, and subjects such as fly tipping and pollution come under the purview of the Environment Agency. Under section 59 of the Environmental Protection Act 1990, the Environment Agency has powers to remove fly-tipped waste, and to recover costs from those who deposited it or knowingly allowed it to be illegally dumped.

It is a criminal offence to dispose of waste without a waste management licence, or outside the terms of a registered exemption from licensing. That offence can be subject to severe penalties, including an unlimited fine or imprisonment for up to two years. The Government will evaluate the effectiveness of the new guidance in making improvements on the ground, and will continue to keep the scope and application of existing powers under review. The guidance will inform much of what we do following its publication in the summer.

The ODPM is also researching site provision, again with a view to publication in the summer. That research—being carried out by Birmingham university—is considering the availability, quality and management of sites, detailed information about site closures and pitch losses, and actual site provision, which includes what sites exist, the need for sites and how demand can be met. The Government will take that into account when considering future policy and spending considerations, and will review the adequacy of existing enforcement powers in the area. With the guidance, the research on sites and other enforcement powers, much is being done to evaluate the existing position and to reach a stage at which the people of Harlow and Epping Forest are not encumbered in this way.

Furthermore, the ODPM's site refurbishment programme aims to keep the existing network of more than 300 local authority sites in good repair and available for use. That programme is making £17 million available between 2001–02 and 2003–04. In those three years, we shall spend £3 million, £6 million and £8 million. Round one has already taken place, with 38 bids approved totalling almost £4 million. The bidding guidance for round two, which will apply to 2002–03, was issued to local authorities on 15 October.

The ODPM received a total of 86 bids from 50 local authorities. The results were announced on 20 March, with a total of 57 successful bids amounting to £8.1 million. The site refurbishment grant meets 75 per cent. of the costs, and the unsuccessful local authorities received evaluation feedback. My hon. Friend will know that the Elizabeth way site in his constituency successfully secured £15,400 for fencing work.

It is important to note that such work and the measures we are taking with the Home Office will inform us far more about the way forward on unauthorised encampments. With those initiatives in place, I am sure that hon. Members will recognise that the Government are actively seeking ways to enable local agencies to manage the problem effectively.

As my hon. Friend suggested, the problem is one of balance. Rights and responsibilities are important. The people who dwell on unauthorised encampments should tolerate and respect the settled communities around them. He is also right to suggest that the legal and regulatory framework remains the same as it was under the previous Government, and has been the same for some time. I am more than happy to put that on the record.

It is a matter of real regret that some unscrupulous politicians seek to abuse and exploit this issue for their own ends. They should work with us and with local councils to resolve the problem of competing interests to the satisfaction of the travellers and of the settled community. We suggest that there are rights and responsibilities on both sides.

My hon. Friend mentioned in passing the case of Porter v. South Buckinghamshire district council, and suggested that the conclusion drawn by some people that the Human Rights Act 1998 means that enforcement can no longer prevail on unauthorised encampments was erroneous. He was absolutely right. I understand that that case revolved entirely around the judge's competence in a particular area to direct himself to a conclusion, and concerned merely that legal technicality. It has no impact on the planning jurisdiction, which prevails as before. I exhort those who feel that the erroneous conclusion arising from that case is accurate to re-examine the matter, and to get in touch with my office to receive the same advice that I have been given. As I understand it, the case does not alter the planning jurisdiction with regard to enforcement.

This is an issue of real concern that warrants serious debate. The ODPM site research programme is important, because any solution to the problem must revolve around the issue of sites. I do not concur with my hon. Friend that the 1994 statutory obligation of all authorities to have a site for this purpose should be restored. However, we now have the site research programme, the new guidance to be issued jointly with the Home Office on unauthorised camping and the site refurbishment programme for the existing 300 sites. All those elements will better inform us of the need for any changes in the way that central and local government deal with the issue.

I end where my hon. Friend began. We need to get to a stage where residents such as those in Payne's lane, Roydon, Nazeing, Hamlet Hill and Bumbles Green—all the areas that he mentioned in his constituency—do not have to live that way and be encumbered, put upon and disrespected because of unauthorised campsites.

I thank my hon. Friend for his thoughtful comments. I assure him that as and when events unfold, which will be before the summer and therefore sooner rather than later, I will keep him fully apprised of any new developments in the area following on from our work on site provision, research and the new guidance. The issue is serious but if it is dealt with fairly and in a balanced fashion those on both sides—whether from the settled or the travelling community—should be able both to enjoy their rights and to be apprised of and live up to their responsibilities.

I am grateful that my hon. Friend said clearly at the beginning of his speech that it was not intended as a criticism of all travellers, but merely of a small minority. Much of our enforcement and other powers will be directed at that minority, especially those on unauthorised encampments. For the majority, research into site provision, the provision of further sites and the maintenance of existing sites remain paramount, so that the settled and the travelling communities can live together and respect fully each other's rights and responsibilities.

I shall start by expressing my gratitude to the Minister of State, Department of Health, the hon. Member for Redditch (Jacqui Smith), for allowing me to take some time out of her busy diary today. I want to raise a number of issues in relation to the provision of mental health services in my constituency and in mid-Surrey generally.

The Minister will be aware that mental health services have been a cornerstone of the community in Epsom for the best part of a century. Epsom has played host to five substantial mental hospitals, which were set up in the early years of the 20th century. At their peak they held approximately 10,000 residents; they were a dominating feature of that part of my constituency. Nearly 100 years later, with the advent of care in the community, the ethos of caring for those with learning disabilities and mental health problems has changed.

Over the past decade or so, we have seen a gradual move from institutional care to a more community-based provision. Step by step, those five hospitals have ceased to be used for their original purpose. Many arguments can be made for and against community-based services. The changes that have taken place have thrown up a large number of concerns in the Epsom area, which I suspect are invisible to the Government because that substantial and obvious block of care is no longer being provided in the area.

I want to raise three issues, the first of which concerns the debate that has been taking place over a number of years between the NHS and the parents and relatives of residents at St. Ebba's hospital, some of whom still live there. Secondly, I am concerned about how health service structures impact on mental health care in mid-Surrey. Thirdly—I am afraid that it often comes down to this—I draw the hon. Lady's attention to funding. I do not come here with a begging bowl, but when future NHS funding decisions are taken I want her to be aware of the particular circumstances of my constituency, and the fact that our problems could be overlooked when assessments for a broader funding formulae are made.

The Minister will be aware that a number of parents and relatives of patients at St. Ebba's have been arguing strongly for a long time for the creation of a village community on the site. Indeed, the Government have given much attention to the principle of village communities, because they deliver a high quality of mental health care in many parts of the county. St. Ebba's poses a conundrum because it is not always apparent from the exchange of letters between the Department for Health and the parents and relatives of the patients that two issues are involved, the first of which concerns what will happen to the residual services provided by Surrey Oaklands NHS trust on the St. Ebba's site.

The Minister may be aware that there has been some debate, and not a little controversy, about the trust's plans. A controversial planning application was recently lost on appeal for the provision of flats on the site. The trust is also putting a number of smaller units on the site to absorb some of the residents from St. Ebba's for whom care in the community may not be the right option.

A final solution to the trust's future provision is not yet in place, but the goal of the parents and relatives group is rather different. Surrey Oaklands is considering its current operations and what still needs to be done, but the parents and relatives have been arguing for a long time that using part of the St. Ebba's site as a village community could offer much more than is offered to current residents. There has been much debate about whether a village community would be appropriate and feasible. Over the years, the parents and relatives have drawn carefully on the Government's policy on villages. Most recently, in a letter to my one of my constituents on 17 May, the Department made it clear that options for the care of people with learning disabilities and other mental health care problems

"should include small scale ordinary housing, supported living and village and intentional communities",

and stated:

"Councils should respect the preferences of individuals and their families, wherever the preferred options will meet individuals' assessed needs and are affordable."

That is right, and there is no dispute or debate about it. The parents and relatives group, with which my predecessor, Sir Archie Hamilton, worked actively, has argued for a number of years that St. Ebba's site should be used to provide such a community, to ensure that there is a proper mix of care in the area. There are pros and cons and planning issues to consider. Whether the borough council will permit the development of such a complex and whether the authorities are providing the resources and the people to populate such a community we cannot be certain. However, I think that the Government have an opportunity to clear up the issue. My belief is shared by senior people in Surrey Oaklands and in the NHS community locally.

One of my reasons for initiating the debate was to explain to the Minister why I think that that opportunity exists, and to ask her whether she will consider taking it. Two of the five hospitals, The Manor and Long Grove, have been fully developed: they have been completed and are fully populated. The Horton hospital site is up for sale to developers and the outline plans are clearly in place. I expect development to go ahead within the next year or two. The fourth hospital, West Park, is still partly used by Surrey Oaklands for a number of services—I shall touch on one of them later—and is just reaching the point at which outline planning permission is being sought. Detailed discussions are taking place about the development. I should tell the Minister that NHS Estates and the local authorities will find themselves under a lot of pressure over a controversial road scheme as part of that development, but I shall not be distracted on to that today.

NHS Estates now has two big developments to deal with: the Horton site and West Park. It is also beginning to turn its attention to St. Ebba's. However, I would argue that it cannot do everything at once. These are five substantial sites, and if there is to be substantial construction work at Horton and West Park, work at St. Ebba's should be further down the track.

The Government should tell the parents and relatives of the residents of St. Ebba's that they do not know whether they are right, but they are prepared to give them an 18-month window and an option on the 12 acres at the St. Ebba's site that they are considering taking on. They should be told to put forward a commercial, viable proposition, backed by the private sector and the local authorities, if they believe that it is right to do so. If they can show the Government that there is a business case and a care case for what they want to do, and that people could valuably take advantage of a village community in the area, let them do so, because it would not damage NHS Estates' ambitions to develop the other sites in the area one jot.

Therefore my first request to the Minister is to give those parents and relatives an 18-month window, so that they can come back with a solution. If they cannot do that, we know where we stand. If they can, there is an exciting option for the future that would do credit to everyone involved if it were given serious consideration.

My second concern relates to NHS structures. It is particularly associated with a seemingly growing commitment in the NHS to focus services on London, where it is delivering services to London. Whereas, in the past, a number of services have crossed boundaries, there is an increasing tendency within the NHS in London to do things itself. That has most recently manifested itself in one of the remaining units on the West Park site, the Woodside adolescent unit. Over a number of years, that has provided a service across a wide range of authority areas for young people with particular mental health problems. Discussions are taking place within the Surrey Oaklands NHS trust about the future model of care that would be required for that service, and such a debate has been taking place for some time. Surrey Oaklands is now being forced into a decision to close that unit because the principal buying source in London—Merton, Sutton and Wandsworth—has decided that it will no longer buy that service from Surrey but will establish its own unit two miles up the road in Tolworth.

Clearly, there are clinical and health considerations to be taken into account in determining the rights and wrongs of the matter, but I am concerned that that decision has been taken as a result of the desire of the NHS in London to deliver its own services. I am sure that the Minister would agree that it makes no sense to break up a team in north Surrey only to recreate a team in London. Will she ensure that no curtain is drawn across the London boundary that prevents services from being provided across that boundary? If London purchasing power is removed—it was London purchasing power that built up the services in Epsom in the first place—the community in Surrey will not have the services that it needs.

I am also concerned about proposals to establish a mental health trust for the whole of Surrey, because the last thing that Surrey Oaklands needs is another reorganisation. I ask the Minister to think carefully before pressing ahead with that option.

I now turn to finance and resources. There were 10,000 residents in Surrey hospitals, many of whom are now of pensionable age. Their families can no longer support them, although their relatives have done a wonderful job in trying to provide support in difficult situations. As a result, there is now an older community of people in the area who are more dispersed than before, and because Epsom was a magnet for people with learning disabilities and mental health problems, that community is disproportionately large. My concern is that the Government will take a decision on resourcing for Surrey based on many other factors. It would be easy for the Government to decide that the prosperous area of Surrey does not need the same resourcing as other areas, and for that mental health community to be forgotten.

That approach manifests itself to me most clearly in the fate of the mental health citizens advice bureau in Epsom. That service has been run by the local CAB for several years and provides valuable support. The chairman of the CAB told me that he no longer receives NHS or Government funding. He has been able to secure interim finance from a charitable source, but the service risks disappearing in 12 months' time. There is a need to provide a disproportionately high level of support services to that community, but I fear that services may be eroded because funding decisions will be taken according to much broader formulae. I ask the Minister to bear that in mind when making future service and funding decisions.

My concern is shared by others. Mid-Surrey Mencap has expressed its concern about insufficient funding being available for Surrey social services to meet the needs of the mental health community. I have received letters and e-mails from other people involved in mental health who say that funding decisions are eroding their ability to provide the necessary support for people with learning disabilities and mental health problems in the Epsom area.

Can we lay the issue of St. Ebba's to rest once and for all? Will the Government please take extreme care over what the NHS does as regards providing services across the London border? Will they please also ensure that future funding decisions do not remove core services from a relatively substantial community of people who have a special need? These are wonderful people. I visited a home the other day and met a gentleman in his 60s who had had mental health problems all his life, but who was the most wonderful pianist. I have visited and spoken to many of the devoted staff who care for such people. They deserve my support as their Member of Parliament and the support of the Government, and I hope that they continue to get it. I hope, too, that the Minister will take steps to make their jobs easier.

I congratulate the hon. Member for Epsom and Ewell (Chris Grayling) on securing this debate. He took a very measured approach to describing his constituents' concerns and the operation of the system in Surrey. I hope to be able to give his constituents some assurances, although I may not be able to give them all the assurances that they are hoping for. I can, however, promise him that the needs of service users will remain the primary concern throughout the many changes that are taking place in the provision of mental health services and of services for those with learning disabilities. I think that we share that objective.

The Government have proved that they attach significant importance to mental health. It was not only the focus of the first national service framework, which was issued in March 1999, but one of our clinical priorities in terms of investment. The national service framework put in place a 10-year programme with new, high standards for mental health care services. It clearly stated what services should aim to achieve, how they should be developed and delivered, and how to measure performance in every part of the country. Standards were set in five crucial areas: mental health promotion; primary care and access to services; effective services for people with severe mental illness; carers; and the action necessary to reduce suicides.

Although the framework concentrated on the mental health needs of people of working age, we are also dealing with the needs of children, adolescents and the elderly through other national service frameworks. The framework for older people was published in March 2001, and contains a dedicated standard on mental health for older people, which requires the NHS and social services to put in place by April 2004 plans for integrated mental health services for older people. My Department is also working on the children's national service framework, and one module will be dedicated to the mental health and psychological well-being of children and young people, which clearly relates to the issues that the hon. Gentleman raised about the Woodside unit.

In July 2000, the NHS plan built on the first national service framework, and provided for extra investment in mental health of more than £300 million by 2004. The purpose of that extra investment is to fast forward the implementation of the framework and to ensure that NHS commitments are delivered. It has already provided almost 500 extra secure beds; more than 320 24-hour staffed beds; 170 assertive outreach teams to provide intensive support and follow-up to patients who were being lost to services, often with tragic results; and access to services 24 hours a day, 7 days a week for all those with complex mental health needs. In addition, we have provided investment to improve the physical environment in psychiatric wards, and issued guidance to ensure the safety, privacy and dignity of mental health patients.

The hon. Gentleman touched on the long-term care of people with learning disabilities, which is an important service that is often linked with mental health provision. There is no doubt that improvements were desperately needed in that area of care. People often spent a great part of their lives in large hospitals, often living in conditions that would not be tolerated now, because it was widely assumed that they had no expectancy of a normal life and would have little chance of making any contribution to the wider community.

Times and attitudes started to change, and it began to be recognised that many residents would do better in smaller, community-based care homes. However, when the old institutions closed, the comprehensive local health services needed to care for people too often failed to materialise. The Government recognised that it was vital that people with learning disabilities were properly supported in a variety of settings and given access to appropriate resources such as housing, education and work, to ensure that they had the quality of life to which they were entitled. Such concerns culminated in the publication in March 2001 of the White Paper "Valuing People", which was the first White Paper for 30 years on the care of people with learning disabilities.

The Government initiatives outlined in the White Paper and the changed attitudes that I mentioned have resulted in real benefits for a large and previously neglected group of people. We welcome that, but we must not ignore the fact that change is often stressful. It takes no imagination to understand how frightening such change must be to patients who have lived for many years in the institutional system and to their families, although many mental health professionals have stories about how the most unlikely people have thrived when given the opportunity to live in the community with the support necessary to make that a reality. We must ensure that the option to do so is open to all, but there will still be people whose needs are best served by care in the more traditional setting, and appropriate provision must be made for them.

The hon. Gentleman clearly highlighted the St. Ebba's issue. He will know that that redevelopment came about because of concerns that the residents' quality of life was not what it should have been. They lived in dormitory accommodation in turn-of-the-century buildings. They had little privacy, personal space or ability to choose how and with whom they spent their day.

I am sure that the hon. Gentleman appreciates that the future configuration of the St. Ebba's site, including the development of a village community, is a matter that must be determined locally. It is not a matter in which Ministers can intervene. However, I can assure his constituents that health and social services authorities will continue to work with parents, relatives, carers and, most importantly, the residents themselves to ensure that people with learning disabilities are placed in the care environment that is right for their individual needs.

It is true that the part of St. Ebba's that is being dealt with by the Surrey Oaklands NHS trust remains very much a local service but, at present, the remainder of the site is under the auspices of NHS Estates, which is one reason for diverting the matter to Ministers.

I think the hon. Gentleman would agree that it is vital that we release resources that are tied up in surplus NHS properties owned by the Secretary of State and plough the funds back into the NHS for the benefit of all. For that reason, surplus NHS land, including that at St. Ebba's, is sold. I have some sympathy with those who are concerned about the future of their relatives following the changes at St. Ebba's, but I do not believe that we can put off the business case that has been made for selling the land on the basis of what the hon. Gentleman agreed was an uncertain prospect.

I am willing to consider the timetable for the sale of the land, but I would not want the hon. Gentleman to go away with the feeling that it would be sensible or efficient to lose the significant financial benefits from the sale of the land because of some of the plans that he discussed. He stated the Government's position on housing for those with learning disabilities, and I am aware of the need to carry out properly a full assessment of the care needs of those at St. Ebba's, for example, and to ensure that appropriate care arrangements are put in place. I have been assured by the local commissioner that the proposals that have been developed fulfil that duty, but housing is key to the lives of those with learning disabilities. That is why we made it clear in the White Paper that there is no veto on any option, including village communities, and that where there is limited demand for a particular option, councils and housing authorities may need to consider joining neighbouring authorities to encourage development of a greater range of provision.

Turning to Woodside, the Government recognise the importance of ensuring that a full range of child and adolescent mental health services is available to those who need them. Our ongoing commitment included extra investment of £35 million last year to assist health and local authorities to meet the requirement to improve provision of appropriate high-quality care and treatment for children and young people by building up locally based services. I have a problem with the hon. Gentleman's contention that we should protect a service in one part of the country by preventing another part of the country from developing precisely those locally based services.

It is probably good for young people with mental health problems if the services they need are developed near to them or in London so that they can be easily accessed. It is precisely that demand for the sort of services currently offered at Woodside that is the basis of the need to change and of the considerations of closure. Of course it is important that health commissioners work with other key agencies and providers—I understand that they are doing so—to plan and develop provision to ensure that there is better integration and joint work between tier 3, which covers specialist outreach and out-patient services, and tier 4, which covers in-patient services, to improve the links and provide a 24-hour crisis response team, better outreach and respite services and early intervention in psychosis. All will require some change—change is difficult for users and clinicians—and careful planning and involvement of users and professionals.

Although a decision has been made by Surrey Oaklands NHS trust to close the Woodside unit, I assure the hon. Gentleman that the views of those most directly affected will be key to the development of the new services. A steering group consisting of staff, clinicians, commissioners, carers and users has been established to conduct a review of the services currently supplied by Woodside and to recommend how the model of care delivery given to adolescents and children could be modernised in line with national policy. The group's proposals will be presented for consideration by Surrey Oaklands NHS trust later this month and will then be open to wide consultation involving all stakeholders. Their views will be taken into account before a final decision is made.

In conclusion, the hon. Gentleman referred bravely to funding and finance. I recognise his point that there are ways in the standard spending assessment distribution for local authority funding and health allocations. We must work on the formula to ensure that it delivers the necessary resources in those areas where needs are greatest and work is being done with the SSA formula and the health formula. I am sure that the hon. Gentleman agrees that the issue for Surrey may not be solely distribution but the amount of money, so I have no doubt that he welcomes the Chancellor's ongoing, extra investment into health and social services and the effect of that on his constituents.

I recognise the hon. Gentleman's concern about the particular nature of the population of those with learning difficulties. It is because we recognise the needs of those with learning disabilities, particularly with older carers, that we made that a key area for investment of the learning disability development fund.

Last year, Surrey received through local funding a 12.6 per cent. increase in its mental health grant. A further increase this year will be important to maintain the sort of services that we want for the hon. Gentleman's constituents with mental health problems and learning disabilities. Regardless of whether we are changing the system, we shall continue to place users' needs at the centre of improvements.