We cannot address the issue of future pensioners—the subject of today's debate—without considering current women pensioners. As the Green Paper, "Simplicity, Security and Choice: Working and Saving for Retirement" says, women pensioners have far less income on average than male pensioners. The average is £153 for a single woman, compared with £194 for a man.

Sadly—but, it appears, soundly—the Green Paper concludes that much of the improvement in the position of future female pensioners will come from labour market improvements, higher employment rates and better pay. It records rightly that there has been progress in both the latter elements. About 70 per cent. of women between 25 and 34 are working, compared with 52 per cent. in 1979. The proportion of women returning to work after having children has risen to almost 70 per cent., and thanks to better child care options and better maternity and paternity provision, the impact of having children on a woman's working life can be less overall.

Since the Labour Party came to power, the employment rate among lone parents, who are predominantly women, has risen above 50 per cent. for the first time—a great achievement for such a hard-to-reach group. That has not only taken many children out of poverty and encouraged a phalanx of women who might well have not done anything at all until much later in life; it has started to make the point for much of the working population that having a child need not be a bar to outside work or learning.

The minimum wage has increased the pay of about 700,000 women, and working tax credit makes work pay for about the same number of women who are main earners. That is progress indeed. However, there is a high rate of female part-time employment—about 45 per cent. according to the Green Paper—and that is at ages that reflect the fact that women still take primary caring responsibilities, which is bound to have an impact on their future pensions. There are other differentials in gender working patterns; there is segregation into poorer paid work, and there is still some sex discrimination.

About 40 per cent. of women have a weekly income of £100 or less. Full-time male earnings are on average twice those of women, and when part timers are included, women's average wages are £200 a week less than those of men. Given the Green Paper's thesis that much improvement in pensions will come from improving the labour market position of women, it accepts, on that clear evidence, that

"the pension position of women will still lag behind that of men for some years to come".

I do not feel very sanguine about that, and I doubt that this progressive Government truly do, either. The Green Paper says "some years to come"; how many years? How much further can rates of participation in employment be increased by better paternity pay and more child care? One may guess that that would, at least for the next few years, be the faster rising curve than pay.

The Fawcett Society, to which I am indebted for much of the information that I will use this morning, has calculated that, at current rates of pay change, it will be another 80 years before there is equal pay for women and men. That means that we should tell our daughters who are coming up to working age that, although they are sugar and spice and all things nice, they are also doomed to poverty in old age. It means also that we should tell them to tell their daughters, who will start work in about 2025—the year that I predict Brooklyn Beckham will sign for Real Madrid—that they, too, will retire poor. Our great-granddaughters will start work in 2045, the year that we—or rather they, by then—celebrate the centenary of Paul McCartney's birth. We should tell them that in retirement they, too, will be poorer than their brothers.

There will be yet another generation after that where women will be poorish, because only women who start work after 2083 will do so on equal pay for the whole of their lives; and they will still have to participate in the labour market for 50 unbroken years on the Beveridge model to get a pension equal to that of men. My great, great-granddaughter might then get what my mother thought she had got in 1970—equal pay, according to the Green Paper. Some 50 years later, women might get an equal pension. That is the miserable prognosis, unless further special measures are taken to improve women's interests.

I want to consider a few possible measures. I make no bones about the importance in my thinking of the campaign, "Make Pensions Work for Women", that is being conducted by the Fawcett Society and Age Concern. I make no apology for the fact that many of my proposals are familiar to the Minister. I want to know whether she can cost them, and make it clear whether they are being favourably received in Government, as they are increasingly supported far and wide as the campaign grows. If they are being received well, what action can we expect? If they are not, what alternatives do the Government have in mind? I do not want my great, great-granddaughter—she might be called Vera the Fifth in a more dynastic familyߞto be the first Baird after me, with my adequate parliamentary pension, to benefit from a good pension. We cannot leave it to higher employment rates, better pay and labour market factors.

I acknowledge that the entitlement of the younger generation to the basic state pension is set to increase, albeit at a time when the value of that entitlement is falling relative to general living standards. Government projections suggest that by 2025, 99 per cent. of women will have some entitlement with an average amount of about 89 per cent., although the Department for Work and Pensions has made slightly less positive predictions.

The first proposal that would help would be to replace home responsibilities protection with a system of carers credit. HRP is little known about and fairly difficult to understand. It supports women who are off work caring for their children. However, it works to reduce eligibility requirements rather than actively crediting caring work. It is also inflexible and provides protection on a whole-year basis only. Thus, a woman who has a baby at the end of April does not receive HRP for that year as she has only 11 qualifying months. Further, if a woman combines caring and employment within a particular year, she cannot add HRP to her national insurance contributions to make a full year or to fill up gaps. To add to the confusion, HRP works alongside a system of credits—for example, those for unemployment and for receipt of invalid care—and although a qualifying year for the basic pension can be built up through a combination of credits and earnings, those cannot be combined with part years of HRP. Earnings and credits can never be combined within the second state pension, so that an individual who is in receipt of one type of credit for part of the year and another for the rest does not qualify.

In place of that confusing system, surely there could be a single system, perhaps called the carers credit, although, to distinguish it from our successful tax credits, perhaps it should be called a carers national insurance premium. That would actively recognise and support all forms of caring by providing credits. It would operate in a consistent way across the basic state pension and the second state pension, and reflect today's reality of changing status throughout the year, allowing individuals to combine entitlement based on earnings and caring. Such a system is crazily long overdue. We talk about motherhood and apple pie, as if that defines everything that is desirable and good, and I am not advocating credits for baking, but it is long overdue that we stop penalising women who are off work caring for their children. The rigidity of HRP penalises people for motherhood.

As long ago as 1989, I worked on a case in the judicial side of the House of Lords, which, hon. Members might find hard to believe, is even more conservative than the legislative side. Their lordships accepted the importance to the economy of having proper provisions in labour and benefits law for motherhood and supporting women when they are off work. Even though those depths of conservatism have been penetrated for more than two decades, we do not have a proper way of supporting women while they fulfil that important role.

1 cannot imagine that such support would be expensive, because it would be a rationalisation rather than fresh provision, and it would ensure better accrual of pension rights. I would be interested to know what the costs might be. A poll conducted by the Fawcett Society showed that 78 per cent. of people of both sexes thought that those caring for children should qualify as carers for the full pension, which shows clear support from both men and women for such a step change. A further advantage of recognising all forms of caring through a credit is that it would become possible to consider whether a state credit could be used in a non-state pension scheme. I will return to that.

The second potential help to accelerate the process of increasing fairness in pensions would be to reconsider the level of the lower earnings limit and ensure that women fully understand its impact. In 2002–03, about 1.4 million women and 500,000 men were earning less than the £75 a week lower earnings limit. That is a point of concern, as the Government acknowledge, and they have undertaken to continue to consider ways of ensuring that everyone understands that they can earn entitlement to contributory benefits.

Research published by the Equal Opportunities Commission in 1998 found that 63 per cent. of people with earnings below the lower earnings limit have dependent children. If the position is similar now, that means that about two thirds of those with earnings under the LEL are building up entitlements to basic pension, but they will qualify for the second state pension only if they have children under the age of six. Further EOC research concluded, worryingly, that both employees and employers colluded to keep earnings below the LEL. Presumably, employers want cheap labour while those on such poor pay do not want to pay out the national insurance contribution. However, it is clear that they are seriously damaging their future rights by colluding in that way. It is obvious that more information is needed, but structural change would probably be advantageous and, again, not very expensive. At an absolute minimum, those working 16 hours on the minimum wage could and should be building up pension and benefit rights.

We also need to consider those who earn more than the LEL through a combination of part-time jobs. The most practical way of doing that could be a system that gives individual employees the option of declaring earnings from a number of jobs to contribute to their benefits.

I have never truly understood the 25 per cent. or its point. It means that to get any state pension, someone has to qualify for at least 25 per cent. of the full pension. Women with fewer than 10 years of full contributions receive no pension at all. That seems unfair and unnecessary, and there can be little argument against the abolition of the rule as soon as possible.

I have already mentioned the state second pension. It is clearly difficult for many people with low or no earnings to build up a privately funded second pension, so the S2P provides a valuable role in second pension provision. The Government should be congratulated on that good move. However, eligibility criteria mean that S2P does not provide sufficient coverage for those on lowish earnings and those with caring responsibilities or disabilities. The range of options that I have mentioned improves coverage, but additional issues include the rate of accrual of S2P.

S2P was introduced in April 2002, and it seems that it will take about 40 years for someone to build up a full S2P entitlement. It provides income of about £1 a week pension for one year of contribution. Again, I am indebted to the Fawcett Society for that calculation. It will be many years before in its current state S2P has any real impact on women's income levels. Can the date at which S2P would be fully in place be brought forward by introducing greater rates of accrual for those currently contributing?

If the current pension model continues so that the minimum income guarantee and the pension credit remain linked to earnings while S2P and the basic state pension remain, broadly speaking, linked to the retail prices index there will be issues in the longer term about the relative value of state pensions, on the one hand, and income-tested supplements on the other. It would appear desirable to make a commitment that by that time the combined level of a full basic pension and S2P will be in excess of MIG. Such a commitment would ensure that the contributions that individuals will have to make a great deal of effort to make were rewarded and would offer an incentive to make additional savings.

I have already indirectly alluded to an anomaly that would not be very expensive to change. Again, I should be interested to hear how the Minister sees that. HRP for the basic pension covers caring until a child's 16th or 18th birthday but S2P rules recognise only time spent caring for a child under the age of five.

I return briefly to the possibility of any carers credit or carers national insurance premium being portable. If carers credit were introduced, it would allow for an actuarial calculation of its value and, along the lines of a national insurance rebate, could allow for the possibility of payment of that value into alternative pension vehicles.

Although many women are best advised to remain within the state system, caring has an impact on earnings for all women regardless of the pension system they join. It is particularly important to consider this as recent reforms in maternity leave mean that, while employers will be obliged to continue making pension contributions through the six months of ordinary maternity leave, coverage will be discretionary for the six months of additional maternity leave. Consideration should therefore be given to adopting a carers credit that is portable across schemes and takes the form of a rebate calculated on an actuarially fair basis.

As I understand it, and again I look to the Minister to help me with this, the Government's policy is to try to encourage people to move from S2P into a privately provided pension. The Government as a whole are keen to shift the current financing of pension provisions from 60 per cent. public and 40 per cent. private to the other way round. In that policy context it seems particularly important to look for a way for credit carers to move into a private pension scheme, or they will remain perpetually disadvantaged.

That brings me to the issue of occupational pensions. The Green Paper states that

"well-funded defined benefit schemes are more flexible and suit the career patterns of many women".

There is much to be said about the lack of "well-funded" defined contribution schemes, particularly in the sorts of jobs that many women have. Many women do not have the career progression that enables them to gain most from final salary schemes. More information about the advantages and disadvantages of different types of types of scheme for women with different working patterns would be helpful. How would schemes based on career average revalued earnings compare with the more common type of defined benefit or defined contribution scheme?

The Government have said that they intend to introduce a reform to the current vesting rules. More women than men leave work before two years because of family pressures, and they are then entitled only to what they have paid in and no more. That could and should be changed relatively quickly. Because of different overall life expectancies women get lower annuity rates than men. At today's rates, to receive an annual income of £10,000, a woman retiring at 65 must pot about £156,000, compared with about £139,000 for a man. Despite that obvious inequality, according to the Green Paper,

"The Government is not attracted"

to unisex annuities, saying that

"it would result in lower aggregate retirement incomes…and only marginal—if any—benefits for women."

The Green Paper also states that

"it is difficult to impose a single annuity rate for men and women on a disaggregated market"

of pension providers. If more people take out stakeholder pensions, and the move from defined benefit to defined contribution occupational schemes continues, more women will rely on annuities. Will the Minister consider re-examining annuities? Distinctions can be drawn about life expectancy across socio-economic classes and geography, but those factors do not feature; only gender is taken account of in annuities, and that is a major problem.

The Government must try to address the problem, primarily because we must encourage women to provide for themselves. They are much less likely to do that unless the pension system enables them to receive a fair return for their money. It is difficult to make women consider paying into their own pension schemes. The Fawcett Society polling found that women do not invest in pensions, and that, even if they were given an extra £100 a month, only about 10 per cent. of young women would put that into a pension. One in four of them would spend the money on children, or already existing debts, so little is the importance of provision for the future appreciated. That is also testament to how hard up a large number of women who have to consider future provision are.

I have made a raft of requests, with which I hope the Minister will help, at least in terms of information, but perhaps also in terms of movement or progress. However, I could not end without saying that it is clear that, since being in office, the Government have done a great deal for pensioners generally, and female pensioners in particular, and I exhort them to realise that there is still a great deal to do.

I congratulate the hon. and learned Member for Redcar (Vera Baird) on securing the debate and on the diligence with which she has pursued women's pensions issues. This is not the first debate that she has initiated on the subject, and we all note the authority and rigour with which she puts her case. I hope that the Minister will respond with factual answers on the costs of some of the proposals.

Like the hon. and learned Lady, I congratulate the Fawcett Society, Age Concern, the Equal Opportunities Commission and others on trying to bring women's pensions to the fore. The Liberal Democrats have been involved in that effort, and, until we read the Green Paper, we regarded it as a success that the Government had included a chapter on women's pensions. Then we realised that it was a list of the problems, with no solutions offered. The hon. and learned Lady proposed some detailed responses, and I will discuss those before stepping back and examining the big picture of women's pensions, in particular younger women's pensions.

Of the detailed proposals that could make a difference in the short term, replacing home responsibilities protection with positive credit is an attractive idea. Home responsibilities protection reduces the number of years in which one has to have contributed, but does not put a year's contribution on the books. A carers credit would have that effect. It seems odd that we reward motherhood by giving a year off of the "sentence"—a year in which it is not necessary to contribute—but we do not think it is good enough to count as a year's worth of work. A year spent stacking shelves in Tesco, for example, would lead to a year's pension entitlement, but a year spent bringing up a young child would not. Those are not the values that we should espouse, so I think that a carers credit is a good proposal.

The hon. and learned Lady pointed out the problem of the lower earnings limit. Sixteen hours work a week on the minimum wage should entitle someone to a year's pension right, although 16 lots of £4 something is not far short of £75, or whatever the lower earnings limit is. Conceptually that has to be right. However, 16 hours' work a week is the definition of full-time work used in various parts of the system. If 16 hours' work at the minimum wage does not get a person pension rights, something somewhere is wrong. I absolutely accept that. The cost of addressing that must be pretty minimal, but it would be interesting to hear that from the Minister.

The hon. and learned Lady makes a good point about multiple part-time jobs that do not reach the lower earnings limit individually, but reach it collectively. If somebody earning enough over the week to reach the lower earnings limit is doing enough hours to be deemed to be working, it is arbitrary that the system does not give that person pension rights because they work in two places instead of one.

What the contributory system tries to determine is whether a person is a worker. As I shall remark more fully in a moment, the arbitrariness is born of the fact that the national insurance system is focused on the model of the male full-time breadwinner; it still has not recovered from that model. The 25 per cent. rule is also arbitrary, as the hon. and learned Lady says. I guess that that is supposed to be a proxy for whether a person was a worker or not. However, why should a person get pension rights for having paid contributions in 26 per cent. of years, but not for having paid contributions in 24 per cent. of years? That seems a pretty arbitrary cut-off.

I agree with the hon. and learned Lady that there are a lot of arbitrary features in the national insurance system in relation to the basic state pension that are hugely detrimental to women relative to men. Many of those features could be addressed relatively straightforwardly, to the benefit of women in particular.

The hon. and learned Lady started to get to the core of the problem when she pointed out that the accrual rate of the state second pension is so excruciatingly slow that it will take 40 years to build up and that, even when it has built up, a full basic pension and a full state second pension will not be enough to lift a woman—or a man—above the pension credit level. She asked quite properly whether the state second pension could not accrue more rapidly. That would be one way around the problem.

The critical point is that even if we could make all those tweaks, those desirable small changes, and get women full entitlement to the basic pension and to the state second pension, that would still be rubbish. A full basic pension and a full state second pension are not worth having if a person still ends up on pension credit. In that case the pension credit, not how much basic pension or state second pension a person has, determines a person's income in retirement. The value of the basic pension and the second state pension entitlement becomes irrelevant—certainly for most women—in a world where two thirds of pensioners are means-tested or income-tested.

The fundamental point that must be addressed is that the state system will always be critical to women, particularly if women continue to take career breaks and have lower post-career break salaries. As the hon. and learned Lady says, regrettably, that may continue to be the case for a long time to come unless effective action is taken. Yet the Government's strategy is to link the basic pension and the state second pension to the prices index and to move to a world in which the contribution of the state to income in retirement falls from 60 per cent. to 40 per cent. So the two bedrocks of income and old ageߞthe state pension and the second state pension—are being devalued every year relative to average earnings, and the state contribution to income in retirement is falling from 60 per cent. to 40 per cent. at a time when the pensioner population is rising.

The tweaks to the system that have been outlined might result in marginal improvements, but unless the big picture is sorted out, women will get gradually better percentage entitlements to pensions that are not worth having. That does not seem a good long-term solution to the problem. The hon. and learned Lady illustrated effectively and cleverly the long-term nature of the problem. Pensions and pension reform have a huge legacy problem. People—women, in particularߞare reaching pension age with pathetic pension entitlements of pennies a week because of a system that was designed in the 1940s and the fact that they earned most of their entitlements in the 1970s under rules that treated women as dependants of their husbands. Even though such attitudes no longer prevail, they will probably take two generations to work their way out of the pension system. There are women today—granted, not many—who pay the married woman's stamp. According to the Government Actuary, more than a million women in their fifties have at some point paid the married women's stamp and are heading for inadequate pensions.

My concern, which to an extent echoes the hon. and learned Lady's, is that we must recognise the urgency of addressing the issue. We cannot say that we will let it work its way through the system gradually. When I criticise the state second pension for its poor value and the fact that it takes 40 years to build up, the ministerial reply is always, "Well, new pension schemes take 40 years to bed in. We cannot bring in a pension scheme overnight." However, as the hon. and learned Lady pointed out, we could introduce a pension scheme in less than 40 years, by accelerating the accrual rate. If we did that, more women in particular—they will be the principal beneficiaries of S2P—would stand a better chance of being able to stand on their own two feet financially in retirement.

I cannot help wondering why, rather than make the detailed, complex tweaks that we have debated so far, we do not simply say that national insurance in its present form has had its day and that national insurance is now about exclusion, not inclusion. The panoply of national insurance contribution rules is about how we can keep people out of pension entitlements. Those rules say, "If you're a man on a decent salary or a woman on a decent salary, you're in; if you're a mother, you're half in or half out; but if you're low paid or you do irregular work, you're out."

I understand that national insurance includes 90 per cent. of the work force and excludes 10 per cent., most of whom are women. Why do we have a complex system of rules and regulations, accounting for pages and pages of legislation and billions of pounds in administrative costs, that are all about excluding a small number of people, predominantly women? Why do we not change to a citizenship-based entitlement to pensions? We could not do that overnight, because we would suddenly end up paying every married woman over pension age a full pension, which would be extremely expensive. However, rather than plugging this gap and that gap, trying to spot one group and changing the rules for another, why not say that from D-day, or from tomorrow, people will build up a year's pension rights each year that they are a citizen? There would be issues about immigration and what we meant by "citizen", but we could sweep away all the questions about how many hours someone worked, how many jobs they had, whether they were above or below a particular earnings limit and whether they had home responsibilities for part of the year. That would constitute a huge simplification. If people accrued a year's pension rights as citizens, that would benefit women hugely. That is the direction in which we should go.

The hon. and learned Lady mentioned annuities, and properly so. I am intrigued by that point. I have been somewhat sceptical about unisex annuities, simply because they involve an actuarial calculation in a market. If the Government want to achieve redistribution, they should do it through the state system, rather than by trying to tweak a market, which only reflects the fact that the same pot of money has to last longer. However, the hon. and learned Lady made the valid point that we allow annuities to discriminate on the basis of gender, when other, arguably much more powerful, differentials affect what should be actuarially fair annuity rates for male manual workers in Glasgow and male executives in the home counties or whoever. Annuities tend not to discriminate much on those grounds, yet we allow them to do so on the ground of gender, which is perhaps on average a smaller distinction. I may return to that issue, and I am grateful to the hon. and learned Lady for making that point.

The Government could tackle another issue about the way in which annuities act to the detriment of women. Many women in defined contribution schemes end up with small pots of money, but pension providers are not interested in small pots of money, because providing annuities based on those pots is not economic for them. Therefore, many women who build up a stakeholder pension or are in a DC occupational scheme find that providers will not offer them an annuity at all, because their small pot of money simply does not offer good value. I understand from the financial pages that some companies that provide pensions do not offer annuities, so such women have to go elsewhere for an annuity and are told, "Sorry. We're not interested in you, because the pot of money is too small."

The Government could offer a sort of National Savings annuity product that is not necessarily a best buy in the league tables, but that offers the guarantee that however small someone's pot of money, they will be sold an annuity, perhaps at a market average rate. The state would not be in unfair competition with the private market. The state would simply say to anyone, but typically a woman, who came along with a £5,000, £15,000 or perhaps £10,000, "We will guarantee that you can buy a pension at a decent rate of return." The rate would not be chart-topping, but it would probably encourage women to feel that it was worth saving, because they would get better value for money for their annuity. The Government could probably deliver that with economies of scale, whereas private providers think that it is not worth the bother to provide such products and do not have to do so anyway. That would be a small change, and the Government could discuss whether National Savings could offer such a product, which would be beneficial to women.

Divorce is another big issue for younger women when it comes to pensions. The historical model was that women did not need pensions because they would rely on their husbands'. That attitude is changing, but it still exists in the system in many respects. A woman who brings up children and separates from their father may have trashed her own pension rights and have no other rights because of divorce.

The antidote to that problem is individualised pension rights—a system based on the individual rather than on inherited rights—but it will take a long time to introduce. as we cannot do away with survivors' benefits in the short to medium term. The system must be structured so that each individual builds up good rights, which is another reason why mothers with caring and other responsibilities should build up a substantial pension in their own right and not have to rely on the pension contributions of their husband, who may become their ex-husband.

The Government have legislated for pension splitting on divorce, but few cases have gone through, although that is not a criticism of the legislation, which had all-party support. In practice, I know what most women with children who split up from their husbands would choose when given the option of taking the house, the car or the pension. It is difficult to rely on derived pension rights from a male partner. More must be done to ensure that women have their own pension rights.

We must act in the short term. Age-related additions to the state pension would be hugely pro-women, because most poor and elderly pensioners are women, and because age additions to the state pension are not contributions-tested. Whereas the level of state pension depends on one's contribution record, and women in general have poor contribution records, age additions are paid in full, regardless of the contributions. Admittedly, the amount is only 25p at present and it would be daft to try to scale it down. If it were, say, £10, payable in full regardless of the contribution record, it would do something positive for women that would not take 40 years to sort out. It could be done now.

Joined-up government is needed to tackle the matter of young women's pension rights. While we are having this debate about what women might put into their pensions, another arm of Government is about to introduce top-up tuition fees. That is absolutely central to the discussions about how much women can afford to save. A typical woman student will graduate with a debt of £20,000 and she will not have much disposable cash, if any, to put into a pension. It will take her a generation, until she is well into her 40s, to pay off that debt, especially if she has children, and she might fancy moving out of the parental home before then. However, she will be told that the state will do less and she is expected to do more to provide a pension.

How are those factors to be reconciled? It is beyond the scope of this debate, but in my judgment tuition fees must be tackled. Young people, especially young women, who graduate with huge debts will have no spare cash to save for a pension in a future in which the state provides less—40 not 50 per cent. Who will fill that gap? I am heartened to think that the Minister will tell the Department for Education and Skills that it is undermining her Department's goal of persuading more people to save for a pension, and that the Government will change their thinking on the matter.

The Liberal Democrat approach to these matters is to argue for a simple and substantial state pension system, which will gradually free people from the contributions rules and benefit women, and which will be supplemented by compulsory contributions from those who are in a position to make them. As I said, that will be difficult if people have huge debts, but if that problem can be dealt with, compulsory contributions would pick up women in particular, because many men are already members of occupational schemes by dint of their employment. I am talking not about women on the lowest incomes who have not got the spare cash for pension saving, but about women on higher incomes. If compulsory pension saving was phased in, so that people could get used to the idea, such women would build up pension rights in their own name, so that they were neither dependent on their husband or potential ex-husband, nor wholly dependent on the state. Instead, they would have a foot in both camps, which would bring them greater security.

The big picture is that if the state pulls back from universal pension provision, that will be a problem for women, because private pension provision is, almost by definition, earnings related. It reproduces and carries into retirement the inequalities in earnings that are present in the work force. The heavier our reliance on the private sector, the more detrimental it is to women—for as long as women are at a disadvantage in the labour market. Rather than just plugging the gaps, we need a good across-the-board state system that provides generous levels of benefit and better entitlement for women to a good pension. We need women to build up entitlement in their own right so that they are not dependent on a man in old age, or at any other stage if their life. That is the direction that we must go in. The hon. and learned Member for Redcar has done a huge service by raising these issues. I look forward to hearing the Minister's response.

I am delighted to have an opportunity to take part in this debate. I normally declare an interest on these occasions, because I have some private pension provision but, given the title of the debate, perhaps I do not need to do so.

I congratulate the hon. and learned Member for Redcar (Vera Baird) on initiating the debate. It is the second such debate that she has secured this year. I assume that that is because she feels that last time the Government's response was inadequate. As the same Minister is responding today, we might hear a bit more.

The earlier debate was about women and pensions generally, and principally covered current pension recipients. Nothing was inadequate about the Minister's response on that occasion, and neither will there be today.

That outburst of loyalty is very welcome in an era when loyalty is at a premium. Let us wait and see whether the Minister's response is more adequate this time.

I join the hon. and learned Member and the hon. Member for Northavon (Mr. Webb) in commending Age Concern and the Fawcett Society on their campaign. The problems of women pensioners are familiar to me not only as a constituency MP, but as a Front Bencher and co-chairman—with you, Mr. Deputy Speaker—of the all-party group on ageing and older people.

This issue will not go away. As the hon. and learned Lady graphically pointed out in her excellent speech, single women are among the poorest pensioners in the land, and they make up the majority of the pensioner population. The reasons for that are fairly obvious and boil down to five basic causes. Women have a longer life expectancy than men, although that gap is rapidly closing; they are more likely than men to take on caring responsibilities, and therefore to take time out of the labour market; they are more likely to be low paid or working part time; the welfare system has historically been geared to men's patterns of lifetime earnings; and the welfare system has assumed that women would be able to rely on their husbands' pensions to support them in old age. We live in a fast-changing society, and a lot of those assumptions are no longer valid.

What are the Government doing to address the problem? I assume that one of the main features of the pension credit that is now in operation is that it tackles not only the problem of all poor pensioners, but of women pensioners who—as we have established—are among the poorest pensioners in the land. It is fair to say that the pension credit has got off to a shaky start—I am sure that even the Minister could not disagree with that.

Of course I disagree with what the hon. Gentleman said. The pension credit has got off to a good start.

I was about to explain why it has got off to a shaky start. There are two major criticisms of the pension credit: it is complex and there is a problem with means-testing. We know that the poorest pensioners—women are often to be found in that category—are precisely those who tend not to apply for means-tested benefits. I do not think that anyone can gainsay that. Mervyn Kohler, the head of policy at Help the Aged, has described the byzantine complexity of the new system.

At departmental questions the other day, the Minister, perhaps in a slip of the tongue, described as a target the 1.4 million pensioners who it is assumed will not claim pension credit by 2006, albeit they are entitled to it. Her fellow Minister referred to that 1.4 million as a planning assumption. Either way, the Government are working on the basis that 1.4 million pensioners will not get around to applying for pension credit. A large number of poorer women pensioners must be included in that figure.

Let me deal with the Minister's assertion that pension credit has got off to a good start. The Department announced the other day in a great blaze of glory that 1.9 million pensioner households—around 2 million peopleߞ are receiving pension credit. However, the reality is that a large percentage of those people were already on the minimum income guarantee. They have been transferred by a flick of a switch from one to the other. Only about 100,000 households have signed up as new claimants to the new pension credit. The Minister is not in a position to gainsay that. Nevertheless, if she wants to deal with that in her concluding remarks, it would be helpful. I stick by my earlier comment: the pension credit has got off to a shaky start.

Women outnumber men as members of occupational pension schemes and will be even more affected than men by the collapse in the occupational pension system. The Government have been too slow in tackling that problem. Their own measures are likely to be subject to the law of unintended consequences. Some hon. Members may already have seen "No Nest Egg", a recent publication by the National Consumer Council, which describes the chilling results of research into the attitudes of young consumers to pension provision. The high levels of distrust of the financial services industry and of the Government shown by young people, and their disenchantment with the subject of pensions, will come as no surprise to many of us. We are seeing a whole generation of young consumers and workers who are simply not interested in making their own pension provision. However, according to the conclusions in "No Nest Egg", they might be receptive to new saving mechanisms that appear more relevant to their needs and situations.

My party—the official Opposition—is trying to deal with that question as it affects young consumers, and women in particular. The lifetime savings account is designed to be attractive to women. It would give people flexibility in getting their money out when they need it and putting it back again, without being penalised. Would it not be better to have a system of saving for the long term in which people did not have to pledge to leave the funds untouched until they reach retirement? Would it not be good if there were the real incentive of the Government making a contribution alongside that of the individual, which is available on retirement? That would allow everyone, including women, to build up their own personal pot of savings to draw on as they wish.

I have always been slightly hazy about how that lifetime savings account would work in one fundamental respect. The hon. Gentleman said that people would be able to take money out if they wish. Could he clarify the position of someone who takes their money out and who ends their lifetime with a lifetime savings account with nothing in it? Would that person be able to claim the full range of benefits because they have no income?

The hon. Gentleman rightly refers to one of the practical questions. That is why we are consulting widelyߞin the industry and elsewhere—on the proposals. However, the basic concept will form part of our next election manifesto and will have particular relevance to women, whose provision is, after all, the subject of the debate.

The hon. and learned Member for Redcar made the point very well that at present there is an unfairness in the value of annuities for women, although perhaps that is balanced by the fairness of them living longer. We would like to encourage the use of unisex annuities, which would certainly be of benefit to women. We have also said that we would legislate so that there would be no absolute requirement to purchase an annuity, whereas the Government have set their face against that.

The hon. Gentleman referred to the law of unintended consequences. Has he thought whether such a law might apply to making annuities unisex? If so, how does he intend to deal with some of the unintended consequences that might follow from unisex annuities?

The pensions world is one of unintended consequences. The Minister is not in a position to quiz us on our proposal unless the Government start to take seriously the genuine unfairness to many people—including a number of my constituents—who feel cheated because, having worked and saved all their lives, they get a miserable return on the annuity that by law they must purchase when they reach a certain age.

The main issue in the debate is that of the state pension. Age Concern and the Fawcett Society have waged a strong and effective campaign on that issue. They are at one with the Conservative party in wanting to eliminate means-testing as far as possible. In their joint report, "Simplicity, security and choice: working and saving for retirement." they state:

"A non-means-tested state pension, paid at a level that would cover basic costs, remains the simplest way of addressing women's access to a decent income in later life and would provide the clearest incentive for people to build up additional private pensions and savings."

That is why my party has recently announced that it wishes to restore the earnings link for the state pension over one Parliament, and to roll back the means-testing and the complexity that often deters people from claiming. We know that the take-up of the state pension is, as near as makes no difference, 100 per cent. However, we know that many pensioners do not claim many other benefits, either because they are put off by the complexity or because they do not wish to go down the demeaning road of means-testing—to go cap in hand to the Government and answer a lot of intrusive questions. I suspect that the pension credit will be no exception—indeed, the Government's figures reflect that assumption.

Our proposals would have two other benefits. As well as significantly increasing the basic state pension over a four-year period—by £7 a week for a single person and £11 a week for couples—they would take 1 million pensioners off means-tested benefits by 2006, thus restoring the dignity of pensioners which the Government are threatening. The proposals will also do much to reverse the disincentive to save that is a result, unintended or otherwise, of the Government's policies.

The hon. Gentleman began his remarks by talking about how poor some single female pensioners are. Does he accept the figures produced by the Institute for Fiscal Studies that indicate that the proposals that he has just outlined will cost poorer single pensioners, many of whom are women, £9 a week?

No, I do not accept those figures because they make certain assumptions that I do not think are valid. We want to ensure that all pensioners get a better deal, and we are particularly keen for women pensioners to benefit. I am firmly of the belief that the proposals will do a great deal for the poorest pensioners, a large proportion of whom are women, as the hon. and learned Member for Redcar has rightly made clear.

Does the hon. Gentleman feel able to list what the Conservative Government did during their lengthy period in office for women pensioners, who were much poorer then than they are now? He has ample time to tell us that list—it will not take him very long.

I do not think that I have ample time, and I might incur your wrath, Mr. Deputy Speaker, if I gave that list.

The single most important thing that the Conservatives did for all pensioners, particularly women, as is shown by the figures—some of which, in fairness, the hon. and learned Member for Redcar quoted—was to encourage the massive expansion of occupational pensions. By the time we left office, our country was the envy of the rest of Europe because of that growth. One reason why women are beginning to catch up in the pension stakes is because of occupational pension funds. The Labour Government are, in effect, dismantling many of those occupational pension schemes. I am sure that the hon. and learned Lady will not deny that great numbers of women in occupational pension schemes are finding their pension rights threatened by the closure of such schemes across the country.

To conclude, it seems that the reason why the hon. and learned Lady had to have another debate on this subject only a few months after the first is, as I said, that the Government's and the Minister's response last time was inadequate. Let us hope that since then the Government have given more thought to the serious issues raised, particularly by Age Concern and the Fawcett Society. Let us also hope that the Government will start to recognise that, as the hon. Member for Northavon said, simplicity in pensions is the ultimate answer to poverty, whether it affects women or male pensioners.

Will the hon. Gentleman give way?

No, I will conclude my remarks.

At the end of the day, simplicity is the surest way of getting help to the pensioners who need it most.

First, I congratulate my hon. and learned Friend the Member for Redcar (Vera Baird), not only on her success in obtaining the debate, but on the care that she has taken and on her detailed analysis. Even though there is more time than expected in which to conclude this debate, I fear that it might not prove possible for me to deal with every point raised, although, of course, I will do my best.

I cannot promise to satisfy the hon. Member for Eastbourne (Mr. Waterson), who appears to think that we are having this debate because of an inadequate former response. My view is that the Fawcett Society, Age Concern, and those such as my hon. and learned Friend, who have raised the subject on more than one occasion, do so simply because this is a vital issue with many facets and aspects. It cannot be dealt with in 30 minutes or an hour and a half in Westminster Hall. It is absolutely appropriate that the issue is returned to time and again, and it is appropriate that my hon. and learned Friend, who has shown an assiduous and detailed interest in the issue, should have come to this Chamber on more than one occasion to discuss various aspects of it.

Did it seem to my hon. Friend the Minister that the hon. Member for Eastbourne (Mr. Waterson) talked about pension provision in a general sense, only tacking on women at the end of what he said from time to time as an afterthought? Is that at all typical of the Tory party's attitude to women?

I hear what my hon. and learned Friend says, but I do not wish to be particularly ungenerous to the hon. Gentleman, who was not present at the previous debate and is relatively new to his Front Bench duties on this subject. He is walking into an extremely complex set of issues, problems and interrelations that no one can hope to master in a short period. However, I had the distinct impression once or twice while he was making his remarks that he had forgotten the tradition in this particular Chamber of being ultra polite. Perhaps he got out of the wrong side of the bed this morning—it happens to us all.

I was grateful that my hon. and learned Friend fully accepted the progress that has been made by the Government. It is easy for those who are passionate about advancing the interests of women, in particular with regard to pension provision given the potential problems, to forget to say, "Well done," or "Keep at it." There has been progress, and I was grateful that she took the time to deal with that, and to say, "Well done-where she thought that progress had been made.

My hon. and learned Friend still made several sharp and significant criticisms, and I shall deal with some of them. She would accept—certainly she has done in the past—that pensions policies are time capsules. The hon. Member for Northavon (Mr. Webb) fully accepted that. The current distribution of income in retirement, if we consider today's pensioners, is inevitably a reflection of pension policies past. As much as we, as new Ministers, want to bound into office and sweep everything away to start anew, that is perhaps least possible when it comes to pension policy. What we have at present is a reflection of past social mores and social policy, and past assumptions about society and gender roles. We must bear that in mind as we consider how to deal with the issues raised by my hon. and learned Friend.

My hon. and learned Friend, the Fawcett Society and Age Concern have rightly perceived the unequal position of women in income distribution among today's pensioners. The figures that my hon. and learned Friend quoted from various sources show that the average man earns £194 a week, and the average woman earns £153.

If I had to encapsulate what my hon. and learned Friend said in a couple of sentence, I would say that her main concern is primarily that, without further change to pensions policy, the gender gap in retirement will continue. She said that it will continue until Vera Baird the Fifth—I did not realise that she was of such grand lineage, but I should have done. Those who are of working age—she talked about her daughters, granddaughters and great-granddaughters—might face the same problem that we all perceive in the current distribution of income.

I want to provide hon. Members with some reassurance by detailing in part how some policy changes that we are implementing will help to tackle the problem. I mercifully have a little more time than usual, so I also want to respond to points made by others.

I shall briefly set out what we are doing to help women of working age—those who we are talking about in today's debate—to have better pension provision. I shall take a broad-brush approach, for which I make no apology because it is important first to take a quick look at the framework. Employment is key to ensuring that the private or occupational side of provision can be made more adequate. We are helping women gain employment through the new deal, which makes work possible, and which has so far helped more than 200,000 lone parentsovercome the barriers to working life that child care and being alone with children can present.

We have also helped to make work pay through the tax credit, and put additional resources into child care to help remove one of the major barriers to work for lone parents and women who have caring responsibilities for children. That was acknowledged by my hon. and learned Friend and others, although not by the hon. Member for Eastbourne. We have one of the highest levels of female participation in the labour market in Europe: 70 per cent. and growing.

We are helping women improve their future pension provision by use of the state second pension and the introduction of stakeholder pensions. The stakeholder pension is a low-cost, flexible and portable option, which was not previously available. Its introduction plugs a gap that excluded all but full-time working women from a sensible occupational private pension option suitable to their needs. Its impact should not be underestimated.

The state second pension will revolutionise the pensions position of lower-paid workers, many of whom are women, carers or disabled women. About 5 million such people will build a second pension provision, worth at least twice as much as that provided by its predecessor, the state earnings-related pension scheme. Seventy per cent. of the beneficiaries will be women and a further 2.5 million carers will have access to the same pension rights as those who have been earners. That measure is wholly equitable—I was pleased that my hon. and learned Friend recognised that it is particularly good for women—yet the Opposition, the party of the hon. Member for Eastbourne, are pledged to abolish it. That policy, on which he did not concentrate so much, is a particularly pernicious part of a wholly anti-women policy recently announced by the hon. Gentleman's party.

In addition to removing the beneficial impact that S2P represents over time—I realise that there are some points about how long—the Conservative party's policy would affect women in other ways. It would abolish the new deal for lone parents, which is the main, most effective means of helping women who have to look after young children, into the labour market. The new deal policy has seen participation in the labour market by young women with children above 50 per cent. for the first time. It seems to me—I do not lay this at the door of the hon. Member for Eastbourne but at his party's—that Conservatives have decided to restart their war on lone parents, 94 per cent of whom are women, after we thought that they had called a truce. They have spread that war to all women, rather than just lone parents. The hon. Gentleman does not accept the figures from the Institute for Fiscal Studies on how the policies that he outlined would penalise in particular the poorest single pensioners. I would be interested to know what assumptions he thinks have been made that are wrong; no doubt he can write to me on that.

The Government are helping existing pensioners through the pension credit, which provides a reward for having saved, as well as a guaranteed minimum income to top up help to those who need it most. That means an average extra payment of about £400 a year, most of which goes to those who need it most at the poorest end of the income scale, many of them women. Although that policy leaves pensioners £1,250 a year better off on average, the poorest are £1,600 a year better off. That is why there are 400,000 fewer pensioners living on a relatively low income against the backdrop of rising prosperity.

The Minister's target is the 1.4 million pensioners who are not claiming pension credit, although they are entitled to it, including about 2,000 of the poorest pensioners in Redcar, for example. How many does she think will be women?

The hon. Gentleman has misunderstood. The Government's aim is for all pensioners who are entitled to take up the pension credit to do so. Claiming it is significantly simpler than claiming minimum income guarantee was. All it requires is a 20-minute phone call once every five years. Most pensioners can manage that. To encourage take-up, there is a provision to enable face-to-face interviews, including home visits, for those who cannot make such a phone call. I refute the assumption that the number of people whom we want to ensure as a minimum are entitled to claim pension credit represents some sort of ceiling. Of course, it does not. My hon. Friend the Minister for Pensions has made it clear that he would like to see 100 per cent. take-up; so would we all. If Opposition parties—I do not so much blame the Liberal Democrats for this—would stop characterising a 20-minute phone call once every five years as akin to the Poor Law means test, we might have a better chance of ensuring that people were not put off from claiming. Some of the comments that we received from people who have claimed have been extremely complimentary, and that is as it should be. We want to make claiming easy, and we want people to claim their entitlement and enjoy the full effect of having done so.

Equally importantly, we are also improving pensions information to ensure that individuals are aware of their own pension position, rather than just having a general awareness that saving for the future is good but not knowing what that means to them. It is critical that women have regular access to good information and can make plans about the level of income that they want and need in retirement. My hon. and learned Friend the Member for Redcar quoted a survey that found that only one in 10 young women who had extra income would put it into a pension. I sometimes think that that is a reflection of the selfless nature of many women. My hon. and learned Friend suggested that it might have something to do with being hard up, and I am sure that an element of that is involved. There is no doubt that if women get extra money, they like to spend it on the kids.

The Green Paper consultation indicated strong support for making informed choice a reality. In its response, the Equal Opportunities Commission commented that evidence suggests that women have lower awareness of pensions than men and endorsed the need for greater awareness among women. That backs up the survey evidence that my hon. and learned Friend read out to us in her speech.

As a Government, we are committed to making a success of the balanced approach of both targeting state support on those at the poor end of the income scale and developing the right framework and information for individuals to make informed decisions about further private or occupational provision. We are working with the Association of British Insurers, which has agreed to lead a consortium from across the pensions industry to help us develop a pensions information pack that employers can give to their employees.

We are also working through the employers' taskforce, with human resources and employee benefit specialists, to develop a strategy for encouraging the wider use of communication tools such as the total benefit statement. When women take a break from work, the automatic pension forecast should ensure that they still have the information that they need to plan their retirement. We hope that with the flexibility of measures such as stakeholder pensions, which were designed with women's employment patterns in mind, they can make contributions when not working. That will mean that when women take a break from work, it does not necessarily mean that they take a break from pension contributions.

I shall deal with some of the points that have been raised in the debate. I hope that Members will forgive me if I do not get through them all, but I will do my best to answer the main ones. I will start with the points made by my hon. and learned Friend, whose debate this is.

My hon. and learned Friend referred to home responsibilities protection and the lower earnings limit, but she started by talking about the pay gap. As a woman, it is always difficult to read about the pay gap, because we know that our female colleagues may suffer from it. When the Equal Pay Act 1970 was passed, the gap stood at about 37 per cent. Since then, it has closed to about 18 per cent, and although that is still a major gap, it is significantly less than it was.

The gap is influenced by a range of different factors, many of which are outside Government control. Men and women still make different choices about who cares for children, and we do not want to interfere with that. Families must make such decisions, and we do not want to take action that will end up penalising particular choices. The latest Office for National Statistics figures suggest that the pay gap has narrowed during the past year by a further 1 per cent. to its lowest level since the 1970 Act, so progress is still being made. The figures show that women now earn 82 per cent. of men's earnings, despite the fact that they work on average three and a half hours less a week. Average female wages rose by almost 3.5 per cent. while average male wages rose by just over 2 per cent. The hourly wage—this reflects the minimum wage—of the bottom 50 per cent. of women rose by 3.5 per cent., the comparable male figure being 1 per cent. Progress is still being made.

My hon. and learned Friend also referred to home responsibilities protection and the inflexibility of some of the rules such as the 25 per cent. rule, the fact that it goes from April to April and that it represents a year off the sentence, as the hon. Member for Northavon rather depressingly put it, rather than a more positive year's credit. It was introduced in 1978 to help to protect the basic state pension for people whose opportunities to work were limited because of care and responsibilities at home. It is salutary to realise that it is not until then that caring for children at home was recognised at all in the credit system of national insurance. That shows those of us who assumed as we were growing up that things would just get better and better that the process can sometimes be slow.

In any event, HRP helps millions of women who receive child benefit for a child under 16 and who are not doing paid work to have their responsibilities at home recognised in some way in the system. It also helps women who are caring for a person getting attendance allowance and disability living allowance—but not carers allowance as there is a different system for that—to get some credit for their work. It works by reducing the number of qualifying years rather than by crediting, but it means that a woman can get a full basic state pension if she has 20 years of qualifying years and 19 years discounted through home responsibilities protection. It can provide significant assistance.

The complexity of the system and the fact that people do not always understand it is not necessarily a bad thing. We do not require people to work out their own entitlement to basic state pension, or we would all be in trouble. That is one of the reasons why I do not take too seriously the comments made about the alleged complexity of pension credit. We do the calculations. We do not require those who benefit from it to do the calculations but simply to phone us. There is no evidence that people are missing out on the chance to protect their pension in this way. I know that my hon. and learned Friend did not so much allege that as suggest that the system could be improved.

Credits are slightly different. They are intended to protect benefit entitlement for people who are unable to work rather than to provide a recognition of those who have some shorter-term care and responsibility at home that might extend over a number of years. Credits are intended to protect benefit entitlement for people who cannot work for short periods due to circumstances outside their control, perhaps illness or disability. There is a difference between the longer-term nature of home responsibilities protection and the shorter-term nature of credit.

My hon. and learned Friend asked whether we could have a carers credit. We take the position of carers seriously. If one looks at the social security system since the war, it is clear that only more latterly has the role of carers been recognised in the welfare system. It was only relatively recently in benefit terms that carers allowance was even introduced. There are improvements through the state second pension, which my hon. and learned Friend recognised in respect of the requirements of pensioners. I will come on to the accrual rate in due course. There is certainly more recognition of the needs of carers in state pension provision in the state second pension.

We have also extended home responsibilities protection to foster carers for the first time. While that is a small issue, it is particularly important to foster carers. That builds on the existing help that is available through home responsibilities protection.

Is there not an issue of principle about how much value society places on different activities? After a week of shelf stacking at Tesco, someone has built up a full pension right. If someone spends a week caring for an elderly relative, they build up a year's full pension right. However, if someone spends a week with a new-born child over the course of a year, they do not build up pension rights. Why is that a second-class activity, compared with the other two?

It is not. The hon. Gentleman is assuming that the system was established at one time and in a coherent way, but he knows that it has not been. Things have grown up for different purposes over different periods, and consequently there can be incompatibilities and differences between them that do not necessarily reflect a conscious decision to take one thing more seriously than something else. I think that the hon. Gentleman is aware of that.

I move on to the point made by my hon. and learned Friend about unisex annuities. It was also raised by the hon. Members for Northavon and for Eastbourne. The Fawcett Society has suggested that unisex annuities should be considered. My hon. and learned Friend was particularly exercised by the fact that gender discrimination was allowed in annuities but that other types of discrimination were not. The hon. Members for Northavon and for Eastbourne expressed an interest in this, although I think that the hon. Member for Northavon was less convinced than the hon. Member for Eastbourne, who called for unisex annuities.

I made a point to the hon. Member for Eastbourne about the law of unintended consequences. There is a concern that introducing compulsion into unisex annuities could result in there being lower aggregate retirement incomes for the population as a whole, and in only marginal—if anyߞbenefits to women. Recent research by the Association of British Insurers suggests that that would be the case. It shows, on an actuarial basis, that the savings for women of purchasing a unisex annuity would be minimal. According to an ABI example, the sum would be about £3 a month for a woman with a typical pot of £10,000, and that any advantages would be far outweighed by starting to save a bit earlier. That suggests that we might do better by aiming our propaganda at enabling people to make informed choices, and at trying to get them to take savings more seriously earlier in their lives.

The consultation that we recently conducted revealed that insurers would be likely to respond to such a requirement by starting to collect new information—for example, in respect of occupation—with which to segregate their customers, as an alternative to gender, and that that would not necessarily benefit women any more than would the straight gender information that they now use.

As is often the case in pensions, this issue is not as simple as it sounds with regard to both the analysis of the problem and the potential solutions. The Government do not want to spend their time in coming up with policy solutions that are circumvented by new proxies for gender discrimination, and for other things. I am sure that all Members agree with that. Therefore, we are not convinced, although it sounds like a good thing.

My hon. and learned Friend made a point about the state second pension applying to those with children under 16, rather than under six. There is an issue here. When home responsibilities protection was instituted, it was not generally the case that women with children went out to work. We are now trying to encourage such women—even lone parents, for whom it is harder to go out to work—to enter the work force at an earlier stage in their child's lives. Therefore, we again have to be careful that by creating an equal age at which women are expected to do something, we are not providing disincentives to work for those who are showing that they want to go out to work. Consistency across policies, some of which date back 20, 30 or 40 years, is not necessarily what we are looking for. The newer policies that have been introduced, with lower ages at which women are expected to do something, might encourage them to do it—go to work, for example—in a way that policies from 1978 would never have done.

The hon. Member for Northavon spoke about pension sharing on divorce. It is important that women get the full value of the partnership on the breaking up of relationships. Such circumstances are increasingly prevalent. We use the cash equivalent transfer value, which is a method of defining what the pension share should be. However, there is no easy answer. That method attempts to create the value of the benefits to which a member would have been entitled, had he ceased his service at the point at which it is calculated—at the point of divorce.

There is no way of knowing whether a scheme member might leave early due to a job change, go off to do something else, or retire early. This is, to some degree, a guessing game. There must always be a balance between achieving fairness when a divorce occurs and requiring employers, or scheme providers, to do ever more complex and administratively difficult calculations, which will increase the cost of the general provision of occupational pensions when we are trying to simplify and reduce the costs. Many hon. Members have talked about what is happening to occupational pensions. I think that there is some common ground between us on that matter. Putting more costs on to such schemes will not ensure better coverage or more access to schemes for young women.

The hon. Member for Eastbourne asked how we could persuade young people to become interested in pensions. If anybody has an answer to that question, I should be pleased if they would write to me as soon as possible and set it out in full. One of the conceits of youth, if I may put it that way, is that one is immortal and the last thing one needs to consider is pensions. If I had talked to any of my friends about pension provision when I was young, which was a long time ago, I would have been considered a pretty boring person. I suspect that most young people still feel the same way today. Getting people to save from an early enough age is one of the most difficult things for a Government to do. Young people are not inclined to listen to Governments, but when they start talking about having to save for retirement they probably switch off entirely.

This is a problem for us all. As the figures in the Green Paper show, there is no doubt that whether we are talking about young men or women, people do not start saving early enough for their retirement. If they started saving just a few years earlier, things would be a lot easier for them on becoming a bit older. Of course, they start thinking about that when the position is already not as good as it would have been if they had started sooner. We must try to tackle that problem by providing information and making savings easier and more flexible. However, there is no sensible, ready-made answer that will definitely work if we just apply it.

I realise that we are running a little short of time, but I want to deal with some of the points my hon. and learned Friend made about the lower earnings limit, and awards on credit to people with earnings below that. The current system of credits relies on clearly identifiable triggers. To deal with earnings below the lower earnings limit would pose administrative and evidential difficulties. Evidence of earnings at lower levels may not readily be available, so there would be a problem with verification.

My hon. and learned Friend said that it would be desirable to extend the state pension to those earning below the lower earnings level, but our current basic state pension system is based entirely on the contributory principle. That raises the question about whether it should be a contributory benefit. I am sure that the hon. Member for Northavon, who proposed his citizen's pension, would agree with me about that. We must protect the contributory principle and administer it fairly to all those who are in it, or would like to be. The contributory principle has underscored our basic state pension provision for as long as it has existed. Moving away from that to any great extent would create much wider problems than the small issue to which my hon. and learned Friend referred. That is another example, perhaps, of the law of unintended consequences and of the fact that, when we talk about pensions, it is almost impossible to propose a simple solution to what often seems to be a simple problem. As we all realise, this is a complex, intergenerational and long-term matter to which there are no simple solutions.

I am fast running out of time and must respond to the other points by writing to hon. Members—

Order. The Minister has run out of time.

Thank you, Mr. Deputy Speaker. I also thank Mr. Speaker for granting this debate at short notice. It has to be appreciated that this is a short debate, and my hon. Friend the Member for Coventry, North-West (Mr. Robinson) will pick up any points that I fail to make. He is quite adroit at that. My hon. Friend the Member for Leicester, East (Keith Vaz), who is also here today, is lending his support on the issue, which centres on the suspension of a doctor at Walsgrave hospital some two years ago. It is worth noting, as I hope the Minister will, that this is the second time that we have had to have a debate on suspensions at the hospital.

There has been a range of problems at the hospital, but we should start by recognising that progress has been made in several areas during the past 12 months—we would not want to take that away from the new management. That progress includes an improvement in patient care, a new trust chairperson and a new chief executive of the trust, an improvement in terms of the practice of bed blocking and a tremendous effort to reduce waiting times. There has also been tremendous progress over the building of a new hospital, the final cost of which may be £380 million or more. It is also worth stating for the record that my hon. Friend the Member for Coventry, North-West and I supported my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) as a link between us and the national health service to secure that hospital.

One outstanding issue remains—that of Dr. Mattu. He was appointed on 1 May 1997 to establish a new medical school and to help to improve standards. He also joined the cardiac department. In February 2002, he was suspended after he raised concerns about overcrowding in some wards, in which five beds were placed in four-person bays, which was interesting. There was quite a lot of controversy about it. From 1999, he raised at a series of meetings other concerns about standards and the level of care. As I say, he was employed to help to improve standards.

There have been two inquiries to investigate some of those concerns. The Commission for Health Improvement carried out an investigation and expressed several concerns. In fairness to the trust, it acted on the report and put those matters right. A further inquiry is to be held because of allegations that the first two inquiries, which were separate from the CHI report, did not appear to cover all the concerns regarding five beds in a four-bed bay. We believe that this inquiry should be independent, as that would show transparency and encourage the public again to trust the management of the hospital to deliver adequate services.

It has been estimated that the suspension and resulting legal expenses are costing the NHS about £50 million a year—a considerable sum that could be used for other purposes in the health service. Suspensions and over-long disciplinary procedures cost the NHS a great deal of money. In previous cases, the disciplinary procedure has taken two years and run up costs of hundreds of thousands of pounds. The personal cost to Dr. Mattu includes not being able to practise his skills, the emotional cost to him and his family and the cost of long disciplinary procedures. At what stage does whistleblowing become a disciplinary matter? We need guidance from the Minister on that question.

In the past three years, there have been at least three suspensions for very long periods. One case had to be resolved by the courts, one was settled out of court and now there is the case of Dr. Mattu. The new management have had the chance to wipe the slate clean as most of those cases, including that of Dr. Mattu, occurred under the previous trust management.

My hon. Friend the Member for Coventry, North-West and I are calling for Dr. Mattu to be reinstated or, failing that, for an independent panel to examine the case, or the Minister to set up an independent inquiry. We want to let the past stay in the past and get everyone to work towards one aim—the provision of a better health service for the people of Coventry. In outlining our concerns in the Dr. Mattu case, we make it perfectly clear that we do not want a quarrel with the management. If that is what we wanted, there would be no reason for us to call for arbitration.

There have been problems at the hospital, but we recognise that there have been slow improvements and that there cannot be any major improvements until the new hospital is completed. However, we acknowledge the valuable service of the staff in providing for the health of the people of Coventry and we would not want anyone to think that we are disputing that contribution. There can be a new hospital, but if staff morale is low there is a problem.

The way to lift staff morale is to treat the staff fairly, consider their grievances and try to resolve them. As a gesture in that direction, at the very least there should be some conciliation between the trust and Dr. Mattu and his advisers. It is Dr. Mattu now, but who will it be next week because the management happen to disagree with the staff on the issues that they raise?

We must bear it in mind that one of Dr. Mattu's functions on appointment was to improve standards and, in doing so, the onus was on him to raise issues about which he was concerned. Five beds being placed in a four-bed bay is a serious issue, and as that and other issues have not been resolved and there has been no independent inquiry, there are grounds for mistrust in the public mind over how the hospital is managed and for a lack of confidence in the services. I do not say that that has happened, but there is a real danger that it could.

This is a short debate and we want to give the Minister adequate time to reply. We appeal to her to consider the situation objectively. I know it is difficult for her to intervene, but where there is a will there is a way. At the very least, she should push for conciliation, if not an independent inquiry.

My hon. Friend the Member for Coventry, North-West will make further points about the hospital and Dr. Mattu's case. The people of Coventry are watching that case, as they did the previous cases, as what has been going on is very frustrating for them and the situation cannot continue. At some point, the past must be buried so that we can move on to the future and deliver what the people of Coventry deserve—a new hospital and the best services that can be provided. If that is done, staff morale will improve and, more important, the people of Coventry will have confidence in a first-class health service.

Like my hon. Friend the Member for Coventry, South (Mr. Cunningham), I thank Mr. Speaker for granting permission for this important debate at short notice. I also thank my hon. Friend for securing it. I am grateful to the Minister for being present, and I look forward to what she has to say.

As my hon. Friend said, this is the third debate that we have had on the problems of Walsgrave hospital. I had hoped that this Adjournment debate would not be necessary but it is, despite the fact that there is a new broom, and a new start, for which we thank the previous Secretary of State. We have a new chairman and new chief executive, and for the last year and a half the problems of Walsgrave had more or less disappeared from my radar screen, until now. As MPs, we are close to our constituencies, and we measure that by the postbag and representations that we receive and by the general feeling in the city about the hospital, which is probably its most important institution.

My hon. Friend said that progress has been made. The new hospital is going up, the private finance initiative project has been agreed and there is every chance that we can sustain that new start if we deal with the remaining problem. I am not sure why it has flared up again in recent weeks. Perhaps it has to do with the National Clinical Assessment Authority letter, which I hope my hon. Friend the Minister will comment on. Perhaps the situation has simply gone on far too long. It is now 20 months since the suspension and we are no nearer a resolution of the problem.

For that reason, my hon. Friend the Member for Coventry, South and I felt that the matter had to be raised in Parliament again today. It is indeed time to do so because this very week a Reader's Digest press release again identified Coventry's Walsgrave hospital as one of the principal areas for concern about suspensions. Highlighting an article in the Reader's Digest published today, the press release states:

"One example of a trust throwing its weight around is the University Hospitals of Coventry and Warwickshire NHS Trust"—

of which the main hospital is the Walsgrave—

"who are at the centre of three high-profile suspensions. The most recent case concerns Dr Raj Mattu, one of the world's leading heart specialists."

The press release says other things, which I shall come to, but it is a strange situation in which one of the world's leading heart specialists—those are the words of a well informed Reader's Digest article, not mine—is suspended for 20 months. People should think of the cost—not only the hundreds of thousands of pounds to which my hon. Friend referred, but the loss to the people of Coventry. At the heart of the matter seem to be nothing more than bickering, rivalry and allegations of confrontation, and perhaps harassment or bullying, made by one consultant against another. It has taken 20 months to get nowhere but deeper into confrontation and aggravation for the whole city of Coventry.

The issue will not go away, and it needs to be confronted and resolved in the very short term. The people of Coventry are fed up to the back teeth with bickering, rivalries and allegations of harassment between consultants. It is much worse than what takes place in the Oxbridge common rooms. Heaven knows, people who have served in them are aware of the bickering, fighting and confrontation that goes on there. The alternative to a settlement now is another year of the same. We will go through the procedures, which will take at least a year, and be no further advanced.

I intend to leave the Minister plenty of time to reply, but I want to say that Dr. Mattu, whom I know personally and with whom I have recently discussed the situation, as I did many months ago, was unwell for four months this year with an illness that has clearly been aggravated by the stress that this incident has caused him, and one should never overlook that. Previously, other factors delayed a resolution, but we are through those now and, as I understand it, the representatives on each side are ready to engage.

One story came to my attention just last week. Although Dr. Mattu is suspended, he still comes to Coventry and he holds three surgeries there. I am told that the fact that he does very little private work may be one issue that is causing friction between him and the other doctors. I do not know about that and cannot comment on it, but Dr. Mattu is doing voluntary work in Coventry and, I think, in Kenilworth or Leamington, where he holds three clinics. This incident took place not as a consequence of one of those clinics, but because of a chance encounter in a local pub, where he met a gentleman who has allowed me to mention his name. That gentleman is one of my hon. Friend's constituents, not one of mine, and I have told my hon. Friend that I shall be mentioning this man in the debate.

The constituent's name is Jim Brown, and he told me the following story. He was twice admitted, very recently, to Coventry Walsgrave hospital as an emergency case. On the first occasion, he was kept in overnight and discharged the next day. On the second, he was not admitted to specialist coronary care, but held for two nights in the normal emergency wards and discharged on the third day. Dr. Mattu bumped into Mr. Brown in a pub in Coventry and said to him, "You are not looking very well. Jim. What's the matter?" He knew that he had a history of coronary complaints. Mr. Brown explained to Dr. Mattu that he was suffering from something similar to what the Prime Minister had—an excessively fast heartbeat.

Raj Mattu, because he knew the person and knew about the condition, said that what he needed was electric shock treatment—precisely what the Prime Minister had. Dr. Mattu said to Mr. Brown, "Why don't you go to your GP tomorrow? The condition is very serious and if it continues it can cause long-term damage." He told him to tell his GP that he had that condition and to ask him to get him admitted to the coronary unit. He said that the people in the coronary unit were very capable and would administer the treatment that Mr. Brown needed.

Mr. Brown did just that. He went to his GP, who phoned the hospital, saying that the case was not an emergency, but that he had identified the problem—subject to hospital confirmation—and that he believed that such treatment was necessary. The treatment was administered and Mr. Brown is fine. I spoke to him on the phone and he confirmed every aspect of that conversation. He said that he is fine, and he could not understand why it took the intervention of Raj Mattu to get him that treatment.

There is no doubt that we are dealing with a competent doctor. The Walsgrave may want to ask itself some questions about why, in Mr. Brown's case, there was no coronary investigation after his emergency admission, but that is not the main point that I want to make. The point is that Dr. Mattu was, and is, by any standards, an outstanding doctor. It is not just Reader's Digest that believes that to be the case—it is recognised in Coventry. Dr. Mattu was recruited in 1997 for the specific purpose of redressing what was seen as an inadequate situation in the hospital. There were two incidents—one in 1999 and the other in 2000. In the 1999 incident, in which there were five beds in a four-bedded room, a young man was admitted—I do not know the details of what happened—and it was not possible to get the equipment on to him quickly enough. He died. Both incidents were investigated, but I do not know what the judgments were. It would be nice to see the results published, although I am much more interested in the future than in the past.

What have the present chairman or chief executive to fear from an inquiry? They were not in post when those incidents took place, and the practice of putting five beds in a four-bedded room has stopped. However, if the Minister could make the results of those investigations available, it would be very interesting to see what happened.

It is no good pretending that Dr. Mattu created waves for no reason. He did so because he wanted to improve an inadequate situation and because he thought that not enough attention was being paid to what he believed was improper practice. Five beds in a four-bedded room might have been acceptable if all the patients were recovering from heart operations, but it should never have been allowed when the patients were in a critical condition, such as that of the patient who died.

I think that Dr. Mattu was a whistleblower, although that may not be universally accepted. He set very high standards and expected others to reach those standards, but that is nothing less than patients would wish. If he was difficult in that respect, that is all in the past. The question now is what should be done to resolve the present situation.

The NCAA has been contacted. The Minister will remember that the NCAA was set up with the precise purpose of accelerating the process of suspensions. It limited the number of cases in which hospital trusts should seek to suspend and set a target for the time it should take to process those suspensions. Neither of those has been observed in this case, but it predated the setting up of the NCAA.

I am told that the NCAA has written a response, and, although it says that disciplinary hearings should proceed, it is not standing in the way of a compromise or negotiated settlement. A compromise settlement must now be reached, and that could be achieved through an intervention from the Minister or arbitration by a jointly-appointed, independent party. We must cut through this process, which is dragging on—costing us millions or at least hundreds of thousands of pounds—and denying the people of Coventry the care that they need.

What is the essence of a compromise agreement? The trust should not expect to humiliate Dr. Mattu in any way or to reach an agreement that wholly supports its wishes. The essence of a compromise agreement is that each side should drop its claims against the other and no blame should be apportioned. If we start from that point, I am sure that a compromise can be reached, and I urge the Minister to set about resolving the problem on our behalf. If she were to say that procedures must be followed, we both know that the situation would continue for another year, with hundreds of thousands of pounds of extra costs, and we would be denied the good services of an outstanding doctor.

First, I join my hon. Friend the Member for Coventry, North-West (Mr. Robinson) in his congratulations to my hon. Friend the Member for Coventry, South (Mr. Cunningham) on securing this debate. I am aware of the local concerns regarding this issue and that there is considerable disquiet over the length of time taken to resolve the situation.

Before I discuss the suspension of Dr. Mattu, I want to say a few words about the progress being made locally at the University Hospitals Coventry and Warwickshire NHS Trust. My hon. Friends, including my hon. Friend the Member for Leicester, East (Keith Vaz), will be aware that, in 2001, the Commission for Health Improvement awarded the trust a zero star rating. That was coupled with the fact that, in the Dr. Foster report into cardiac surgery, published in November 2001, the trust was highlighted as having one of the worst cardiac mortality rates in the country and given three months to improve.

Following a number of interventions, including by the Modernisation Agency, a review by the Commission for Health Improvement in 2002 found that satisfactory progress had been made. Issues such as the high death rates, the practice of putting five beds in four-bedded bays, and strategic planning were all found to have progressed satisfactorily, but more work still had to be done. As a result, the decision was taken to franchise the trust and, as my hon. Friends have mentioned, the then chief executive, David Loughton, resigned in March 2002. The new chief executive, David Roberts, assumed the post in May 2003. He implemented a plan sustainably to improve performance at the trust.

I should like to pay tribute to the hard-working staff at the hospitals in the trust, who have turned round performance to the extent that the CHI awarded the trust two stars for 2002–03 and concluded that overall it is performing well, although work must still be done before the trust is one of the best in the country. The super-hospital for Coventry and Warwickshire is also being built, at a cost of about £359 million.

I will now turn to Dr. Mattu's case. I am aware of the issues surrounding the case, especially the long time taken to sort it out. There have been allegations that Dr. Mattu has been suspended because he is a whistleblower. The Government expect a climate of openness and dialogue to exist in the NHS, a climate that encourages all staff to be able to raise concerns about health care matters reasonably and responsibly, without fear of victimisation.

In August 1999, the Department of Health issued stronger guidance to all NHS trusts and health authorities on whistleblowing. That guidance is in line with the requirements of the Public Interest Disclosure Act 1998, which gives strong statutory protection to employees who disclose information in the public interest and are victimised for doing so. National health service employers should ensure that all staff are aware of local policies and procedures, and their responsibilities for raising genuine concerns in a responsible and reasonable way. The Department's view is that concerns raised should be dealt with locally and in accordance with those local policies and procedures wherever possible. In. luly we issued an updated policy pack to support organisations reviewing their policies on whistleblowing.

Dr. Mattu has been employed at the trust as a consultant cardiologist since May 1997. The then joint medical director at the trust suspended him from duty on full pay on 21 February, following allegations of serious bullying. The act of suspension was—and still is—neutral, pending investigation of the allegations, and was in accordance with the trust's disciplinary procedure, which states that

"where, in the Medical Director's opinion, a practitioner's continued attendance at the workplace is or would be prejudicial to an investigation or good working, or is not in the interest of patients, the public or other staff, the practitioner may be suspended from duty on full pay pending the outcome of preliminary enquiries or the full investigation."

In each case, the consideration and the implementation of the suspension should be in accordance with the health service guidelines set out in HSG (94) 49.

Following Dr. Mattu's suspension, a further allegation was received that corroborated the original complaint. There was a formal investigation into the allegations, conducted in accordance with the trust employment procedures relating to clinical staff, which had been agreed by the local negotiating committee. That committee comprised senior consultants and so forth. The procedures are recognised as being fair and appropriate. The investigation methodology consisted of taking statements and interviewing people. Dr. Mattu has remained suspended during the process; his suspension is reviewed fortnightly by the joint medical director of the trust.

In January, an independent panel meeting was held, in accordance with trust procedure and agreed with the parties, to review the evidence and to consider what further action, if any, was necessary on the ongoing suspension. The panel undertook a preliminary investigation assessment and found that the prima facie case of personal misconduct needed to be answered. Dr. Mattu has engaged the services of the Hospital Consultants and Specialists Association and a solicitor. The trust has also engaged a solicitor. Progress on the case has been slowed by the lengthy and complex disputes between the trust and Dr. Mattu and his representatives. As a consequence, Dr. Mattu is unfortunately unavailable due to sickness, as my hon. Friend the Member for Coventry, North-West mentioned.

West Midlands strategic health authority representatives met the trust on 30 July 2003 to review the processes employed by the trust to date, and in particular to ensure that the fundamental principles of due process and natural justice have been complied with.

I know that technically the suspension is, or is said to be, a neutral act. However, the consultant concerned has been suspended and left in limbo, with all the stress that that involves. There is no countervailing pressure on the others involved. I want to raise another point; is there not something wrong with those processes, which can go on for 20 months, even allowing for the four months of Dr. Mattu's indisposition? Cannot the Minister see that the processes are not working? What will she do about the matter?

I assure my hon. Friend that the process is genuinely neutral. I appreciate that it may not feel like that, but it is. That is how the matter must be regarded by all parties. My hon. Friend presses me on the length of the duration of the case, and I share his concerns about that. It is of concern that it has taken so long and we do not want cases to take so long. Dr. Mattu wrote to Sir Nigel Crisp, who suggested that the National Clinical Assessment Authority should look into the handling of the case. The NCAA provides a service that deals with doctors and dentists on performance issues and gives advice about local handling and how difficulties can be resolved. Ian Stone, the chief medical officer's adviser on long-term suspensions, is also an employee of the NCAA

A group was convened and met on 3 September. As a result, options for concluding Dr. Mattu's suspension and the implications of each of the options for the trust, its employees, its employees and the wider NHS were considered. The group also agreed to provide an expert opinion on how the trust should move forward and on the support required by the trust and, if appropriate, its employees. Ian Stone wrote to the trust's chief executive on 23 October to advise him on the steps that it should take to bring the case to a conclusion. The trust will consider that advice, but the final decision on the course of action to be taken rests with the trust.

As a result of my hon. Friends' comments, I am concerned about the amount of time that the case has taken and undertake to see whether there is anything further that we can do to speed it up. However, I cannot give my hon. Friends any assurance that that will be the case. It is very difficult to resolve such long-running disputes as rapidly as everybody would wish.

It is a pleasure to see such a good turnout from both sides of the House for this debate, which comes at a very appropriate moment for the industry. I am delighted to have secured it.

I was interested recently to see the controversial moment that boosted the ratings of "Coronation Street", when Sarah asked in the corner shop, "Is it really 37p a pint?" for the milk that she was collecting. That pays tribute, perhaps, to the sentiment felt widely across the UK that this is an industry whose value has been hidden for too long. The UK pinta has a special place in Great Britain.

Obviously, dairy is a 24/7 industry. When I visit my constituents on the farm, or when they visit my surgeries, I recognise that it is not a job or a business that can be done part-time, or that can be undertaken for two or three days a week. It is a full-time commitment and the industry has experienced a rigorous decline in recent years. In Scotland, 50 years ago, there were five herds for every one that remains. Galloway's prosperity was built on the industry and many constituencies represented in this Chamber today have witnessed a similar decline in prosperity, in direct proportion to the number of herds in the industry.

As I was discussing before the debate, the average age of a dairy farmer is now 59 and I hope that my constituents will not mind my pointing out that, when one is speaking to members of the industry, it seems higher. It is an old industry, and there is little prospect of the Government taking action to return it to its historic prosperity.

I am grateful to the hon. Gentleman and share all his concerns for the future of the industry, but is not this an issue less about Government action and more about the attitudes of the large supermarkets and dairy companies, which seem to be driving my constituents—and hisߞinto oblivion?

The hon. Gentleman is right. It has to do with the balance of market power and I shall discuss that shortly. That is the issue raised most often by my constituents. It is the balance between retailers, processors and producers that seems so out of kilter and that is putting a brake on the industry.

The hon. Gentleman does not have the benefit of the Western Morning News, the regional newspaper for our part of the country. Perhaps I could draw his attention to an extremely useful diagram. It shows that the average shop price of a litre of milk is 42p, but the farmer gets only 18.3p—their costs on average are 20p, processing costs are 11p, supermarket handling and cold storage are 2p, and the supermarket profit on that figure is 10.7p. Would the hon. Gentleman agree that that is disastrous?

I certainly acknowledge the clarity of the Western Morning News on this issue. The hon. Gentleman will want to retain his historic good terms with that local media, but I would like to progress by suggesting some direct measures that the Government could take to ease some of the industry's pains.

The president of the National Farmers Union Scotland, John Kinnaird, recently met Dairy Crest's chief executive, Drummond Hall. Mr. Kinnaird said:

"No-one begrudge: Dairy Crest making a profit, it is key to any successful business. However, our members cannot accept processors and retailers increasing their margins at the same time as producer prices fall through the floor. The major retailers have committed to pay more for cheese on top of earlier commitments on licpid milk. At the very least, Dairy Crest should commit to passing that increase back to producers in full."

That is the essence of the price problem: however much is promised at the retailer end, very little gets back to the farm gate.

Price is at the root of the issue, but there is another factor, to which the hon. Gentleman alluded at the start. This is a declining market, and one reason why we need to restructure it is so that all sectors can pull together to try to return it to a state in which the demand for milk is increasing, which would make many other things fall into place. Does he agree?

I do not necessarily agree if the hon. Gentleman is suggesting that milk is a terminally ill industry. I see dynamic things happening in the dairy sector. In recent years, consumption has stabilised and all the evidence is that that situation could continue. I was pleased to be asked to open a new production hall recently by my local processor, Express Dairies. That is exactly the type of innovation that can show the way forward in the industry. It is taking the Nesquik brand into liquid milk. That is a significant investment, securing local jobs in Kirkcudbright, so I am delighted to welcome it. I do not share the hon. Gentleman's pessimism that the. UK dairy industry is in terminal decline. It is rescuable, and if nothing else I hope that this debate provides an opportunity for hon. Members to point the way forward.

As we see if we compare 2003 with 1997, we are still not being helped as a nation, particularly in Somerset, Devon and, no doubt, south-west Scotland, because the Government have in effect undermined the dairy industry by forcing us to import a lot of milk. That was not the case before 1997.

Yes, importing milk causes particular resentment in the industry. There is a paradox, though, to link that to the price debate. The 10 per cent. appreciation of the euro in recent years has not fed through into prices at the farm gate. It is a particularly strange market when that does not happen.

The supermarkets obviously have structural control over the retailing side of the industry. They sell milk cheaply and have done so for many years. The challenge, then, is.. to achieve two things: first, the consumer pays a fair price for milk and, secondly, a fair proportion of that fair price is transferred back to the farm gate.

The UK industry has proved to be very efficient. The yield has risen by almost 1.5 per cent. every year since 1987. That has happened through innovation and the commercial nous of the industry with its breeding, feeding and management systems. Those real commercial gains have been achieved through the hard endeavours of people at the coal face, but the return has been precious little.

The net farm income figures have recently shown a return to the dark days of a couple of years ago. Farm incomes are now at a third of their 1995–96 level. The industry has to tackle those price problems. They are the background to the understandable protests by Farmers For Action and others whereby farmers have sought to take their legitimate complaint to the processing and retailing sectors.

Some strong rural areas of the UK are represented on the Back Benches today. The UK countryside owes a great debt to the dairy industry. l understand that 230,000 farm holdings is the UK total. Unfortunately, the number of registered dairy production holdings in the UK has fallen from 35,000 to 25,000 in recent years. That trend affects all rural communities in the UK and the Government must take it very seriously. In my constituency, there has been a significant decline in the number of farmers, and a trend away from the small family farm.

I am anxious that rural communities should continue. They suffer most when 1he smallest farm units prove unsustainable and they are anxious that the common agricultural policy reforms will put a brake on small farms.

I congratulate my hon. Friend on securing the debate, which has created much interest in my constituency where there are strong feelings on the issue. He will be pointing out the relative strength of the supermarkets and the prices that they fix for farmers. We should also consider Ministers' inaction following the problems of the foot and mouth crisis, which decimated rural communities, especially the small family farmers that he mentioned.

My hon. Friend is right to draw attention to concerns about an outbreak of these diseases. My constituency was badly affected by the foot and mouth outbreak in 2001 and people are worried that that may be repeated. It is an uncertainty that is holding back the industry. I am worried that there may be a repeat of the foot and mouth outbreak and that the potential problems of tuberculosis, which have blighted the industry in many constituencies, may spread to my constituency.

The farmers in my constituency raise reform of the common agricultural policy with me as often as they mention prices. At a recent National Farmers Union meeting in Kirkcudbright, there was a wide-ranging discussion on the complex issues that affect the dairy industry, which is bearing the brunt of uncertainty about a negotiated settlement of the CAP reform package. There was particular concern about the prospect of decoupling, which was sold to the industry on the basis of a substantial reduction in red tape and form filling. At the early stages of CAP reform, that was, understandably, an enticing prospect for farmers. However, given the practicalities of modulation and ensuring that farms are linked to environmental schemes, the prospect of reducing the burden of red tape appears to be disappearing over the horizon. Farmers are worried that decoupling is no more than a smokescreen that will involve a reduction in their incomes.

Modulation is a prospect that often seems to mitigate worst against the UK, especially in rural areas. In the past, modulation has meant income evaporating from my constituency to elsewhere in Scotland and Europe. There is great concern that modulation and its expansion in the CAP reform package will continue that trend.

Conservative Members often demand reform of the common agricultural policy. Is the hon. Gentleman advocating that we do not take the opportunity of earlier decoupling than everyone else?

The hon. Gentleman is mistaken. I was not advocating that, but I do want us to take a close look at exactly what we are getting involved in. The industry was sold decoupling on the basis that it would remove the vast swathes of red tape and bureaucracy that have built up over many years and replace it with a simple system. What started to emerge was a removal of many of the schemes, but in terms of the modulation of red tape, they are being replaced by a new form of bureaucracy that has the potential to be even greater than that which it purports to replace.

The industry is concerned about the effect of CAP reform on farm incomes. Early estimates of the probable effect of the package suggest lower profits for dairy farmers, although many uncertainties remain. Estimates by Richard King of Andersons suggest that, as the new dairy premium arrives on farms, a 150-cow herd producing 1 million litres of milk might see an initial income gain of about £6,000 in 2004, which will be very welcome. However, from 2007 the price cuts agreed under the reforms will start to bite and compensation will decline as modulation rates increase and the EU exerts further financial discipline. That uncertainty in the longer term is proving to be a significant worry for all family businesses involved in the dairy sector.

I am particularly conscious of how technologically advanced the industry has become: even the smallest farmers in my constituency are no longer the cottage industry that they once were. They are high-tech, high-capital investment businesses that require certainty. That lack of certainty is proving to be the biggest burden that those businesses must overcome in very short order, before the business evaporates before their very eyes.

This morning, I took the wife of a local dairy farmer round the House. She told me that they have to consider an investment of either £18,000 to lease milk quota, or £50,000 to buy it, at a time when they do not know what the value of the quota will be. I am sure that my hon. Friend realises what a tremendous problem that is for dairy farmers, if they are to try to survive at this particularly difficult time. Does he believe that part of the problem is the milk quota system, which was introduced in 1984 and had an adverse effect on the UK compared with other European milk producers?

I agree with much of what my hon. Friend says. She is right to point to the financial commitment that quotas require small businesses to make and to the fact that the capital in a business is often not only the fixed capital but a substantial investment in quotas. Families and local communities are greatly concerned about how the industry will move from that system to a system without quotas.

Given that margins are so incredibly tight in the dairy sector, I am particularly worried when I hear reports that dairy businesses in my constituency are seeking to expand their way into margin and profit. It is a risky strategy for those businesses to double their production because their margins have been halved. Although I am delighted to see any investment in the industry, I am concerned that the environment in the industry is so uncertain that businesses feel that such drastic measures are necessary to secure a fair return on their investment and work load.

I shall conclude by proposing some things that the Government could do to pave the way for a return to prosperity for the dairy industry, although I accept that there is much that is not within the gift of the Government. I know from experience that the Minister for Rural Affairs and Local Environmental Quality is a talented man, but he does not have a golden hand in much of this. However, the Government can make a difference in a number of significant areas—although those do not all fall within the remit of the Department for Environment, Food and Rural Affairs—and I wish to draw the Minister's attention to them.

In particular, the formation of farmers' co-operatives is an important way in which the businesses in my constituency could start to make money again. The potential for the competition rules in the UK to interfere with that natural development must be examined carefully. Can the Minister tell me what position his colleagues in the Department of Trade and Industry adopt on that matter?

As the hon. Gentleman will recall, the Competition Commission exonerated the dairy retailers some years ago. Does he not agree that one successful retailer with 20 per cent. of the retail convenience food market can almost impose conditions that others have to follow?

The hon. Gentleman may be correct. However, my concern is that, if farmers want to get involved in small co-operatives, which I see as a key to breaking out of the cycle of decline, they are potentially prevented from doing so by the rigour of the Competition Commission.

The hon. Gentleman is making a serious and important point. In the dairy sector there is understandably a fear, particularly following the break-up of Milk Marque, that there is a bias against co-operation. That is based on a fundamental misunderstanding of the reasons why the Monopolies and Mergers Commission found against Milk Marque. The commission's adverse finding in that case was made not because Milk Marque had a monopoly position, but because it abused that monopoly position through its selling system. Events since then have shown that the competition authorities are willing to allow the creation of large dairy co-operatives and processors, as demonstrated by the creation of First Milk and Dairy Farmers of Britain.

I am grateful to the hon. Gentleman for giving me the opportunity to point that out, as he was talking about the industry's confidence in being able to proceed with such an approach.

I am grateful for the Minister's observations. That is another area of great uncertainty in the industry, and uncertainty is proving to be a barrier to progress.

There are two further areas in which the Government could make a difference, the first being labelling. Labelling of all agricultural products is a major disincentive to developing the UK, Scottish and Galloway brands that command respect and a premium price. The UK rules on labelling are an appalling abomination. We are doing our industry no credit and must do more to give it an incentive to build up local brands. For the dairy industry, the branding of non-UK milk as being from the UK sticks in the throat.

Will the Minister ask his colleagues at the Department of Trade and Industry to reconsider market power and in particular the supermarkets' voluntary code of conduct?

I wholly agree that the industry has serious problems, for example the issues of additional yield and good husbandry throughout the country on many farms. However, the hon. Gentleman has not mentioned the economic aspect and supply and demand. Does he agree that, despite the fact that we have not delivered a full quota in recent years, there is still over-supply in the marketplace? As long as that is the case, supermarkets can clearly beat prices down at the farm gate.

There is also a failure to develop potential milk products and a serial failure to develop specialist products in the dairy industry, which could drive returns into the industry and the farm gate.

The Minister has the opportunity to re-evaluate the supermarkets' code of conduct. It was a voluntary scheme and I understand that the offer of that scheme was gratefully accepted by the industry at the time. There is great scepticism that it is not working as it should and I ask the Minister to implore his colleagues at the Department of Trade and Industry to seek the Office of Fair Trading's involvement in monitoring that agreement. There is considerable concern in the dairy industry that it is being forgotten about again, and that the prosperity of past years will not be repeated unless urgent action is taken and a fair price given for a fair product.

I congratulate the hon. Member for Galloway and Upper Nithsdale (Mr. Duncan) on initiating the debate. This is a crucial stage in the life of the dairy industry, and I am pleased to contribute briefly. I am particularly pleased to see so many Conservative Members at a time when they have their own deep trauma.

In its briefing for the debate, the National Farmers Union points out that the key issues on which we should focus are milk prices and bovine TB. Unless and until dairy farmers get a fair return, they will continue to contract in number. Until bovine TB is controlled, more and more farmers will be forced to leave an industry that has become enfeebled in less than a decade.

I shall focus initially on milk prices. As the hon. Gentleman said in his admirably measured introduction to the debate, the dairy industry is in a dire state. Processors and supermarkets take an ever higher proportion of the retail price, leaving farmers with continuing and growing losses. Clearly, that cannot continue. With prices at 18p a litre at the farm gate and a production cost of about 20p a litre, a typical 1 million litre per annum dairy farm is losing £20,000. With milk production nationally standing at about 14 billion litres, that is equivalent to 14,000 farms with hundreds of millions of pounds in losses, which is not sustainable.

Is it not the case that a higher proportion of the delivered milk price—to the doorstep or the chiller cabinet—has to be paid to the farmer? That has been true for 50 years. In 1945, the then Ministry of Information—I do not believe that it was located in Millbank—talked about the least pleasant aspects of farming:

"In winter, you are up long before sunrise. In calving time you are often up all night. You milk twice a day, dawn and afternoon. You have to wash down each animal, feed it, milk it, clean down the shed, clean yourself and ensure the purity of the milk, over and over again, day after day."

Apart from the major efficiencies of mechanisation, 58 years on, one is tempted to say that little has changed. Farmers milk the cows and everyone else milks the farmers.

On that point, does my hon. Friend agree that UK farmers could assist themselves by embracing fully the concept of fair trade and recognising that they are in exactly the same powerless position as producers in developing countries in relation to the power exerted over them by large companies? Is it not time that we had a fair trade campa gn for quality UK produce?

There is an awful lot in what my hon. Friend says. A proportion of World Trade Organisation discussions and negotiations revolved around that very issue, so there is some potential in what he says. The situation is not fair. The proportion of the delivered price retained by the farmer is not sustainable, and it is unfair. The work involved in producing milk is immense compared with that involved in selling the product. Farmers have to have high standards of welfare for livestock and full traceability, and adhere strictly to the dairy farm assurance scheme. They have to care for the land, with all the environmental aspects that that entails.

Almost the first thing that the hon. Member for Galloway and Upper Nithsdale said was that the job is 24/7, and it is. Dairy farmers are dealing with living creatures and when they are not working with cows, they are usually thinking about them and are concerned about their welfare. Although new Labour is said to be reluctant to intervene in markets, like its predecessor, it has to when markets are failing as seriously as this one is.

Early-day motion 1803 is garnering a substantial number of signatures from throughout the House. It was tabled by my my hon. Friend the Member for Ynys Mon (Albert Owen) and amended by the hon. Member for Ceredigion (Mr. Thomas). I encourage hon. Members in the Chamber and those who may read the debate to consider that motion carefully. It points out that the Government must be an honest broker in bringing together powerful dairies and multiple retailers to enter into a full and proper dialogue with dairy farmers and their representatives. Unless they get larger returns and a surplus, dairy farmers will never be able to reinvest in the industry and it will continue to decline in the way the hon. Member for Galloway and Upper Nithsdale described.

Like many other rural areas, North-West Leicestershire is seeing dairy herds decline. One of the most shocking closures in the past few weeks was referred to by another farmer in a letter to me just two days ago who wrote:

"As you may be aware John and Pat Stanley sold their entire dairy herd this week. It was a shock to all of us in the industry because they were considered one of the most efficient high production herds in the country, and they enjoyed what they did.

It is a sad reflection on the industry when families like that have to give up milking. The animals which were all outstanding went for very little money, as buyers have little confidence in the future of dairy farming."

The farmer is absolutely right. A family with a high reputation has left the dairy industry, so things must be seriously wrong.

I speak to the local National Farmers Union regularly and, prior to this debate, I contacted and received comments from people such as John Adkin of Belton, Clive Spalton of Isley Walton and Chris Timmis of Swannington. The mood is profoundly pessimistic. I shall cite one further quote:

"It is of grave concern to us that we have suffered a very depressed milk price over the last three years. This we cannot absorb any longer. We are a long established mixed family run farm and our main source of income…is from milk sales.

We have slashed out costs to the bare minimum, the effects of this are that there is still no surplus cash to reinvest or even maintain the farm and buildings that are required. Effectively we are producing milk at below the cost of production".

That is a depressing state to get into.

We have been in this situation before. Those who are running family farms and who are the second or third generation will be able to reflect on the farm records, which show that there was a similar period in the 1930s, when low and volatile milk prices effectively brought about the creation of the milk marketing boards, which saved the milk industry when it was on its knees. The boards created some stability in farm-gate prices. The days of the milk marketing boards ended in 1994, after legislation from the Conservative Government. One of the successes of that scheme, which died with it, was ensuring that farmers, processors and retailers took a fair slice of income from the production of milk.

How on earth have we arrived at the present commercial chaos in less than a decade since the end of the old milk marketing boards? I ought to declare that my wife worked for the milk marketing board for some time. We need a proper regulatory board to handle the present three-way negotiation between farmers, processors and retailers, because the negotiation is unequal. The farmers are not collected together in groups that can exercise the leverage that they ought to be able to exercise as an industry.

The hon. Gentleman is making a valid point. However, I was on the Committee that dealt with the Bill relating to the milk marketing boards and I wonder whether he recalls that his colleagues on that Committee joined with the Conservative Government to destroy that system.

I was not aware of that and I am sorry to hear it. I shall look at the names of those people and see whether they have recanted. It is a serious point.

My recollection is slightly different. I do not think that that was the case at all.

Some interesting research in the Library this evening will show whose memory is more accurate.

I believe that there is a way back. Many people want to speak so I will confine my remarks to a further two minutes. My way back is through a co-operative of some kind, or groups of co-operatives. The Minister said that the Government have not looked unfavourably on the development of a number of co-operatives that have emerged in the post-Milk Marque era. Well, that is fine, but co-operatives in the dairy industry in the European Union achieve much more than co-operatives have been able to in this country. Co-operatives are biased towards making commodity products. They make value-added products, set a floor on the milk price and require public and private retailers to pay a reasonable price to obtain milk at the farm gate.

I hope that the farming industry, dairy farms in particular, will not base its action too much on a few disappointing co-operative failures. [Interruption.] The failure of the Amelca co-operative in west Derbyshire, to which the hon. Member for West Derbyshire (Mr. McLoughlin) was about to refer, was a failure not of co-operative principles, but of the business plan, and it was created at a time of difficulty in the industry.

I hope that there will be a way back for the dairy industry through the formation of co-operatives, and that the Government will play their part. The industry needs more stable milk prices, a higher floor price and greater security for dairy farmers. All producers need better prices. There is no single villain in the piece, but I hope and expect that in the last two years of this second-term Labour Government we can help to turn around the dairy industry, which is looking over the edge of a precipice. Many hon. Members who represent rural seats are fearful of what the future may hold.

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Order. Hon. Members may wish to note that we have just 24 minutes until the Front-Bench responses must start at 3 o'clock.

I am grateful to be called to speak in this debate because, as the hon. Member for North-West Leicestershire (David Taylor) pointed out, the fact that early-day motion 1803 is already gaining signatures from hon. Members of all parties shows the very real concern that is felt about this issue throughout the House. I congratulate my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Duncan) on initiating the debate. The dairy industry will be listening to it and to what the Minister has to say at the end.

The dairy industry is vital to the physical and economic health of the nation. The simple fact is that prices must improve or it will disappear. As the largest single agricultural sector, the dairy industry provides jobs for tens of thousands of people. It contributes 22 per cent. of the value of agricultural production. The UK dairy industry provides 95 per cent. of the dairy products that form an essential part of our diet. The 30,000-plus dairy farmers in the UK help to maintain and protect our countryside and there is no doubt that the countryside feels under threat from this Government.

By taking for granted the availability of milk and the vital role that it plays in our diets, we could be contributing to the demise of the industry. More than 10 billion pints of milk are sold in this country every year, providing a mixture of vitamins and calcium—which are essential for good health—that few other foods can rival. The industry is vital for the health of not only our nation but our children. The Government are complacent and I hope that the campaign that is being launched forces them to take action.

Six years of poor prices have forced the milk-producing industry to contract alarmingly. Since 1997, farm-gate prices have steadily dropped. They are now more than 5p per litre less than in 1997, despite the fact that retail prices have remained relatively steady. Low prices are forcing farmers out of business. In England alone, there are 5,000 fewer dairy farmers than in 1995. In south and west Derbyshire, there are only 574 dairy holdings, compared with more than 700 in 1995. Year after year, the number of dairy farmers is being reduced. How long will we let that continue?

There is no good explanation for why farm-gate prices for liquid milk are so low. Prices should have moved in the dairy farmer's favour in the past nine months. The pound has weakened against the euro, world commodity prices for butter and cheese have strengthened and Britain maintains a strong market for fresh milk. Indeed. the large supermarkets agreed to raise by 2p per litre the price paid to the dairy processor with the undertaking that that would be passed back to the producer. Yet prices remain among the lowest in the EU because most processors are passing back less than 1p. Farmers are now receiving only 39 per cent. of the price that consumers pay for milk. In 1996–97—I do not know quite why I have those figures—they were receiving 58 per cent. People should reflect on that.

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If the hon. Gentleman does not mind, he spoke for 13 minutes and a lot of people want to contribute.

There continues to be unwillingness by some to ensure that profits are shared throughout the industry. The futures of remaining farms are undermined by the lack of investment and the general exodus from the industry. Many dairy producers simply cannot see a way to continue, and the Department for Environment, Food and Rural Affairs continues to predict a decline in net income. I wish that the Department would take its responsibility to agriculture a little more seriously. Agriculture seems to be what it cares about least; it is amazing that it does not even appear in the Department's title.

My hon. Friend is developing powerful arguments, not least with the staggering price difference that he quoted. Is he aware that another major factor now rest restraining investment and confidence in the industry is the great threat of the ever-expanding bovine TB problem and the appalling delay that it causes?

Indeed. That is a big issue in Cheshire, as it is in Derbyshire. I had an answer from the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Exeter z(Mr. Bradshaw), on the rise in TB cases in my area of Derbyshire, and the figure was staggering. The fear that that causes for farmers is yet another burden for the industry.

With prices so low, farms are being starved of cash for future investment, as my hon. Friend the Member for Galloway and Upper Nithsdale said.

Does my hon. Friend agree that an extra cost will be that of implementing nitrate-vulnerable zones?

Yes. That is another regulation, another demand, another thing for farmers to spend time on among so much else.

Few young people are interested in entering the industry when the average income of a dairy farmer is only £2.90 per hour for a 70-hour week. There is no minimum wage for the dairy farmer because he simply has to work longer and harder to achieve his return. Many farmers with experience are considering leaving. If the industry collapsed, that would have major ramifications for the whole United Kingdom. Dairy farming is the single largest agricultural sector in the UK and the industry accounts for 22 per cent. in value of agricultural production. Its destruction would see considerable increases in imports and the loss of significant exports. Tens of thousands of jobs in the supply and support industries that rely on the cow would be at risk. If dairy farming is to continue, larger returns must be passed back to enable reinvestment. The average price to a milk producer is 17p per litre, but the average cost of production is estimated to be more than 20p per litre. Those are the crucial figures.

I have the privilege of representing one of the most beautiful constituencies in England, and the Minister was there just a few weeks ago. There is no doubt that many people visit my constituency, which contains some of the Peak District national park, partly because it is farmed, maintained and looked after. If we do not look after the dairy farmers, the countryside that many people enjoy week in, week out will, sadly, disappear.

It is a pleasure to follow the previous speakers. I particularly congratulate the hon. Member for Galloway and Upper Nithsdale (Mr. Duncan) on securing the debate, not least because it was precisely the debate that I called for in business questions a week or so ago. It is long overdue if we are properly to represent the people who are attempting to make a living from dairy farming in our constituencies. If I needed persuading of the difficulties that the Somerset dairy farming industry faces at the moment, and I do not because it has been that way for some time, I could have done no better than listen to those who attended the south-west industry dinner at the Royal Bath and West show. However they were involved in the industry, whether as farmers, processors or whatever, everybody said the same thing: the industry faces a dire future.

I shall be brief so that other hon. Members have the opportunity to speak. I represent a constituency that may contain more dairy cattle than any other and is certainly one of the finest dairy lands in the country. On behalf of dairy farmers, I want to express the cries of pain and anger that, if they were here today, they would express. I do not want to repeat arguments that have already been made, but if we do not get the farm-gate price of milk or milk produce right, we will not have a viable dairy farming industry in years to come.

We have skated around the central issue, which is the power of the supermarkets. They have an oligopoly that destroys any attempt at a free market in milk. Until somebody faces down supermarkets and says, "We want an indigenous dairy industry and we want our farmers to continue to lead the life that they have done over the years, producing milk and milk products in this country," we will not make a difference. The issue is the difference between the price of production and the price that is available through the retail system.

Will the hon. Gentleman give way?

If the hon. Gentleman will forgive me, I will not, as many other Members want to speak.

We cannot sustain a position in which a loss is made on every pint of milk sold. The hon. Member for West Derbyshire (Mr. McLoughlin) is right to say that there should have been an improvement in the past three years. There has not been because of the power of the supermarkets. They could not care less about this country's industry because they can always import products.

Milk is not a price-sensitive issue for the consumer in the supermarket. People do not base their purchase of milk on price; they go in, pick up the container of milk and pay the price at the checkout. The supermarkets cannot see that unless they produce a sustainable ladder through the industry that makes a proper return on investment and capital at farm, processing and supermarket level, they will destroy the industry.

I see so many smaller farmers who face a very uncertain future and are coming to the conclusion that to sustain the losses that they are sustaining while retaining their farm as an asset of huge capital value is a nonsense that no accountant would advise them to continue. They also face the fact that they cannot make the essential investment needed to improve and modernise their farms because they cannot demonstrate to the banks that their businesses have a viable future.

When farmers wrestle with the continuing knock-on effects of foot and mouth and the difficulties of bovine tuberculosis, which we have still not properly addressed; when they consider that some agricultural sectors are beginning to come out of depression; they are told that other farmers are doing better but they know that they are not; and when they cannot feed their families on the return from dairying, they will of course consider whether it makes sense to continue.

As the hon. Member for West Derbyshire said, if we do not have dairy farms in the best dairy farming areas, whether in Somerset, Derbyshire, Cheshire or wherever, we will not have the areas of outstanding beauty that people come to visit—there will be a wilderness. Nobody wants that to happen.

I beg the Minister to take a strategic view of what is best for Britain, its farmers and the British countryside. The hon. Member for North-West Leicestershire (David Taylor) may well be right: until we have some form of intervention or bargaining process that levels the playing field on behalf of our farmers, we will not give them a fair deal.

Our farmers are desperate. They are getting to the point where they are prepared to take desperate measures. I want to avoid that, but we can avoid it only if the House is seen to be speaking up clearly for the industry and the Government are seen to be doing something for it.

I am pleased to have the opportunity to speak briefly on the dairy industry in west Wales. I shall not exchange facts and figures about which part of the country has the most dairy farmers. There is, however, certainly a strong dairy tradition in west Wales and my constituency and a strong tradition of innovation in the dairy industry there. Some award-winning cheeses were introduced in west Wales, the first organic dairy was started there and there is an increasing amount of co-operative working in the industry in that area.

I am certain that the dairy industry in west Wales and throughout the UK has been at the forefront of innovation, reacting to customer demand, trying to introduce new products and developing new ways of adding value to the milk supply chain. That activity must be supported as much as possible by the Government as part of the solution to the current crisis in prices.

I listened carefully to what the hon. Member for Galloway and Upper Nithsdale (Mr. Duncan) said. He made a measured and important contribution to the debate, and I congratulate him on that. I agreed with much of what he said and I shall not bother repeating it, because many hon. Members want to contribute.

It is important to recognise the scale of the decline in Wales. We have lost nearly 500 dairy farms in just two years. That is a significant blow to the dairy sector. We need some sort of critical mass in that sector, especially in terms of forming co-operatives, working together and adding value to products. If we do not intervene now and take some action, when the industry comes together and starts working it will not be of a sufficient size and strength to challenge the supermarkets and the processors, as the hon. Member for Somerton and Frome (Mr. Heath) said.

On talking to dairy farmers in my area, I find that they do not always come down hard on the supermarkets. They ask some hard questions of the processors, such as the creameries, which are the intermediaries in the chains and are aho taking a lot of money out of the process. We are aware that in the last couple of years at least three price increases by the supermarkets were made in the name of the farmer. If we were to work out what the price should be per litre, we should be talking about 26p being passed on to the farmer at the moment—if we take into account what the supermarkets tell us they have been doing with the price increases. If the supermarkets have passed the price increases on to the processors, who has been holding on to them? The farmers have certainly not been receiving them. An average farmer producing milk in Wales receives around 8p per pint. We know that milk sells on the doorstep at about 43p, and for a little less than that in the supermarket.

Many hon. Members have talked about what action could be taken. The hon. Member for North-West Leicestershire (David Taylor) and the hon. Member for Somerton and Frome talked about what could be done, including some sort of intervention, or arbitration. I hope the Minister takes my suggestion seriously, because it is a new Labour suggestionߞI know it is, because the Government did something similar about two weeks ago.

When Carlton and Granada came together, the Government said, "There's a problem here." They said that there was too much weight in the marketplace in the hands of one big company and that they were not sure about it. They allowed the merger to go ahead, but established an independent watchdog to limit the company's ability to raise the price of advertising slots to ensure that there were no adverse effects on those who bought advertising time from that huge company. The milk industry is crying out for just such an independent watchdog. There could be one person—perhaps a regulator empowered by the Government—to undertake those tasks, looking at the price paid by supermarkets, processors and producers and trying to come up with equality in that regard. I commend that idea to the Minister.

We need to know from the Minister today what further action he intends to take on bovine tuberculosis. As we know, the Krebs trials will drag on until 2006. There will be an effect not only directly on dairy producers but on consumer confidence. If bovine TB increases as it has done—it has been increasing by 20 percent. a year in Wales so far—the effect on consumer confidence will be something to be concerned about. In particular, there will be an effect on the cheese producers. Think of all the cheese producers using raw, unpasteurised milk. It makes the best cheese, but how will they maintain consumer confidence if there is rampaging TB in the cattle population? The Government must take an interest in that and must take action.

My final point—I understand that time is short—is on compensation payments to milk producers under common agricultural policy reform. I understand that the Department for Environment, Food and Rural Affairs is considering a compensation payment with a decoupling based on the quantity and not quality—that is to say, the butterfat or protein content—of litres held under the quota. I would like the Minister to reconsider that.

If we accept that there is over-supply in the market, why are we rewarding it in the payment of decoupling following CAP reform? Why are we not considering supporting producers such as those on Guernsey and the Channel islands, and organic producers, who are aiming at specialised markets and aiming to protect and deal directly with consumer demand? We could be in danger of rewarding the acknowledged over-supply in the market.

I hope that those are useful suggestions for the Minister to consider. There is more that can and, in a sense, should be said, but other hon Members want to speak in this important debate and I understand why.

First, I congratulate my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Duncan) on securing a timely and critical debate. The subject is of vital interest to farmers and milk producers in my constituency, which, coupled with that of North Shropshire, is claimed to be the largest milk field in Europe. However one defines such matters, a lot of milk producers are represented in this Chamber. That is why there is such interest in the debate, and such urgency to impress on the Minister the action that needs to be taken and is within the gift of DEFRA. For the sake of the national interest, it is not something that the Government can afford to ignore or dismiss lightly.

Economically, there is a background of ever-commoditising a raw material for so many value-added products against an over-supplied European market. Because of that over-supply, we have some distortions in the market.

Is my hon. Friend aware that the whole annual EU surplus of milk is supplied by Germany and France? Germany consumes less milk than the United Kingdom, has twice as many cows and is allowed to produce 28 million tonnes. France produces three times what it consumes—24 million tonnes. We are allowed to produce just 13.9 million tonnes and we consume practically all of it.

I am grateful to my hon. Friend. That is why I emphatically say that the industry is not declining—not only does the UK need it, but it has market demand to sustain it. What the industry really needs is a level playing field. That is why, in the four years that I have been privileged to be a Member of the House, I have twice, under the private Member's Bill ballot, introduced a Food Labelling Bill. That Bill demands the display of the country of origin and standards of production. I know that high standards are shared by so many, including the organic and specialist producers. The hon. Member for Ceredigion (Mr. Thomas) made an absolutely vital point about Channel islands producers, and the fairness of compensation under the intended schemes.

I plead with the Minister to impress the importance of the issue on his colleagues in the Government and, particularly, on the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Exeter (Mr. Bradshaw). I had a constructive meeting with Cheshire farmers and the Minister for the Environment about bovine TB, but because there has since been a transfer of responsibilities it is critical that those farmers get to meet the Under-Secretary. The Cheshire farmers did not criticise DEFRA, but said, "Here is a positive opportunity for the Government to take the appropriate action." We recommend, and it was well supported—the NFU endorsed it in a briefing that I know all hon. Members received—a MOT test certificate for cattle, so that when transfer movements take place, those cattle that have been able to take TB tests have a higher qualification and can go with their passports.

Secondly, we need to ensure that an isolation ward is provided at the farm of receipt so that the rest of the herd is not put at risk. That would be a practical solution. On the front line of the spread of bovine TB—whether or not it appears in clusters—the vectors appear to be badgers and perhaps other wild animals. The Krebs inquiry is hopelessly delayed and under threat as a genuine process to address an admittedly difficult political issue. In Exeter in Devon, there are genuine pressures caused by bovine TB as well. That proposal is not special pleading; it is something for the dairy industry, in the national interest, that is within the Government's gift, and it could speed the process up and do so accurately and scientifically.

I urge the Minister to help us to secure a delegation to meet the Under-Secretary so that we can make those points yet again, because nothing is happening yet. We have to see progress in the interest of our dairy farmers, who are crying out for help. They are doing their best in the national interest and they are not getting the support that they need.

I congratulate the hon. Member for Galloway and Upper Nithsdale (Mr. Duncan) on his measured opening remarks, which hit the nail on the head. He explained that dairy farming is a way of life, rather than a job in the countryside. I have to declare an interest: many of my family are engaged in the dairy industry and I have worked in it myself.

The hon. Gentleman pointed out that the Government need to take on board the effect of competition rules on mergers between farmers' co-operatives in the future. In his earlier intervention, the Minister showed that he is aware of the likelihood that the only way forward for dairy farmers is for farmers' co-operatives to have greater muscle in the market to negotiate and secure a far better farm-gate price than they can at the moment.

The hon. Member for North-West Leicestershire (David Taylor) explained and reflected what I have found to be the case among dairy farmers not only in my constituency but, I am sure, throughout the country: they are all fundamentally and profoundly pessimistic. He said that he more or less regretted the loss of the milk marketing boards, and knowing what we know now, many of us look back to the stability that they were able to provide the dairy industry. There was a climate in which farmers could plan for the future, which they clearly cannot do now.

The hon. Member for West Derbyshire (Mr. McLoughlin) argued well that prices have increased due to the strength of the pound against the euro, the stronger world price for cheese and the agreement—among some supermarkets at least—to pass on a 2p-per-litre price increase on liquid milk. During the past year, all those factors should have been working towards improving dairy farmers' circumstances. However, it is clear that the one fundamental factor that has worked against even that is the strength of the supermarkets and the fact that they can dictate market conditions as they have done. In my view, the bulk of any farming subsidies seems to be siphoned off to middlemen, processors and supermarkets. The hon. Gentleman hit that nail on the head.

To be fair to the processors—I have the biggest dairy in my constituency—there has been a huge reduction in capacity. That has come at a cost. One thing that I said earlier, which was slightly misconstrued, was that we need to rebuild the relationship between the processors and the producers. That can be done only if the processing industry is reasonably efficient.

That is true. The Dairy Trade Federation called in the Monopolies and Mergers Commission, as it was in those days, to consider the impact of Milk Marque because farmers wanted to integrate vertically into the market. It is appropriate that farmers are able to do so, and to add value to their products and engage in processing themselves. I am pleased that they are doing that, and I hope that we learn from those areas where they are doing it successfully.

My hon. Friend the Member for Somerton and Frome (Mr. Heath) expressed the passion and human emotion behind the current situation, and, along with the hon. Member for Ceredigion (Mr. Thomas), repeated the theme of the impact of supermarkets on farmers. The hon. Gentleman also asked, who is making the profit? Someone clearly is, and it sure as hell is not the farmer.

The hon. Member for Eddisbury (Mr. O'Brien) mentioned the impact of bovine TB. Certainly, those areas that were restocked following foot and mouth have seen further outbreaks, and I agree with the hon. Gentleman that that points in the direction of having health clearances attached to cattle passports as cattle are being moved around the country. The Government must take on board such positive initiatives because, as the dairy industry tries to recover from its current doldrums, it does not want to be hit by the further effects of bovine TB outbreaks.

Does my hon. Friend agree that the effects of TB on the dairy industry are set to be even more significant? The average cost is £36,000 per affected farm per incidence. Although the Government provide compensation for the value of the slaughtered cattle, they fail to cover the cost of loss of milk sales, halt to the trade of live animals, disruption to breeding plans and the loss of pedigree lines, all of which add up to that loss of £36,000, which is devastating for farmers.

I entirely agree with my hon. Friend. It is clear that although there is 100 per cent. compensation for: he animals themselves, the overall impact on the holding is significant—he articulated that far better than I could.

I come from a farming background. Earlier, I was speaking to one of my cousins, who is a dairy farmer in the parish of Mullion. When I was being brought up in that parish, there were nine dairy farms; now there are two. People have talked about the significant reduction in the number of dairy farms in the country. It is a question not just of economic sustainability, but of social sustainability. We are losing rural traditions and the lifeblood from the countryside, as, frankly, the countryside is being turned into prairie and ranch. We cannot afford to allow that to continue. The contribution that farming makes is not only to the economy itself, but to the whole way of life of the countryside. People need fully to understand that.

British dairy farmers are among the most mechanised and efficient, and they operate in some of the most favourable climates, especially for pasture and growing. Yet, to my knowledge, they are more firmly on their knees than those in any other European dairy industry. On the impact of the MMC report in 1999 and the Government's response to it, which we debated in this House, it was a critical error by the Government to accept the MMC's interpretation of the place that Milk Marque had in the market. Since that critical point, we have seen a significant decrease over a long period, ending where we ar;, today. We do not know what will happen as a result c f the break-up of Milk Marque.

As I forecast in 1999, the problem was not only that the MMC made a misinterpretation. The Minister at that time, the right hon. Member for Tyneside, North (Mr. Byers), made an overruling that prevented localised vertical integration, which could, on a value-added basis, have been the rescue. Instead, all the power was given to the distributors and yet more pressure was put on the farm-gate price.

The hon. Gentleman makes a good point. The vertical integration point certainly needs to be looked at.

Dairy farmers are going out of business in this country at breakneck speed. Prices are at rock bottom. Families I have spoken to today, and other farmers mentioned during the debate, are clearly producing milk at a rate that can hardly achieve break even; some are making a loss. That is, of course, a loss to the Treasury because it is collecting no tax from dairy farmers at the moment. At the same time, processors and supermarkets are clearly making profits. It is evident that we cannot simply sit back and allow that to happen, and limp on from crisis to crisis. The milk price should be the basis not simply for establishing that fact; it should be the basis for special pleading. We should recognise that this is a dysfunctional market. There are still quotas. The Government have a role to play: they should intervene in the market.

The Government must answer some questions. What assessment has been made of the impact of the conclusion of the Competition Commission report of 1999 that Milk Marque had been exploiting its monopoly and should be split up? What do they believe is the break-even price for dairy farmers? Do they believe that the code of conduct operated by the Office of Fair Trading should be toughened to give farmers more muscle in the marketplace? Have they assessed what will be the impact on our dairy farmers of the European Union's eastward expansion, and if so, what will it be? Will the dairy premium that will be introduced simply be siphoned into the coffers of the processors and supermarkets, although it should be used to support our dairy farmers? Crucially, what will the Government do to protect our dairy farmers in the marketplace in future?

I congratulate my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Duncan) on securing the debate, which is indicative of his passionate commitment to the dairy industry. That passion has been replicated across the Chamber, not least by my hon. Friends the Members for Eddisbury (Mr. O'Brien), for West Derbyshire (Mr. McLoughlin) and for Congleton (Ann Winterton). I note that the Chairman of the Select Committee on Environment, Food and Rural Affairs, my right hon. Friend the Member for Skipton and Ripon (Mr. Curry), is present, which illustrates his personal commitment to this subject and to the plight of our dairy farmers.

Measured in any terms—farm incomes, the number of people leaving the industry, borrowing—there is no doubt that the industry is in decline. That has been repeatedly stated in the debate. According to a wide range of indicators, dairying is in deep crisis. The National Farmers Union claim that

"unless the price paid to milk producers improves there will be no dairy industry left to worry about".

There cannot be a more stark warning than that.

As my hon. Friend the Member for West Derbyshire pointed out, milk products account for 22 per cent. of agricultural production. The decline and collapse of the dairy industry is more than just a narrow sector issue: it is about the welfare, benefit and maintenance of our countryside, as he described. As hon. Members have said, dairying is now barely viable. The Minister knows that milk producers need about 19p to 20p per litre to be viable, and they are not getting that. Raw milk production is almost beyond viability.

The problem is even more complex. Whereas our European competitors have much greater capacity to add valueߞthey have much better processing at farm level—in our country, processing is concentrated in the hands of a few organisations. As the hon. Member for North-West Leicestershire (David Taylor) pointed out, the ability of dairy farmers to trade their way out of problems is limited by their inability to add value to their products. The hon. Gentleman is right that we need to look at collaboration and co-operation—at ways in which we can encourage dairy farmers to add value to their products.

Is my hon. Friend aware that Yeo Valley is now the predominant organic yoghurt supplier and that although it set itself up as a co-operative, it is finding it hard to compete?

My hon. Friend is a champion of the industry in his own part of the world, and he is right about that. That point was also made by a charming Member for a Welsh constituency, the name of which I will not attempt to pronounce because I will get it wrong, who said that it is vital that we help people to develop vertical markets that allow them to add value in the way that has been described. That is not happening at present, and I hope that the Minister tells us how he will help to make it happen.

The situation is not helped by the common agricultural policy. My hon. Friend the Member for Congleton made the position clear. A newspaper article of last weekend contained the following statement about milk production:

"The UK is only permitted to produce 14 million tonnes a year, slightly more than we consume. Germany, which consumes less milk than Britain—only 11.2 million tonnes—has twice as many cows and is permitted to produce 28 million tonnes. France, which consumes even less (8 million tonnes) is allowed by Brussels to produce 24 million tonnes".

That is neither fair nor right and it cannot be allowed to continue.

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As my right hon. and hon. Friends may have different views, I shall give way to them in turn.

My hon. Friend makes an important point. Would he acknowledge that at the time of our entry to the European Union the UK was concerned to safeguard New Zealand exports to this country? Low British production is the price we paid to do that and we are still paying that price.

With your permission, Mr. Deputy Speaker, I shall now give way to my hon. Friend the Member for Stone (Mr. Cash), who may have a different perspective.

Does my hon. Friend agree that we have to reform the common agricultural policy and ensure that it comes back to the UK on satisfactory terms?

The views expressed by my right hon. and hon. Friends are widely held among dairy farmers. Far be it from me to add more in the short time available than to say that I agree about the need to reform the CAP. Other issues need to be amplified here.

As the hon. Member for Somerton and Frome (Mr. Heath) pointed out, it is unacceptable for supermarkets to take the lion's share of the profit that is to be had in the production of dairy products. The relationship between the farm-gate price and the retail price is simply unfair. It is unreasonable to have such distortion and imbalance in the food chain. We need a Government who are prepared to face up to that and do something about it.

Labelling is vital too. My hon. Friend the Member for Eddisbury has been notable in this respect. He introduced two private Member's Bills to bring fair food labelling to this country, both of which were blocked by the Government. That is scarcely believable given the palpable reasonableness of his proposals.

There is also the dreadful business of bovine TB. Coming on top of all the problems that have been highlighted in the debate it is the icing on the cake. It is the last straw for many dairy farmers. Hon. Members will know that the disease is spreading rapidly. It is making its way across the country. My hon. Friend the Member for North Wiltshire (Mr. Gray), who is recognised as a champion of dairy farmers, has highlighted the matter in his area and in the House. Yet, as was pointed out, rather like the Liberal Democrats' capacity for being politically capricious, the Krebs report and tests are seemingly endless. The Krebs tests go on and on and yet dairy farmers face the problem of bovine TB unabated. The Minister needs to tell us what specific and urgent steps the Government will take to deal with the spread and severity of bovine TB.

I will end with a series of questions that farmers would put to the Minister if they were here today. Do the Government agree with the president of the Scottish NFU, who is well known to my hon. Friend the Member for Galloway and Upper Nithsdale, that the decision of suppliers not to pass on to farmers the extra 2p per litre that they receive is "abhorrent"? What specific measures will the Government put in place to allow farmers to add value to their products? Do the Government accept that because of the current price per litre of liquid milk paid to producers the average net profit of dairy farms is falling to the point where those farms are no longer viable? Do the Government accept that under CAP reform the plight of dairy farmers is likely to worsen?

Have the Government sought to amend EC regulation 2597/97 in the manner that the milk taskforce report recommended? Do the Government accept that the uncertainty is greatly damaging to the industry and will they state clearly today whether the UK will go for earlier decoupling of the dairy sector in 2005 rather than in 2008? What is the Government's strategy to help the dairy industry? What are the notional targets in terms of production and the number of producers or is there no strategy? Will we be entirely reactive, reacting to the imperative set by cur competitors in Europe? What is the Government's policy on aiding dairy farmers affected by breakdowns to their herds caused by bovine TB? We want new information, new ideas and new proposals from this Minister today.

The Government must know of the profound difficulties faced by the dairy industry in the United Kingdom. The Minister will have heard the concerns expressed by hon. Members in all parts of the Chamber—from the Government Benches, the minor parties and Her Majesty's Opposition. He will understand that many of the points go well beyond political knockabout and reflect genuine concern and a real passion to support our dairy industry. There has been enough wringing of hands; let us hear from the Minister specific, persuasive proposals to deal with the matters. They must be persuasive because, if he does not introduce such proposals, there will be no British dairy industry.

I congratulate the hon. Member for Galloway and Upper Nithsdale (Mr. Duncan) on choosing such an important subject, which has not been debated in the House for some time. I want to respond tc the specific issues that he raised and his particular request for Government action.

The hon. Gentleman's website shows his long-standing interest in the topic, including legislative burdens on industry, to which he referred. However, I must confess to having been led astray and to reading his doomsday diary, in which the saga of the leadership of the Conservative party accelerates towards chaos on 5 November, with bonfires blazing across Britain. I commend to my hon. Friends and Opposition Members a reading of his contribution. We have seen an excellent turnout by all three main parties today, and only a cynic would suggest that some might be here to gain an alibi if the last of the 25 letters trickles in this afternoon.

The dairy industry has national importance, and the debate is timely. I can confirm, as I was asked to do, that I have read the early-day motion standing in the name of my hon. Friend the Member for Ynys Môn (Albert Owen), which recognises the nature of the milk market but, as hon. Members have done today, calls on the Government to intervene in the interests of the future. We at the Department for Environment, Food and Rural Affairs, together with our colleagues in the Department of Trade and Industry, need to examine the market carefully and objectively, and I shall refer to the study commissioned by the Milk Development Council and undertaken by KPMG.

The hon. Member for Ceredigion (Mr. Thomas) referred to regulation, and the Government's view is that the voluntary code should be made more effective. It is reviewed from time to time within the context set by what was the Monopolies and Mergers Commission.

Will the Minister give way?

No, it is important that I respond to points made by Members who have been here throughout the debate and made contributions. If there is time at the end, I shall give way to others.

I agree with the hon. Member for Galloway and Upper Nithsdale about the full-time nature of dairy farming, and he was right to say that the past few years have been particularly difficult for the industry. I am not sure that his statistic about the average age is right, because I have been told that the average age of 59 has been quoted year after year for several decades. However, he is right to say that farm-gate prices have been depressed and that many dairy farmers have not received sufficient returns to sustain their businesses in the long term.

Dairy farmers have also had to adapt to new burdens, and they are now faced with having to adjust to the new conditions that will be created by the reformed common agricultural policy. Although the Government recognise those difficulties, and we will help when we can, we also believe that the UK dairy sector has a sustainable future. The hon. Gentleman gave examples from his constituency of how farmers are being imaginative and finding new ways of doing business, and I have seen many such examples throughout the country in the past two years.

Let us consider the market situation. The reasons why low farm-gate prices have been such a burden to the industry are complex and cannot be reduced to a single factor. At different times and in different combinations, exchange rates, the prices on world commodity markets, and domestic supply and demand have all played a role. For example, in spring 2002, when the average farm-gate price fell below 15p per litre, an unusually large seasonal peak of milk production meant that there was insufficient capacity in the UK to process it. Unfortunately, that occurred when demand for dairy commodities on world markets was low due to economic difficulties in some key importing countries, such as Brazil. That led to the retention of dairy products that would normally be exported on to EU markets, which were already in a position of structural surplus. That forced down prices throughout the Community to intervention levels when the strength of sterling meant that the intervention price was insufficient to provide a floor to the market at a level at which UK dairy farmers could cover their costs.

We need to ask why farm-gate prices are still low today, when world markets are reasonably buoyant and when the euro has strengthened against the pound, leading to increased prices for many commodities.

Imports of liquid milk represent less than 0.5 per cent. of the UK market. The UK's exports are considerably more, and we export more, mainly to Ireland, than we import. I should also point out that there has been an improvement in farm-gate prices.

I was pointing out facts relating to recent improvements in farm-gate prices. The latest official data, for milk delivered in August, show an average farm-gate price of 18.70p per litre, nearly 2p per litre higher than the average farm-gate price for August 2002. That does not include any recently announced increases. Nevertheless, several hon. Members have quoted figures that appear to show that the increase has reflected fully neither the market situation nor the effects of the major multiple retailers' price initiative in June.

Considering the retail initiative first, it must be noted that liquid milk sales by the major multiple retailers use only about 25 per cent. of raw milk in the UK. The 2p per litre increase announced by the supermarkets would therefore, if distributed to all dairy farmers, result in an increase in the farm-gate price of 0.5p per litre. Without an improvement in the underlying market situation, the effects of such an initiative would be short-lived. Although the liquid milk market normally commands a premium over other outlets, if the premium grows too large, companies will naturally compete for it. As most liquid milk is sold through supermarkets as an own-brand commodity, any competition is likely to be on price, which will quickly erode the premium. While supermarket price increases are not unwelcome, we should not underestimate their effect.

Considering the market for other milk products, there have been price increases for butter and skimmed milk powder that might support those for liquid milk. However, for cheese—particularly mature cheddar—the situation is not so good and as the manufacture of cheese accounts for a quarter of the UK's milk production, that is significant. Furthermore, commodity cheese—unlike liquid milk—is open to competition from other member states. There are signs that cheese prices may soon rise, which may lead to further increases in farm-gate prices.

Nevertheless, as the hon. Member for Galloway and Upper Nithsdale mentioned, that does not explain why farm-gate prices in the UK compare so unfavourably with the EU average, taking currency into account. As hon. Members will be aware, the Milk Development Council commissioned KPMG to consider the issue and its report, published earlier this year, makes interesting reading. Some hon. Members have acknowledged that there is no single factor that would produce a solution. The report found that there are several reasons for the unfavourable comparison, including the low value of the dairy product mix compared with that in many other member states; the relatively low level of innovation and new product and brand development in the UK dairy industry; and the structure of the industry and dairy co-operatives.

KPMG's report suggested that there was room in the supply chain to improve efficiency through better co-operation. Its conclusions are very much in line with those of Sir Donald Curry's report, which found a need across all agricultural sectors to improve returns through adding value and improving supply chain efficiency. We have addressed that assiduously since the publication of the Curry report. The industry itself must address most of those issues, such as the structure of the sector and new product development. However, the Government can and have—

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I said that I would try to answer the questions raised in the debate; if there is time, I shall take interventions.

For example, my noble Friend Lord Whitty has been chairing meetings of a dairy supply chain forum, consisting of senior figures from all parts of the supply chain, which has been considering co-operative solutions to improve supply chain efficiency, among other issues. As a result of discussions in that group, the industry has already begun to act to address the problems of seasonal milk production, which reduces prices for all dairy farmers in the spring. Furthermore, under the auspices of the forum, the Milk Development Council has initiated an innovations workshop to examine barriers to innovation in the sector and how to overcome them, which is the point made in the KPMG report.

For their part, the Government have granted nearly £500,000 to the Food Chain Centre to examine how to improve dairy supply chain efficiency. We have also established English Food and Farming Partnerships to encourage co-operation and collaboration across all agricultural sectors—

Order. We must turn our attention to the closure of post offices in south Portsmouth.

I am delighted to have"been given the opportunity to hold today's debate arid to bring to the Government's attention the strongly held views of the people of Portsmouth, and in particular Portsmouth, South, about the proposed closure of six more post offices. Those six offices—Highland road, Fawcett road, 4 Albert road, Old Portsmouth High street, Winter road and 249 Milton road—comprise nearly 50 per cent. of the sub-post offices in Portsmouth.

The irony is that the existence of the Milton road office was used to justify the closure of Langstone road post office some months ago on the grounds that it is quite close to Langstone road and that the people affected could use that. Less than six months later, it is also being closed.

Public reaction has been significant and many thousands of people have made representations. The strength of feeling is such that my office has passed on well over 500 objections to the closure of one or other of those offices. On top of that, we have submitted petitions containing more than 1,000 signatures in support of the Highland road office and some 1,500 signatures in support of the post office in Old Portsmouth High street.

Many Members have been involved in discussions and debates about closures, and my mind goes back to what Ministers, and indeed the Prime Minister, have said. In November last year, the Prime Minister made it clear that he would do everything in his power to enable all post offices to become Government general practitioners. How right he was that most people would support that aspiration; how sad it was that he did not follow it through by introducing the very things that would offer alternatives to closure for many of those post offices.

I would be the first to admit that many offices in cities such as Portsmouth have struggled to hold on to their business, but they have had little or no encouragement to grow their business from the Government. In fact, obstacles have been placed in their way. It is interesting that more than 50 per cent. of the elderly people in Portsmouth—this statistic is much greater than the national average for pensioners—get their pensions through their pension books and post offices. My constituency is unusual because it must be one of the few where the percentage of the elderly who still want to obtain their pensions in that way is greater than 50 per cent.

The Post Office is reluctant to answer the question whether it is prepared to see a viable post office close. Its failure to supply information supporting its case is a significant point in today's debate and has been a notable feature of past debates. Obviously, it has done individual deals on compensation with sub-postmasters. One cannot blame individuals for settling on the bird in the hand rather than trying to work out what the future might hold. If imaginative measures to galvanise support for sub-post offices along the lines promised by Ministers and, in particular, the Prime Minister had materialised, perhaps some threats of closure would not be happening.

I wanted to assess the viability of the High street post office in Old Portsmouth. I asked the Post Office's consultation team leader whether, in principle, any of the decisions could be reversed, and I was assured that they could. I therefore mentioned commercial viability and whether that had been taken Alto consideration. The High street post office in Portsmouth is interesting. The postmaster who holds the franchise lives in Somerset and does not operate the business. He has a manager there. The post office is well supported, and the manager claims that it is a viable proposition. A group of residents is willing to buy that business and take it on, but the Post Office told me that it would not seriously consider that.

I find it strange that the Post Office, as on a previous occasion, would not even entertain the idea of meeting the people and discussing those issues face to face. When there were closures in Portsmouth previously, the Post Office agreed to come to meetings after the closures were announced, not during the consultation period. The Minister on that occasion seemed somewhat gobsmacked by that, and felt that it should not be repeated. Once again, however, the Post Office has agreed, but only this morning, to attend a meeting later this week, after the consultation period has closed.

The point that Post Office representatives made to me very robustly was that they did not want to have to talk to the people in a public meeting. They were prepared to meet only a select few, such as local councillors and perhaps one or two other interested people. That was the only basis on which we could get a meeting. That is highly regrettable and it does not suggest that public consultation will be a vital part of deliberations. It also appears that the decision has already been taken. I would be surprised if any of the post offices were allowed to remain. I should like to see them stay open, but I fear that the decisions have been made because the Post Office has announced that it intends to close some 3,000 post offices in the current round of activity.

We will lose nearly 50 per cent. of the sub-post offices in the urban area of south Portsmouth. To say that that is a good thing could not be further from the truth. In most instances, it will encourage the one thing that the Government have said that they do riot want: more car journeys. It is not easy in a big city such as Portsmouth to walk a mile comfortably. For some, particularly the elderly, a journey of a mile across urban roads is not as easy as one might think. Certainly, some proposed closures will lead to difficult and hazardous journeys for the elderly if the journeys to alternative post offices—I have walked three of those—are made. In at least two cases it would take a fairly fit elderly person the best part of an hour in each direction if they wished to continue to use the services of a post office. Others have made it quite clear that instead of walking to the next post office, they will drive. That will defeat the object of trying to get people to reduce their number of car journeys.

That returns us to the question of what a post office means to a local community and how important it is. In a city such as mine, there are a significant number of places that one could describe as urban villages, and I expect that the scenario is the same in many other constituencies. The post office is located at the centre. It is convenient and useful for many reasons. It is on the way to school, close to other shops and close to where a large number of people live.

If the Government had been a little more courageous in their attempts to encourage businesses in post offices, rather than doing everything they could to persuade people to find alternatives, we might not have seen the closures and some post office business might have been more successful. I shall quote from a constituent's letter. Relating to Old Portsmouth, it says:

"I am 77 and have a naval disability pension. I am unable to drive, I am entirely dependent on a wheelchair … I view the future with considerable apprehension if we are going to lose our Post Office … Old Portsmouth no longer has a bank and the post office is regarded as the bank and 'village' financial centre. Its loss (especially to pensioners) would be an enormous deprivation. It is not overstating the case to say that this Post Office is the hub of the village and an integral part of people's lives. Its loss would lead to disruption and a serious devaluation in the quality of life. To many pensioners it is a lifeline".

Some people might think it bizarre that a post office could mean so much to a pensioner, but two or three post offices lend themselves to such a scenario. They are meeting points—he focal point of the place, where people meet regularly and enjoy the facilities. Many hundreds of houses are going to be built in Old Portsmouth, but the Post Office said that it was not sure that that expected growth would be "deliverable" to the post office. I hope the Post Office is prepared to test that over time to see whether it materialises.

I was disappointed by Ministers' lack of response when I wrote to them on the matter. They sent back the Government line and did not engage in the debate raised in the correspondence. My letter to the Department of Trade and Industry on 14 October asked specific questions, none of which was answered satisfactorily. I wrote on similar lines to the chief executive of Postwatch; its approach to the Post Office on the situation in Portsmouth was received in a very negative way. I hope that this debate gives us an opportunity to ask the Minister, the Department and the Post Office to reconsider in respect of the difficulties that the closures present.

It is not easy to take difficult decisions and I understand that the Post Office has problems, but many are of its own making. It has not gone out of its way to engage the public and encourage them to use the post offices. Indeed, the post office in Fawcett road was subject to a temporary closure. The Post Office wrote to me saying that it would open the post office on a specific date last November, but that day came and went. I followed up with letters and received a reply saying that the intention was to reopen the post office. Sadly, when the list of six was announced, Fawcett road was on it. I wonder whether there was any intention to reopen it. This is a sad reflection of the dismissive way in which the Post Office and, to a lesser extent, the Government have ignored what people said in the past.

Thousands of people tried to save the Langstone road post office, but they lost the argument. I hoped that the Post Office would learn a lesson from that and not repeat its mistakes, and that a consultation exercise would mean a dialogue with the people of the city of Portsmouth. I greatly regret that the Minister did not take serious note of what was said when I raised the issue during the previous debate on the subject in this Chamber. More important from the point of view of the people of Portsmouth, the Post Office disregarded the matter too.

People take time and effort out of a busy life to fight such a campaign. Pensioners do not readily take to the streets and motivate others to support the retention of a building or a business unless they genuinely believe that something bad will happen unless they do something. They have fought their corner and made their case, so it is disappointing that the Post Office has not had the courage to come to the city of Portsmouth to make its case transparently and, if necessary, forcefully. It has chosen not to do so. Indeed, it seems to be willing only to rehearse the enormous problems it faces and the financial burdens it carries nationally.

The Post Office is not prepared to consider the upheaval and disruption as well as, in some instances, the undoubted deprivation that removing a facility such as a post office will cause. That cannot be right and it should be opposed vigorously by Members representing constituencies such as mine. That is why I was keen to join in a debate here a few months ago, when about 16 Members took part—record for this Chamber. All those Members were affected by closures in one way or another.

I hope that the Minister's reply gives hope to people who have campaigned on the matter, asking for their case to be listened to and to be able to take part in a dialogue—not a one-way slog against a brick wall. They want an open dialogue on the issues that they face and ways forward. I would also be interested to know whether closures are Government policy. The Prime Minister said that they were not and that he did not want to see viable post offices closed. I hope that the Minister will say that the Government are prepared to make the debate more transparent and provide the necessary figures to support, or otherwise, the closures. I also hope that when there is a viable alternative to closure it will be explored and developed.

I assure the Minister, her colleagues in the Government and the Post Office that people's support for that organisation will wane considerably. No effort was even made to test whether the post offices that will be expected to absorb the people displaced from the closing post offices will be able to cope. Do they have the physical capacity to take perhaps several hundred more transactions over a busy two days when people are collecting their pensions? It is disappointing that, once again, none of that has been properly explored. Sadly, when questions are asked about such issues, the Post Office does not want to give too much information.

I hope that the plea from the people of Portsmouth, South on the six proposed closures and the closures that have already taken place has taught the Post Office and the Government a lesson about how not to go through a consultation exercise. I would be interested to know whether the Government have given instructions to the Post Office not to enter into a public debate on the closures.

Interestingly, the hon. Member for Eastbourne (Mr. Waterson) said in a debate that a public discussion finally took place only after he forced the issue on to the Floor of the House, put the Minister behind the black ball and said, "Are you afraid to have this debate?" I have tried everything possible to have a reasoned debate with the Post Office, but, sadly, it has neglected to take up the challenge of justifying its decisions and, more important, neglected to explain to the people of Portsmouth how the post offices in our city will operate in future. That can only be described as a disgrace.

I congratulate the hon. Member for Portsmouth, South (Mr. Hancock) on having secured the debate on what is clearly an important issue. I assure him that the Government are committed to maintaining a viable nationwide network of post offices. Both as Ministers and as constituency MPs, we fully recognise their importance as a focal point for local communities, particularly for elderly and less mobile customers. However, as I think that he accepted, failing to take difficult decisions about how to maintain that viability is not the best way to support the Post Office.

I will come on to some of the hon. Gentleman's specific points about the proposals in his constituency, but it is worth while reminding ourselves of the policy context for the changes, which are based on recommendations in the performance and innovation unit's 2000 report. which was widely welcomed. The Government accepted all the recommendations that it made. One of those recommendations was that, if the Post Office decided that fewer post offices were needed in some urban areas, the Government should consider providing funding to ensure that sub-postmasters affected could be adequately compensated for the loss of their business.

Last November, following parliamentary approval of the funding, Post Office Ltd. initiated its urban network reinvention programme. The network of post offices is made up of nearly 17,000 branches—ore than all of the banks and building societies in the country put together. Over 1,000 urban sub-post offices have at least 10 other post offices within a mile. Sub-postmasters have been finding it increasingly difficult to earn a reasonable income from their business and have been leaving the network. In the last financial year. Post Office Ltd. lost £163 million.

The truth is that if action is not taken now, there will be unmanaged decline in the network and serious gaps will open. That will do nothing to maintain the viability of the Post Office or to serve the hon. Gentleman's constituents and those who depend on Post Office services. There are many arguments for why this decline may have occurred. The hon. Gentleman admits that for many post offices it has been a struggle, not least because of under-investment. The programme is also enabling the Government to put that right. It is also the case that greater mobility and changes in shopping and financial habits mean that people are not using the post office as often as they used to, and customer numbers have sharply reduced.

I take seriously the hon. Gentleman's challenge to ensure that we make the range of services offered by post offices attractive. I want to talk later about the support that the Government are providing and the action that Post Office Ltd. is taking in order to improve those services. It is essential for the viability of the post office network that it adapts to changing lifestyles, changes in people's preferences and new ways of doing business.

The hon. Gentleman raised a point about the proposal to develop post offices as Government general practitioners. That was a recommendation from the performance and innovation unit report and, as the Government were asked to, we embarked on a pilot project to test the concept of post offices as Government general practitioners. As sometimes happens when one piles up proposals, one finds that they do not work in the way that is most effective.

The pilot showed that it would neither significantly improve Departments' ability to meet their delivery or financial objectives nor raise sufficient new revenue for post offices, although it did show a number of areas in which Departments might deliver services through post offices in future. The scope for that is being kept under review, as is the significant commercial interest in placing kiosks in post offices, which would open, as the hon. Gentleman suggested, other business opportunities. That was a rational decision taken on the basis of a pilot.

The hon. Gentleman also raised a. concern about the consultation process with regard to the closure proposals. It is the case that the consultation proposals have been considerably improved. Initially closure proposals were focused on single offices known to be at most risk of closure because of poor viability. The company has accepted that there was much uncertainty about the future shape of the network and has now undertaken to produce its proposals on an area-by-area basis using each parliamentary constituency, or geographical groupings of them. In its recently published report on the post office network, the regulator Postcomm commended Post Office Ltd. for its constructive response, and welcomed its more co-ordinated approach, as did the Trade and Industry Committee.

Producing proposals on that basis brings the benefit of giving a clear view of the level and location of service provision at the end of the programme in a given area, taking into consideration all those important issues of access and the way that local people need to use post offices, while giving the opportunity to understand the views of key opinion formers—especially MPs and local authorities—about the wider plans. Of course, in accordance with the code of practice, every proposal is subject to public consultation.

The consumer watchdog set up by the Government, Postwatch, has a key role in the process. It is consulted on every proposal and monitors th programme as a whole. Following discussion with Postwatch on how to undertake consultation on the new area plans, Post Office Ltd. agreed to extend the period of public consultation from one month to six weeks. As with the early stages of the programme, consultation is still based on the proposal for each individual branch and Postwatch still receives prior notification of proposals.

Does the Minister agree that one of the fundamentals of any consultation would be the willingness of the Post Office to take its case to the people of the area? Why has it systematically refused to take its case to the people of Portsmouth, South and many other constituencies where offices have been deemed ready for closure? What is it about that proposition that the Post Office finds so difficult to handle? Would not a major breakthrough be for the Post Office to be ready and willing to participate in a proper consultation, in which it makes its case to the people most affected?

I certainly agree that it is important to have proper consultation. That is why we have extended the time period; why we have increased the support to Postwatch to enable it to act as a defender of, and a voice for, people throughout the process; and why we have ensured that the proposals are shared with local people. I am not sure that I agree that public meetings, beloved as they are of politicians, are always the most effective way to make local people's voices heard. As the hon. Gentleman himself pointed out, he has been able to ensure that the voice of his constituents is being clearly heard, as have many other hon. Members. It is—dare I say it?—slightly churlish of him to criticise the Post Office for now agreeing to meet him, when that is clearly what he is demanding.

rose—

The hon. Gentleman spoke for longer than his allotted time. If he wants to speak again, that is fine, but I will not be able to answer all his questions.

I want the Minister to be left in no doubt that the Post Office has agreed to a meeting after the consultation period is closed, which is complete nonsense. Surely she agrees that for the Post Office to say that it will argue its case after the consultation has closed and then to have a fixed number of people who can attend does not encourage the public to believe that it is doing this openly and transparently.

The hon. Gentleman has certainly taken the time opportunities available to him today to put his case. I agree with him to the extent that I expect the decisions to be taken on the basis of the widest consideration of the views of local people and the other criteria that have been laid down. That is clearly what should happen and, given the extended time and the role of Postwatch that I have outlined, it is more likely to happen now than it was previously.

The hon. Gentleman also raised specific issues about his local branches. It is important to identify the fact that, although he pushes me on this issue and rightly demands that Post Office Ltd. takes responsibility for listening and responding to the points made by his constituents, the Government do not have a role in this decision-making process. It is also important to note that once decisions on the current proposals have been reached, difficult as they are, Post Office Ltd. has no intention of returning to the hon. Gentleman's constituency with any further proposals. That is why it is important that the views of Postwatch, as an effective consumer champion, and of local people are taken into consideration in the process.

The hon. Gentleman rightly raised the issue of how we improve the services offered by post offices. Let us be clear that this process has enabled the Government to invest an additional £30 million to modernise and adapt the offices that remain in the network. Those offices that may receive customers who previously attended one of the post offices being closed are eligible to apply for grants of up to £10,000 each to improve their facilities. I understand that offices in the hon. Gentleman's constituency have applied for such grants. That will enable us to begin to see better, more accessible post offices, with some of the investment necessary to make them places that will do business successfully and contribute to their communities.

More widely, Post Office Ltd. continues to develop and introduce new services and business activities. Most recently, that has included the announcement of the intention to offer a range of financial products through a joint venture with the Bank of Ireland. Other initiatives, including the acceptance of debit card payments and a major advertising campaign for travel insurance and bureau de change services, contribute to make the post office a place that customers want to visit. The Government have provided £480 million to automate every post office branch, enabling the establishment of the technical infrastructure to support electronic banking services.

Change is difficult, and I understand the hon. Gentleman's concern to ensure that, throughout this process, there is open consultation, and that local people have the opportunity to have their say. However, the ultimate objective is to end up with a better, stronger and broader post office network.

I am pleased to have secured this debate on the cultural and memorial building for those who were far east prisoners of war in 1941 to 1945.

When I gave my maiden speech in 1997, its subject was a memorial to far east prisoners of war. Although events have moved on since then, it is regrettable that there is still no permanent memorial to which people can go to learn what happened to British prisoners in captivity across south-east Asia during the second world war. It is high time that that sad state of affairs was remedied. Today, I not only commend the charity Children and Families of the Far East Prisoners of War and the National Memorial Arboretum for their sterling efforts to raise funds for such a memorial, but ask the Government to play their part in ensuring the success of that project.

In my maiden speech, I asked the Government to give serious consideration to contributing funds to the building of a memorial museum to the British soldiers who died while imprisoned in the far east. At that time, it was suggested that such a memorial should be constructed on an infamous section of the Thai-Burma railway line that became known as Hellfire pass. In that place, in just 12 weeks, a massive cutting was hacked through the solid rock of a mountainside by prisoners of war and forced Asian labourers, using nothing but the most basic tools. It is known that 700 prisoners of war died while building just 3 miles of railway at that spot.

Although many veterans and relatives of those who died thought that that would be a fitting place for a memorial, others preferred different sites. As the desire grew to ensure that any such memorial should also include a historical record of what happened to the far east prisoners of war and act as an educational resource for present and future generations, it became clear that the best place for it would be in the UK.

Before proceeding, I should perhaps explain my interest in the issue. The subject was initially raised with me by one of my constituents, Mrs. Carol Cooper, whose father was a far east prisoner of war. He was Lance-Corporal William Smith, who left his family to go to war 62 year; ago, most poignantly, on this very day, which also happened to be his 26th birthday. He died in captivity in Burma in 1943 at the age of 28, when Mrs. Cooper was only four. During his imprisonment he kept a remarkable diary containing not only a detailed record of his experiences, but addresses and facts about his fellow soldiers, poems about his family and recipes he planned to cook on his return home.

Mrs. Cooper has been kind enough to supply me with a few short extracts from her father's diary for use in this debate. They relate to a few days in August 1943 when her father was in a camp on the border of Thailand and Burma called Sonkerai. I include the excerpts to try to give hon. Members some idea of what the far east prisoners of war had to suffer:

"Saturday 14th: It seems we are a sort of forgotten men because no one seems to worry about us and we are still stuck in this pig sty of a hole. There are over 2,000 men here and the deaths average 9 a day.

Monday 16th: Heard news Corporal Liversly died last night so the death roll of Divisional H.Q. is growing. Still no sign of moving and the food is rotten. We have sunk to a sorry plight. No soap to wash with, our clothes are lousy and it takes all the go out of one to do anything.

Friday 20th: Well we lost yet another of our party today and I helped to carry him away this evening, so that leaves us with 50. There have been 167 deaths this month so far and the record was 28 in one night when cholera was at its height. It is simply a case of plain murder."

Lance-Corporal Smith's family were not aware of the existence of the diary until Mrs. Cooper happened to read about the auction of a diary written in a Japanese camp by a member of the Royal Norfolk Regiment. Mrs. Cooper realised that the diary was her father's and she tried to buy it back. Initially, she was unsuccessful, but she succeeded after the BBC took an interest and made a documentary about it. The BBC made a further programme in which it took Mrs. Cooper to Thailand and along the route of the Burma-Thai railway, retracing her father's steps as outlined in his diary. The railway was 250 miles long and built through harsh, disease-ridden country, almost exclusively by human effort. It was completed at the cost of a huge loss of life, with 13,000 prisoners of war and 80,000 forced Asian labourers dying from sickness, disease, starvation and sheer brutality. It has since been said that the railway was built at the cost of a life for every sleeper.

Having recovered the diary and travelled in her father's footsteps, Mrs. Cooper could have left the matter. However, she was struck by the fact that, throughout her journey, she had not seen a single memorial, plaque or stone from the British Government to honour the sacrifice and suffering of thousands of British servicemen. Until her journey, she had, like so many others, a general idea that many British servicemen had been imprisoned and badly treated in the far east. When she realised the full horror of their experience, she vowed to take up the fight to ensure that they were properly honoured and remembered.

In August 1997, Mrs. Cooper placed an advert in our local paper calling for the children and families of far east prisoners of war to join her in asking the Government to pay those men an honour that they truly deserved. In November 1997, the Children and Families of the Far East Prisoners of War organisation was formed, with 25 members in Norfolk. A year later, five charity trustees were appointed and COFEPOW became a registered charity. It now has about 500 members from all over the country and beyond. It is an extremely powerful voice in lobbying for a fitting memorial to the far east prisoners of war, and is active in raising funds towards that cause.

It is important to make it clear that the cultural and memorial building to the far east prisoners of war, which is what this Adjournment debate is about, is not simply an abstract idea, but a project that is well under way. A site has already been agreed at the National Memorial Arboretum in Staffordshire. It is a millennium project being created on 150 acres of land, alongside the River Thame, and is the nation's living tribute to the people of the 20th century. The site includes the millennium chapel of peace and forgiveness, and there can be no more fitting a place for the cultural and memorial building to the far east prisoners of war.

A design has already been drawn up for the project, which will be a simple and dignified building with a far eastern appearance. It will be constructed of oak, as befits its surroundings in the National forest. The design and establishment of the permanent building, the interior lay-out, the historical research and acquisition of the contents, and the ongoing archival support will cost about £350,000. The National Memorial Arboretum has undertaken to provide ongoing permanent management and maintenance.

As I briefly mentioned earlier, the cultural and memorial building will not be simply a commemorative building to perpetuate the memory of all British prisoners of war. It will also be a research and archival centre, intended to educate not only present-day students and families as well as relatives involved in research, but future generations on that aspect of the history of the far east. There can be no better organisation than the Children and Families of the Far East Prisoners of War to display the story of what happened to their fathers, many of whom never returned. It has worked hard over the last five years to establish a place to provide a record of and an insight into the tragedy that took place in south-east Asia during the second world war, and has been busy accumulating a range of material, which will be readily accessible to anyone trying to find out about that chapter of our history.

There is no place in Britain for people to see and learn what happened to British prisoners in captivity across south-east Asia in the last war. At the arboretum there will be audiotapes, videos, artefacts, photographs, drawings, maps, letters and diaries. All those documents form part of our heritage, and the material should be brought together. I am sure that even more will become available when it is known that the building is complete.

Perhaps most important, the cultural and memorial building will epitomise everything about that particular theatre of war, from 1941 to 1945. It will present a factual, historical picture that must be preserved before the demise of all surviving far east prisoners of war and before their story is lost in the annals of history. The memorial has assumed added importance due to Government plans to erect a memorial at the arboretum in memory of all those who have been lost in conflicts since 1948.

Before moving on, I wish briefly to mention a matter that is strongly connected to the one I raise today. For years, a campaign has been waged for an official apology from the Japanese Government and for proper compensation for the far east prisoners of war. Although the matter remains unresolved, I wish to take this opportunity to pay tribute to the Government for stepping in and at last paying compensation of £10,000 to surviving far east prisoners of war or their surviving widows.

Some people think that the payment should have been made by the Japanese Government, but one of the biggest disappointments is that, of the 37,000 who returned after the war, more than 30,000 died prior to the compensation agreement. It is also the case that many widows died before agreement was reached, so many children who have lost both parents will receive no compensation. I hasten to add that that is not an argument for them to receive compensation, as they have not asked for it, but they and I ask for adequate funding to be released for a tribute in remembrance of far east prisoners of war and in recognition of the valour of those men.

By virtue of the fact that the Government recognised the special case of compensation for far east prisoners of war, they could also do so on the subject of establishing a memorial to them. That is the issue that I wish to take up with the Minister today. I ask the Government to go a step further and to give their backing to the cultural and memorial building to ensure that that thoroughly worthy project is a success.

Since COFEPOW's inception, its members have been in correspondence with the Government to try to get them to fund a memorial to the far east prisoners of war. The response has been a consistent refusal, stated in the following terms:

"It has been the policy of successive governments that the cost of war memorials is not usually met from public funds, but from private donations or public subscription. The Government, and the Ministry of Defence in particular, receive many requests from individuals, ex-Servicemen's groups and charitable organisations for assistance with memorials.

It would not be possible, neither would it be fair, to be seen to support one group rather than another. The vast majority have worthy goals and can make an equally compelling case for support. It would be divisive, and open to criticism from unsuccessful claimants, if the Government were to pick and choose projects to support."

COFEPOW members have become used to hearing that form of words, repeated as it has been for the past five years. Although I disagree with the policy, I acknowledge that the Government at least have an argument. None the less, if any group of veterans constitutes a special case, I contend that it is the far east prisoners of war, who had to endure almost unimaginable torture, cruelty and sheer brutality.

However, rather than carry on with that particular argument, just though it may be, I wish to ask the Government for something that is modest, deliverable and not inconsistent with any previous policy. I am sure that many Members will have heard of the plans for a memorial garden on one side of Grosvenor square in London to commemorate the British victims of 11 September. The memorial garden was opened this year by Princess Anne on the second anniversary of the attack on the World Trade Centre. It is intended that the cost of the memorial, estimated at £1 million, will largely be met by those companies that were directly affected by the 11 September attacks, with the rest being met by public subscription. I have been assured by Department for Culture, Media and Sport officials that they are confident that the costs will be met in that way. However, I quote directly from a letter from the former Under-Secretary of State for Defence, my hon. Friend the Member for Kirkcaldy (Dr. Moonie), which says that

"in order to get this undertaking completed by the second anniversary, it has been necessary for the Government to underwrite the project in the first instance."

No one disputes the desirability of a memorial to the victims of 11 September, but the Government's commitment in underwriting the project is something that we have not seen before. Indeed, I believe that some upfront costs incurred for the 11 September memorial have yet to be met by either private donation or public subscription.

The campaign to raise the £350,000 that is necessary for the far east prisoners of war cultural and memorial building is already well under way. It began on 15 February 2002, which was the 60th anniversary of the fall of Singapore to the Japanese army, when the majority of the far east prisoners of war were captured. The aim is to complete the building by 15 August 2005, the 60th anniversary of the Japanese surrender.

More than £80,000 has already been raised by all manner of fundraising events and methods. I had no hesitation in adding my support to an application for assistance that was made to the Millennium Commission. I can now add that that has been successful with a grant of £131,000 as part of a multi-bid submitted by I he National Memorial Arboretum to be committed once planning permission has been obtained.

All that I and the members of COFEPOW ask is that the Government agree to underwrite the cultural and memorial building to far east prisoners of war in exactly the same way as they have underwritten the 11 September memorial garden. The sum involved is about half that of the 11 September memorial and the time available to raise the money far greater. A significant start has already been made in raising the funds and the anniversary is just as poignant for the surviving far east prisoners and their families as 11 September is to survivors and families involved in that tragedy.

I do not ask for special treatment from the Government for the cultural and memorial building, just for consistency in their approach to two different but very deserving causes. I sincerely hope that the Government are able to make a positive announcement, if not today then in the near future. It is my passionate belief that the far east prisoners of war, who endured such terrible suffering while serving their country, deserve nothing less.

I congratulate my hon. Friend the Member for Great Yarmouth (Mr. Wright) on securing this important debate. He raised the subject in his maiden speech and he has campaigned on it for most of his parliamentary career. The subject is close to his heart, particularly because of the large number of men serving in the East Anglian units that defended Singapore in 1942 who became prisoners of war when the island fell to the Japanese. I welcome the opportunity to pay tribute to them, their comrades, those who were similarly captured when Hong Kong surrendered a few months earlier and others who were taken prisoner during fighting elsewhere in the far east. I express my admiration for the bravery with which they endured the terrible conditions of their captivity, which, in many cases, they continued to endure when the war was over, and the bravery with which so many met their death.

I appreciate how distressing it must be for the families of those prisoners of war knowing how much their loved ones suffered during their captivity. There will have been particular distress where a husband or father returned from captivity a changed man, or where a child never had a chance to get to know his father. It is natural and right that they should want the suffering of the prisoners to be remembered, in recognition of what they underwent all those years ago and as a reminder that it must not be allowed to happen again.

I stress, however, that the far east prisoners of war have not been forgotten by the Government. The Commonwealth War Graves Commission maintains its cemeteries in the far east and is pledged to do so in perpetuity. The Government contribute more than £20 million a year to the costs of the commission's work worldwide. Every year, the Royal British Legion takes pilgrimages to Hong Kong, Singapore, Thailand and Japan, visiting the scenes of the fighting in 1941 and 1942, the places where 140,000 British and Commonwealth troops were imprisoned or put to forced labour, such as the notorious Changi jail, Hellfire pass and the River Kwai, and the many war cemeteries in the far east.

In the United Kingdom, there are 54 memorials dedicated to those who died in the far east. The Catholic church of Our Lady and St. Thomas of Canterbury at Wymondham in Norfolk was built after the war by a parish priest who had been a prisoner in the far east, as a permanent memorial to those who died not only in captivity but later as a result of their ordeal. It still serves that purpose, and the Ministry of Defence is represented at the commemorative services that are held there each year.

There is a far east prisoners of war chapel in the St. Peter Mancroft church in Norwich. At the National Memorial Arboretum near Lichfield in Staffordshire, there is, as my hon. Friend has said, a plot in memory of the far east campaigns and the prisoners of war. In January last year, a length of track from the infamous Thai-Burma railway was installed there as a memorial to the prisoners of war who had lost their lives in its construction. The Imperial War museum and the museums of the individual services contain displays and archives that record and present the history of the battles in the far east and the story of those who fought, suffered and died. That is done with the professionalism and accuracy that is to be expected of our national museums.

Of course, that does not mean that additional memorials should not be erected if people want them or if there is a further need. Indeed, the Ministry of Defence has been well aware of the existence of Children and Families of the Far East Prisoners of War since the organisation was formed six years ago. I sympathise with its worthy aims, and over the years the Ministry has offered it advice on matters such as where a memorial might be sited. I also congratulate the campaign on its success to date, and in particular on its success in achieving a lottery grant.

However, I regret that the Ministry cannot offer help with funding for a memorial. My hon. Friend accurately portrayed and quoted the Government's policy on the matter. The reason for the policy is that the Government receive many requests from individuals, ex-service groups and charitable organisations for assistance with the erection or maintenance of memorials each year. There are more than 46,000 war memorials throughout the United Kingdom, all of them in need of some form of continuing maintenance.

Proposals for new memorials continue to appear. There has been a noticeable increase over the past few years. Interest in the condition and preservation of war memorials has also increased to new heights. That is to he welcomed, and the Friends of War Memorials does a good job in keeping the issue in the public eye.

The Government certainly welcome the growing interest in war memorials but, as my hon. Friend has acknowledged, we could not fund all of them and it would not be fair to support one group and not another. They are all worthy and every single one of them can make an equally compelling case, particularly for financial support. It would be invidious to pick and choose projects to support. Furthermore, the Ministry of Defence is not funded to provide help to charitable organisations in that way. However, I would be happy to meet my hon. Friend to discuss the matter in further detail.

I should also mention that the armed forces memorial, which was announced by my right hon. Friend the Secretary of State for Defence in November 2000 and which will commemorate members of the armed forces killed on duty since the end of the second world war, will be funded by subscriptions and donations and not by the Ministry of Defence. That is our well-established policy, and it is most certainly not intended to deter groups that wish to set up memorials, and clearly does not do so. There are other effective ways of raising money, including sponsorship, lottery applications and appeals to individuals.

My Department has seen a number of projects develop from the first seeds of an idea to a most impressive fruition. Once the organisers accepted that Government funding was not available, they redoubled their efforts to look for other sources and raised considerable amounts of money. Recent success stories, just in central London, have included the Fleet Air Arm memorial outside the Ministry of Defence main building, the commonwealth memorial gates on Constitution hill and the Victoria Cross and George Cross memorial in Westminster abbey.

I have explained why we cannot help with the funding of a memorial, but that does not mean that we cannot or will not help at all. The intended site for the far east prisoners of war memorial is the National Memorial Arboretum in Staffordshire. I believe that the arboretum will be a most suitable place. The concept is visionary and the site has the potential for development as a place of great beauty that will be a perfect setting for commemoration and remembrance. It is the Government's desire that it should be promoted as a site of national importance for that purpose. It has already become a significant place for the veterans of a great many conflicts. As I mentioned earlier, there is already a far east prisoners of war plot there.

Management of the arboretum has recently been taken over by National Memorial Arboretum Co. Ltd. Recognition and remembrance of the role played by the service personnel of this country is one of the key themes of the Government's veterans initiative, and we see the arboretum under its new management as making a major contribution to that aim. Earlier this month, I announced that we would give the company a grant in aid of £250,000 a year for an initial period of three years. The terms of the agreement covering the grant specify that it has to be used to defray the cost of maintaining the arboretum and not for the erection or maintenance of memorials, which must be funded from other sources.

The Government will be helping to safeguard the long-term future of the arboretum and its development. I hope that that will be of great advantage to veterans groups and all the memorials that have been erected or will be erected in the future. In addition, with the arboretum on a firm basis, there will be exciting prospects for education, giving our younger generations an opportunity to learn about what our armed forces have done and undergone in the past. Such a carrying forward of knowledge to future generations is one of the most fitting and most effective ways in which we can honour the memory of the far east prisoners of war.

I wish the fundraising campaign for the memorial every success. Once the completed memorial is in place, I would be pleased to arrange for appropriate Government and armed forces representation at any dedication ceremony that the Children and Families of the Far East Prisoners of War want to organise.