With permission, Mr. Speaker, I would like to make a statement about the future of the BBC. I will set out for the House the background to the current review of the BBC's royal charter and our proposals on its funding, governance and purposes. Those proposals are set out in a Green Paper, "A strong BBC, independent of government", which is published today.

Alongside the NHS, the BBC is one of the two great institutions of British national life. For more than 80 years, it has sought to represent the highest standards in broadcasting. Its archives are a record of our national collective memory, from broadcasts of the coronation and the 1966 World cup to "Dixon of Dock Green" and "The Office".

Since the corporation's foundation, its royal charter has been reviewed by the Government roughly every 10 years, the last occasion being in 1996. Like its predecessors, this review examines the corporation's scale and scope, and its funding and governance. It is, however, unique in the level of public consultation, and in tackling perhaps the greatest challenge the BBC has ever faced—the changes in TV technology that will soon result in a wholly digital Britain.

Like any public institution, the BBC must adapt if is to serve its audiences and keep pace with change, but its values, its global reach, its standards and its editorial independence must be preserved and strengthened, for that is what the British people want.

The results of our public consultation and research are very clear. Overwhelmingly, people like and trust the BBC: they understand and support the principles of public service broadcasting; they want the BBC to have scale; they want the BBC to set the highest standards; they want the BBC to be independent of Government, Parliament and any commercial influence; and they want the BBC to listen.

But they also have significant criticisms—for example, that the BBC is not responsive enough to their interests, and that there has been a decline in quality, particularly in television, with a tendency towards copycat programming at the expense of real innovation. Some people worry about the value for money of the licence fee—particularly those who want but cannot get Freeview—and some of the BBC's commercial competitors believe that it has too much freedom to expand into new markets and stifle competition.

We have to find a balance between meeting those concerns while ensuring that public service broadcasting leaves a footprint in every medium—a guarantee of quality, impartiality and innovation. That balance is harder to strike as the media change. In 1988 Britain had four TV channels; today there are more than 400. In a few years' time, we will become a fully digital nation when the switchover from analogue to digital TV is made. As technology changes, so do the public's expectations. The challenges facing the BBC are enormous, and it plays a leading role in guiding the nation through this period of change. To do so, it needs certainty about its future. Therefore, after closely considering the alternative recommendations of the Select Committee on Culture, Media and Sport, we have decided that the BBC's charter should be renewed for a further 10 years.

I now turn to the question of funding. The review looked at the different options for funding the BBC and consulted the public. Perhaps surprisingly, the licence fee retains a high degree of public support. Although it is not perfect, we believe that it remains the fairest way to fund the BBC, so it will continue throughout the next charter. In the coming months, we will decide on the right level for the fee after 2007, but beyond that we have to take account of the rapid advance in technology and media consumption. During the life of the next charter we will review the case for alternative funding models, particularly subscription, making a contribution after 2016. We will also review the risk to plurality in public service broadcasting, encompassing Channel 4's longer-term position, and whether any public funding, including licence fee income, should be distributed more widely beyond the BBC in order to sustain plurality—and if so, how any such distribution might take place.

The old definition of the BBC's purposes as to educate, inform and entertain still holds true, but is no longer enough, by itself, in a world of increasing choice. We have therefore identified five new purposes for the BBC, which I set out in the Green Paper. In addition, the BBC will play a leading role in the process of switching Britain from analogue to digital television. It will be at the forefront of public information campaigns; it will help to manage "Switchco", the organisation that will co-ordinate the technical process, and it will help to establish and fund schemes that will help the most vulnerable consumers. Hon. Members will know from their own postbags that there is disquiet in many households that are expected to pay the fee when they cannot at the moment receive the full range of BBC services. That is why we think it important that the BBC should help to drive the switchover process.

I should now like to move on to governance, where we will introduce radical change—a BBC-specific model of governance that gives expression to the values on which the BBC is built. There is widespread consensus that the current model of governance is unsustainable. The governors' dual role as cheerleader and regulator does not sit easily in a public organisation of the size and complexity of the BBC; it lacks clarity and accountability. In the Green Paper we set out a new model that reflects the public value approach of the current BBC model but also draws significantly on Lord Burns' work. The BBC governors, with their dual role of managing the BBC but also holding it to account, will be replaced by two bodies, each with a clearly defined role.

A BBC trust will be the custodian of the BBC's purposes, the licence fee and the public interest. An executive board will be accountable to the trust for the delivery of the BBC's services. The functions of the two bodies will be clearly defined, enabling the trust to judge the management's performance clearly and authoritatively. The trust will have high-level powers of approval over BBC budgets and strategy. It will have the tools to hold the BBC to account, issuing new service licences for each BBC service and applying a public value test to proposals for new services. Michael Grade, whose current appointment as chairman of the BBC continues until 2008, will be the first chairman of the trust.

The trust will represent the licence fee payer. Ways of doing that will be developed further between the Green Paper and the White Paper, but they might include webcasting trust meetings, publishing audience research or electing local representative councils. Day-to-day management will be carried out by the executive board, which will be strengthened by a significant minority of non-executive members, and whose chair will be appointed by the trust.

In the past months, we have examined closely the changes that Michael Grade has made. We have also studied the model proposed by Lord Burns for an external public service broadcasting commission. Our trust model builds in the strongest elements of the BBC's proposals, which include the establishment of a separate governance unit, the introduction of service licences and the application of public value tests to both new services and any major changes to existing ones.

The BBC's proposals are undoubtedly a step in the right direction, but as they stand, they fall short of the accountability test because they do not resolve the confusion of the governors' dual role and depend too much on behavioural rather than structural change. The setting up of a BBC trust also incorporates the key recommendation from Lord Burns that there should be clear separation of different responsibilities, to avoid confusion or capture.

However, we believe that the Burns proposals for a unitary BBC board with a Government-appointed chair, and an external PSB commission also with a Government-appointed chair, would fail to provide sufficient authority, clarity or distance from Government. Our proposal ensures that there will be only one clear sovereign body and only one Government-appointed chair. That will make the trust a powerful advocate for the public interest, able to safeguard the BBC's independence.

Strong does not mean over-mighty, and we must ensure that the BBC deals fairly with the wider market. The BBC's competitors have become increasingly concerned about the impact of a publicly funded BBC on their services. Successive Governments have allowed the BBC to be, in effect, a desirable market intervention. However, we also need it to be constrained when its interests collide with the commercial sector and threaten the choice and quality of programming from other broadcasters. It should not play copycat or chase ratings for ratings' sake.

We want the corporation to maximise its income from commercial services, but we also want to see a clear link between those services and its public purposes. To achieve that, the BBC will be subject to tough new internal and external processes. Ofcom will be given powers to conduct market impact assessments for proposed new services. It will retain full Competition Act 1998 powers in relation to the BBC and, in addition, we will consider giving it a new power of approval over the BBC's internal code on fair trading.

Another subject of debate is the BBC's use of independent productions and the balance between in-house and externally commissioned programmes. I want to ensure that the licence fee truly becomes venture capital for creativity. Twenty-five per cent. of the BBC's television productions already have to be commissioned from the independent sector.

I believe that there is scope to go further, and we will consider a range of options for reform in that area, including the BBC's proposal for a new "window of creative competition" and, alternatively, increases in the existing quotas. Either way, I expect substantial progress in that area. The BBC has exclusive access to the licence fee, and in return we want that used to encourage independent production as well as in-house production.

For radio, the BBC has adopted a voluntary 10 per cent. quota, and we will consult on whether that is sufficient.

To reflect the whole United Kingdom and its different and diverse communities, the BBC also needs to make sure that a significant slice of production takes place outside London. It needs to provide a specific range of services for the UK's nations and regions. People should see the full diversity of the UK and their local communities reflected in mainstream as well as regional programming.

I am immensely grateful to Terry Burns and his panel, to Michael Grade and the BBC and to Ofcom. Most of all, though, I am grateful to the members of the public who, in their thousands, made their voices heard. We have endeavoured to take the best of what they told us.

In a changing world, values still endure. In a changing world, trust becomes ever more important in people's lives. In our changing world, the Government will secure a BBC that belongs to its licence fee payers and embodies the values that the British people want. That means a BBC that promotes citizenship and builds our civil society; that promotes education and learning; that is dedicated to creativity and cultural excellence; that celebrates our nations, regions and communities; that brings the world to the UK and the UK to the world; and that is strong, independent and securely at the heart of British broadcasting for 10 more years.

On that basis, I commend the statement and the Green Paper to the House.

I thank the Secretary of State for allowing me sight of her statement in advance. In many areas the direction set out for the BBC is the right one, but in almost every case the statement does not go far enough. Instead, a number of largely cosmetic changes are proposed to the structure and oversight of the BBC. It appears that, once again, the BBC has successfully fought off all proposals for substantial or immediate change.

We welcome the Secretary of State's recognition of the fact that the broadcasting environment is in the middle of a period of extremely rapid change. Every day more households switch to digital, gaining access to tens, if not hundreds, more channels. Many are choosing to pay more for what they want to watch. If the BBC is to continue to receive public subsidy, it must provide programming that is different and in the public interest. It must have even greater regard to its public duty to set the highest standards for the quality of its programmes, its regard for public feeling and its treatment of commercial rivals and suppliers.

The clear remit for individual BBC services and the stronger public service obligation to which the Secretary of State referred are badly needed, but they will make a difference only if they are rigorously enforced. As we have seen with the independent production quota, the BBC has been happy to pay lip service to the obligations placed upon it until faced with an external regulator with the power to impose real sanctions if it fails to comply. For that reason, almost every independent commentator has recommended the establishment of an external regulator, separate from the BBC.

The Secretary of State has described the existing arrangement as unsustainable. The chairman of the BBC has already gone some way to distance the governors from the management. Today she has announced that the board of governors is to be replaced by independent trustees, but that is a long way short of the external regulator that we, and others, believe to be necessary. What is the difference between the independent trustees whom the Secretary of State intends to appoint and the new arrangements for a more independent board of governors that are already being put in place by the chairman of the BBC? Is it not the case that the trustees will still be part of the BBC and will not provide the external supervision that would be provided by a public service broadcasting commission fully independent of the BBC, as was recommended to her by Lord Burns?

The Government have already given Ofcom responsibility for adjudicating on complaints about harm and offence caused by programmes, including those broadcast by the BBC. Why will the Secretary of State not accept that Ofcom should have equal powers to adjudicate on complaints about the BBC's accuracy and impartiality, as it does for other broadcasters? She has referred to the large number of complaints from the commercial sector about abuses by the BBC of its dominant position. She went on to say that she would consider allowing Ofcom to adjudicate on complaints about the BBC's unfair competitive practices. That is a welcome step forward, but why does she need to consider it? Why can she not say today that Ofcom will take over that responsibility, so that we no longer have the existing position whereby the BBC promises to examine such complaints and then, once a decent interval of time has passed, rejects them?

Why has the Secretary of State again rejected the powerful recommendation of the Public Accounts Committee that the BBC's spending be subject to the full independent scrutiny of the National Audit Office? The BBC receives about £2.8 billion of public money, yet it is still unwilling to open its books fully to the Comptroller and Auditor General, and through him to Parliament. If the Secretary of State really wants to improve the transparency and accountability of the BBC, she should make that change straight away.

Let me now turn to the funding of the BBC. As the Secretary of State started by saying that she regarded it as improbable, if not inconceivable, that there should be a change to the licence fee, it must have come as something of a shock to her to receive Lord Burns' report, which states that sustaining the licence fee will become increasingly difficult. Her acceptance of that principle is a welcome change, but her agreement to a continuation of the licence fee for another 10 years means that it is essentially business as usual.

Does the Secretary of State accept that if a move towards subscription were to occur, it would require households to have access to conditional technology? What do the Government intend to do to encourage that? Given the pace at which change is happening, why is she refusing to contemplate any change to the licence fee system until 2017 at the earliest? In the past seven years the licence fee has gone up by 30 per cent. in real terms. Can she at least guarantee that it will not increase in future by more than inflation?

Why have the Government also rejected for at least 10 years the recommendation of Lord Burns' panel—supported, we understand, by Lord Birt—that licence fee money should be made available to other broadcasters for public service programming? Does she accept the analysis of Ofcom that over time, competitive pressures will continue to reduce the amount of public service broadcasting on commercial channels? If she does accept that analysis, what does she propose to do about it?

We agree with much of what the Secretary of State has said in her statement, but having identified the priorities and challenges for the BBC, the Government have shied away from addressing them. We share their wish to see a strong BBC producing high-quality public service programmes, but we also believe that the need for change should be addressed now, and that the charter should be looked at again in five years' time. Instead, the Government appear content merely to tinker at the edges of the existing structure while essentially allowing the BBC to continue for another 10 years with business as usual.

On a point of order, Mr. Speaker. It is deeply unsatisfactory that we have—

Order. The Father of the House knows that points of order can be taken only—

We have not had a copy of the statement.

It is no fault of any Official of the House that the statement has not been circulated. The Vote Office received the statement only recently. [Interruption.] Order. I am not here to say whose fault that is; I am explaining that it is not the fault of any Officer of the House.

On that specific point, I have just been passed a note saying that the statement had not been circulated before I got to my feet, and I apologise to the House for that. Obviously, I shall supply you, Mr. Speaker, with information about why that happened.

A number of the points made by the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) are interconnected, but let me start with the fact that there is a profound difference between the Opposition's view of the future of public service broadcasting and the view on the Labour Benches of the Government's position. The Government see public service broadcasting as providing a bedrock built on universal access and safeguarded by a universal licence fee—a licence fee that is more popular and sustainable, despite its regressive nature, than any of us might have expected at the beginning of this process. I believe that the proposals that I have set before the House today respond very directly to the public opinion expressed by thousands and thousands of people during the process of consultation.

What I have not done is rule out alternative forms of funding in the future. Indeed, in response to the hon. Gentleman's point, I recognise the profound changes that the switch to digital will bring. That is why, at about the time of switchover, we will conduct a review of alternative forms of funding for the BBC and public service broadcasting more generally. In advance of a new charter—in other words, before 2016, in about 2010 or 2012—in the light of the evidence at the time, we will also look at the case for some of the licence fee income being used to ensure choice and plurality for other public service broadcasters, such as Channel 4 and so forth. Those are decisions for five or six years' time; they are not decisions for now, but I have made it clear that they will be for consideration within the next charter period.

On compliance with the requirements that the trust will set for the BBC, the BBC trust will be able to impose very tough penalties and sanctions in the light of failure of any individual part of the BBC to comply with the service licence. Such sanctions might include moving money from one channel to another; it will be for the trust to dispose of such matters.

On the profound difference between the overhaul of the BBC's governance that we have set out today and the present situation—I do not think that the hon. Gentleman can have been listening that closely to what I had to say about this—the separation of the unsustainable dual present function, whereby the governors both regulate the BBC and oversee its management, will end. We will have a BBC trust that is responsible for the oversight of the BBC and for its governance.

I believe that the proposals that I have set out today meet the issues raised by the public in the course of consultation. They are not all entirely acceptable to the BBC, but that is not the point. I believe that the BBC will rise to the challenge that we have presented to it today, and that it will do so in the interests of the long tradition of public service broadcasting that it has led.

My right hon. Friend has announced proposed changes in the governance of the BBC that take account of the proposals of the Select Committee, and we appreciate that. It is also important to make the point that, after the mess that they inherited, Mr. Michael Grade and Mr. Mark Thompson deserve every encouragement in the new start that they are trying to provide for the BBC. I am sure that when my right hon. Friend produces her further proposals following the Green Paper, she will take into account the fact that her governance proposals need further clarification, and that she will be working on that.

With the Government, the Select Committee accepted, with whatever reluctance, that the only viable form of funding an independent public service BBC was the licence fee, and we do not quarrel with my right hon. Friend's proposal in that regard. While millions of people will accept, reluctantly or otherwise, that they are paying a licence fee for the BBC to continue, does she accept that they would be less happy with any possibility that the licence fee could be a kitty to be raided for other public service broadcasting organisations? It is very important that that should be taken into account.

Furthermore, I hope that my right hon. Friend will impress on the BBC the disquiet that is felt in many quarters at the nasty, menacing advertising campaign mounted by the television licensing authority to scare people in a way that is, in my view, incompatible with a democratic society.

My right hon. Friend has issued a Green Paper, and she will obviously be issuing firmer proposals in due course. She pointed out in her statement the difference between the four channels that we had 10 years ago and the 400 that we have now. Will she take into account in her final proposals the fact that the growth will be almost exponential by the end of 2016?

I thank my right hon. Friend for that contribution and I pay tribute to his Select Committee's recent report on the BBC, the Government's response to which I have published today. The report was timely because it enabled us to take serious account of it as we drew up the proposals in the Green Paper.

I entirely accept my right hon. Friend's cautionary note in relation to the public response to any other uses of the licence fee beyond the BBC. That is why I have signalled the intention of the review today, well ahead of time, and why there will obviously have to be extensive consultation and discussion in the light of the circumstances at the time on how such a provision might be applied.

I am well aware of my right hon. Friend's disquiet about what he has previously described as the "aggressive nature" of the advertising campaign for the collection of the licence fee. In the Green Paper, we have undertaken to review a number of outstanding issues in relation to licence fee collection, which, at the moment, costs about £150 million a year—a substantial amount. I hope that my right hon. Friend will accept those reassurances, and I look forward to the Select Committee contributing further to this debate.

May I, too, thank the Secretary of State for giving me advance sight of her statement? For the past 80 years, the BBC has been a pre-eminent public service broadcaster. It has made a major contribution to our democracy, our culture and our standing in the world. With the world of broadcasting changing so rapidly, it is vital for the new charter to ensure that the BBC is strong, independent, and well and securely funded, so that it remains the best in the world and the envy of the world.

We very much welcome the proposals in the Green Paper, which, in the main, we support. Will the Secretary of State confirm that, while she supports the continuation of the licence fee as the means of funding the BBC for the next 10 years, she has rejected outright the calls from John Birt and others to use some of the licence fee income to support other public service broadcasters during that period? Will she also confirm that digital switchover is a Government policy, and that she is not therefore expecting the BBC to take overall responsibility for it? We accept that the BBC should take a lead role in building and funding a digital Britain, but will the Secretary of State tell us the limits on the expenditure that the BBC would be expected to make in that regard? Surely she does not expect it to sign a blank cheque for all the switchover costs.

On governance, we agree that the current conflict whereby the governors are expected to be flag wavers for the BBC as well as its regulators simply cannot continue. We would have preferred to see the establishment of a new, tough, independent public service broadcasting regulator for all the public service broadcasters, but the proposal for the trust is a move in the right direction. However, given that the trust will have strategic oversight of major BBC decisions and a role in overseeing whether it fulfils its public service purpose, will there not still be a conflict of interest? Will people not see the trustees as still being part of the BBC, rather than separate from it? Are the proposals on governance firm Government policy or merely a starting point for further debate?

Will the Secretary of State tell us what role there will be on the new trust for representatives from the nations and regions? Does she agree that, whoever serves on the trust, it would be better if appointments to it were made by a joint Committee of both Houses of Parliament, rather than simply by her or her successors?

On programming, will the Secretary of State ensure that there will be a requirement on the BBC to increase its local and regional programming, rather than merely to maintain it?

Overall, we welcome the proposals in the Green Paper, which contains most of the provisions that we seek, to ensure that the BBC is strong, independent, and well and securely funded.

I thank the hon. Gentleman for his contribution. I have obviously confirmed the continuation of the licence fee throughout the next charter review period, but I have signalled that there will be two specific reviews. He made an observation about John Birt. As director-general of the BBC, he was a passionate advocate for the accountability of the BBC and the licence fee, and I am at one with him on his views on those matters.

The hon. Gentleman knows that I have made two written statements to update the House on digital switchover. The process of switchover is being led by broadcasters and the industry, supported by the Government. The licence fee settlement that will expire in 2007 took account of the BBC's role in promoting digital television and new digital services. We expect the negotiation of the new licence fee also to take account of the BBC's contribution to the costs of digital switchover.

On the status of the proposal for the trust, it is our intention that it should be the new form of governance for the BBC. It is important that the BBC should not be left in limbo for many months, and that it should be able to proceed to implement the new arrangements. How the membership of the trust is selected will obviously be a matter for discussion, but the working assumption is that the appointments will be made by the Crown. On the hon. Gentleman's final point on regional programming, the Government strongly believe in the BBC's right and proper role in the development of regional broadcasting, as I set out in my statement.

I congratulate my right hon. Friend on her statement today. I congratulate her on rejecting Lord Burns' wilder dogma, on retaining the licence fee and on the new structure of governance. Will she, however, clarify the time scale for the implementation of her proposals? There is a sense of urgency involved, and the new trust should be established quickly. If it is to have a role in maintaining quality, it should look now at the BBC's budget proposals, which include 3,000 job cuts, extensive privatisation and the slashing of 15 per cent. off budgets. The trust needs to be put in place as rapidly as possible to address those critical budgetary issues.

I thank my hon. Friend for his comments. The proposals that I set out are intended to take effect as part of the new charter, which will come into force on 1 January 2007, but the BBC, through its internal conclusions, is moving to changes in the governance structure. It will be a matter for discussion with the BBC as to whether it is to establish some form of shadow trust arrangement in advance of the new charter and whether that will have properly established constitutional status at that time.

Will the Secretary of State respond on the issue of funding? I note that she said in her statement that the licence fee remains the fairest way to fund the BBC, and I know that she wants to maintain the highest standards of quality of broadcasting. That view, I presume, would be shared by every Member of the House.

On the issue of the fairness of funding, the Secretary of State must be aware that, across parts of the UK, there are very high rates of evasion—non-payment of the licence fee. Through a series of parliamentary questions, I have been endeavouring to get her Department to establish the evasion in certain parts of Northern Ireland, so far without success. Surely fairness in funding can be achieved only when the 90 per cent. who pay can see action being taken against those who do not. In parts of Northern Ireland, evasion rates are very high. Surely she should examine those rates, elaborate on where they occur and put the detection vans in those places to uphold the law and ensure that the fee is paid. If it is not paid, fines should be.

The hon. Gentleman is absolutely right that money lost in unpaid licence fee is money lost to programming. It is therefore a responsibility of the BBC, through its agencies, to ensure that the licence fee is collected.

For a politician who wants to get a message over as opposed to winning brownie points with his constituents and others, steam radio is of course a matter of greater importance. The Secretary of State says that, for radio, the BBC has adopted a voluntary 10 per cent. quota and that the Government will consult on whether that is sufficient. To some of us, at first sight, it is grossly inefficient. In those consultations, I hope she will look after radio in general, and World Service radio in particular. What is the position of World Service radio?

I thank my hon. Friend for his remarks. Of course we will consider the proposed 10 per cent. quota. It is also worth underlining that Radio 4 is one of the largest commissioners in the world of new writing for radio and that Radio 3 is the largest classical music commissioner in the world. The Green Paper sets out clearly the continuing support for the World Service and the challenges that face it: questions about the number of languages in which it is broadcast and about the migration from radio to television, as well as the role of BBC World. No one who travels the world underestimates the importance of the BBC World Service, and we are determined that it will continue to be strong.

Is it not a fact that the World Service has been subject to parliamentary scrutiny for years without any threat to editorial independence? Why was there no mention in the Secretary of State's statement of parliamentary scrutiny of the rest of the BBC through the National Audit Office? Why did she not respond to the points made on this matter by my hon. Friend the Member for Maldon and East Chelmsford (Mr. Whittingdale)? Is it not true that the BBC has consistently resisted parliamentary scrutiny of nearly £3 billion of public spending? Are not the voluntary arrangements working quite adequately? Why should the Comptroller and Auditor General, alone for the BBC, have to ask permission to investigate any matter? Will the Secretary of State open the matter up in the charter review?

I realise that I did not deal with that point following the remarks made by the hon. Member for Maldon and East Chelmsford. I apologise for that and welcome the opportunity to deal with it now. As the hon. Member for Gainsborough (Mr. Leigh) is well aware, new arrangements have been established on the basis of agreement between the BBC and the NAO. The right and proper way to proceed is to judge how well those new arrangements are working, but to keep the question open during the remaining stages of charter review. However, there are good processes, which, as I understand it from the BBC's perspective and the NAO's perspective, are satisfactory. The question whether we go further during this charter period is still one for debate.

While I welcome my right hon. Friend's defence of the BBC, is she aware that it would be unacceptable to many of us for any slice of the BBC licence fee to go to other bodies, which in practice could mean some of the BBC's commercial competitors? Without wishing to be anything other than polite to all concerned, it would be best if Lord Birt kept away as much as possible from interference of any kind with the BBC. His record as director-general is not quite what she told the House.

I am sure that my hon. Friend does not necessarily believe all the stories he reads in the newspapers. What would unite this side of the House is a commitment to ensuring that not just the BBC, but public service broadcasting in this country, which is an important part of our broader broadcasting tradition, remains strong. That is why I have put on the record today the need in prospect to review the security of public service broadcasting before the end of this charter review period, hence the debate for a later day on whether some licence fee money needs to be diverted to maintain the strength of public service broadcasting.

The Secretary of State rightly said that the BBC needs to provide a range of specific services for the UK's nations. What new powers will BBC Scotland and BBC Wales have to make their own decisions on all news priorities and programming? Will there be specific BBC trusts for Scotland and for Wales? She talks about improving BBC programmes and news and current affairs, but how does she imagine that is possible when budgets are being slashed and 3,000 jobs are about to go?

Let me deal with the last point first. Those are matters for the BBC; they are not matters in which Ministers should interfere. The Government set the terms of the charter and the BBC has to meet those terms. Secondly, there will not be separate trusts for Scotland and for Wales, but we would expect the membership of the new BBC trust to take account of the nations and regions in the ways that I have described.

From all the information we receive, it is clear that the public regard the licence fee as excellent value for money. It is also clear that the public trust the BBC more than politicians, which is obviously not an over-generous compliment to the BBC. The BBC is successful, so why do people fall over themselves to restrict its output against the commercial sector? I say that as someone who is happy to pay Sky five times as much as I pay the BBC so as to receive specialist sports and films. Why try to restrict one of the most successful organisations in the country?

Maintaining public confidence and support for the licence fee relies on people believing that they are getting value for money. I referred to the concern, represented by about 500 letters a month to my Department, expressed by people who are not yet able to get Freeview, although they pay the licence fee. Hence the importance of the momentum behind the move to digital switchover.

My hon. Friend has made an important point. This country has a mixed economy of broadcasting, but the bedrock of that mixed economy is universal access, free to air, to the BBC. That leaves people free to make choices about further services to which they may wish to subscribe, but in the context of that universal entitlement—subject to payment of the licence fee—and it should continue.

The Secretary of State just acknowledged that her Department receives more than 500 letters a month from people complaining that they cannot get Freeview. Can she tell me what other licence fee involves charging people for something that they cannot get? It really is unacceptable. Many of my constituents are very angry that they cannot get Freeview, but are paying for it.

It is only a matter of time. Opposition Members may grimace, but a project as complex as digital switchover cannot be completed overnight. The transmitters must be upgraded, and equipment must be replaced. We must ensure—while being consistent with the principle of universal access—that no one is left behind, and that we do not have a population of elderly and vulnerable people who are shut out from the benefits of digital television. It is a clear aim of Government policy that the switchover should be led by broadcasters and the industry, with Government support, and that that should take place between 2008 and 2012.

I congratulate my right hon. Friend on seeing off all the voices—heavily represented on the Conservative Benches—that wanted her to begin the process of weakening and dismantling the BBC. Is it not the case that the more our society fragments, the more we need the voice of a common culture? Is it not the case that the more the rest of the media engage in a race to the bottom, the more we need the BBC to lead the race in the opposite direction?

My right hon. Friend has issued a quality challenge to the BBC today for the next 10 years. Is it not the BBC's job to rise to that challenge?

I thank my hon. Friend for what he has said. It underlines the profound difference between our view of the BBC and public service broadcasting, serving the people of this country, and that of the Opposition.

The Secretary of State has made an outrageous comment. It is because people like me believe that public service broadcasting and the institution of the BBC are important that we would have begun innovative thinking now, rather than deferring it. Does the Secretary of State realise that it is not attacking the BBC to say that in the real world people may not still be watching television on television sets within the time scale that she has set? We shall be able to download it on telephones; we shall have it on our mobile systems.

This is a transforming technology, and that transformation is happening now. There is no point in promoting citizenship on the BBC if no one watches the BBC. That is public service broadcasting set aside for the elite, not the people. It is because we want the contribution of public service broadcasting, and the BBC's traditional programming, to continue that I despair about the Secretary of State's failure to tackle those issues now. The change is happening now, and people are changing their viewing habits now.

That is precisely why the sixth of the BBC's public purposes is to deal with the digital challenge. It is why my predecessor, my right hon. Friend the Member for Islington, South and Finsbury (Mr. Smith), negotiated an above-inflation-rate increase for the BBC, so that it would be competent and funded to meet the challenges. There is absolutely no disagreement between us on that, however the hon. Gentleman may try to represent the facts.

I, too, congratulate the Secretary of State on the Green Paper, which I look forward to reading in due course.

I support the continuation of the licence fee. Those who complain about paying it—we have heard some of them this afternoon—tend to take the narrow view that the BBC provides only the two mainstream analogue terrestrial channels, forgetting the raft of radio programmes, including the regional opt-out. When I am in London, I listen to BBC Aberdeen broadcasts on the computer. The BBC provides a wide range of services, and I think that the best way of preserving its uniqueness and its standing in the world is to ensure that it continues to be funded through the licence fee.

I also wonder—

Order. It seems that the hon. Lady may want to apply for an Adjournment debate on this matter.

I thank my hon. Friend for the important points that she has made, with which I agree.

If we are not to have a separate trust for BBC Scotland—I do not quibble about that at this stage—it will be important for the geographical and cultural diversity of the station to be reflected not just in the composition of the trust but in its purposes. This is not just about national and regional representation; it is about local provision. In my constituency we have Radio Orkney and Radio Shetland, which are greatly valued by local people because they broadcast not just to local communities, but about our communities to the rest of the country. Can the Secretary of State assure me that high quality local output will not be lost in a concentration of power among a small number of people?

There is absolutely no intention that that should happen, but the hon. Gentleman makes an important point that underlines the increasing local enthusiasm for very local radio and television news. This is part of the challenge not just to the BBC but to other public service broadcasters in the reassessment of the role of regional television and radio programmes.

The supreme achievement of the BBC in Wales—which has itself been a magnificent achievement for the last 80 years—is its work on the use and development of one of the most ancient surviving European languages. That is partly due to the existence of the Broadcasting Council for Wales, whose chairperson has always been a member of the BBC's board of governors. Will the new set-up, with the executive and the trust, be accompanied by a guarantee of Welsh representation, and may we have an assurance that the move from analogue to digital will involve no diminution of the content and availability of broadcasting in the Welsh language?

I strongly believe that the BBC has an important role to play in preserving what might be seen as minority languages such as Welsh and Gaelic, on a UK-wide basis. I hope that the BBC will discharge that responsibility. I also hope that my hon. Friend will forgive me if I do not give any specific undertakings at this stage about the membership of the trust. I can only tell him that I hear what he says about the importance of Welsh interests being recognised at every level of the BBC.

BILL PRESENTED

Equality

Ms Secretary Hewitt, supported by the Prime Minister, Mr. Secretary Prescott, Mr. Chancellor of the Exchequer, Mr. Secretary Clarke, Mr. Secretary Johnson, Secretary Ruth Kelly, Jacqui Smith, Mr. David Lammy and Fiona Mactaggart, presented a Bill to make provision for the establishment of the Commission for Equality and Human Rights; to dissolve the Equal Opportunities Commission, the Commission for Racial Equality and the Disability Rights Commission, to make provision about discrimination on grounds of religion or belief; to impose duties relating to sex discrimination on persons performing public functions; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. Explanatory notes to be printed [Bill 72].

On a point of order, Mr. Speaker. As far as I can recall, this is the first time I have ever raised a point of order in the House. I am doing so now not because I shall be retiring before the general election, but to record the fact that during Prime Minister's Question Time the Leader of the Opposition—whose office I have informed of this—inadvertently gave a misleading impression of what happened during Monday evening's vote. He said that I, along with 61 other Labour Members, had gone into the Lobby with him. The truth is that I had tabled amendment No. 4 to the Prevention of Terrorism Bill, and it was the Leader of the Opposition who went into the Lobby with Labour Members.

The matter is on the record, and I will not be drawn into it.

On a point of order, Mr. Speaker. It concerns the explanatory notes relating to the draft Company Directors Disqualification (Amendment) (Northern Ireland) Order 2005, which we debated in a Committee yesterday. I shall not go through the detail of the actual debate, but it subsequently occurred to me that in fact the notes were rather superficial. Indeed, had I had a deeper understanding then, and had the notes been more substantive, that might have altered the contribution that I and others made. May I ask through you, Mr. Speaker, that when highly complex issues are to be debated—specifically in the special circumstances relating to the governance of Northern Ireland—officials be requested to provide comprehensive notes on the consequences of specific orders, so that we can have a more informed debate?

I will look into this matter and get back to the hon. Gentleman.

On a point of order, Mr. Speaker. Is there anything that you can do to shorten the time taken up by Front-Bench exchanges during statements? This afternoon's opening statement and the Front-Bench reply took 28 minutes, which meant that the some 25 Back Benchers who wanted to get in, including me—the headquarters of BBC Wales is in my constituency and I wanted to refer to it—were unable to do so.

Further to that point of order, Mr. Speaker.

Order. Let me answer the point of order; if I do so, the hon. Gentleman might not need to take it further.

During points of order, a Member sometimes comes up with a gem that allows me to put it on the record that I am displeased with the fact that Front-Bench statements are exceeding the 10 minutes recommended by the Modernisation Committee. I say with the greatest respect to Secretaries of State that they are slipping into their old habit of forgetting that Back Benchers are also entitled to have their say. Today's statement lasted 13 minutes, and as a result the Opposition Front-Bench spokesman took longer over his response; and so it goes on. So I take the point made by the hon. Member for Cardiff, West (Kevin Brennan). I want more Back Benchers to be able to be called, and it saddens me that I have to leave some uncalled.

Further to that point of order, Mr. Speaker. I am grateful to you for allowing me to pursue it. I want to put it on the record that today's statement lasted less than an hour, and that it was 10 minutes past 1 before the three Front Benchers had concluded. Not many Back Benchers were in fact standing today. Will you look into this matter and see what can be done in future?

Yes, and of course the hon. Gentleman will remember that I was very sharp off the mark in leaving the statement because today is an Opposition Supply day, and I want to ensure that it gets a full airing.

On a point of order, Mr. Speaker. My complaint is not that a statement was too long but that there has been no statement at all about the announcement that Nottingham East Midlands airport is to be allowed additional flight paths over my constituency at night, which will cause huge disturbance and blight. Will you ask whether a statement has been requested of you by the Secretary of State—

Have an Adjournment debate.

I have had one of those, and the Minister's response was wholly inadequate. I want the Secretary of State here to answer to the House for this decision, which has been taken undemocratically and without the opportunity for Labour and Conservative Members representing Leicestershire to deal with it.

I am not encouraging this—far from it—but Members can also apply for an urgent question. But that does not mean to say that I will agree to it.

BILLS PRESENTED

Fisheries Jurisdiction

Mr. Alex Salmond, supported by Mr. Roy Beggs, Mr. Alistair Carmichael, Mr. Nigel Dodds, Mr. Kelvin Hopkins, Mr. Elfyn Llwyd, Mr. Eddie McGrady, Mr. Austin Mitchell, Angus Robertson, Mr. Anthony Steen, Mr. Michael Weir and Ann Winterton, presented a Bill to make provision for withdrawal from the Common Fisheries Policy of the European Union; to amend the Fishery Limits Act 1976; to make provision about the exercise of functions under that Act by Scottish Ministers, the National Assembly for Wales, Northern Ireland Ministers and the Secretary of State; to provide that that Act shall have effect regardless of the provisions of the European Communities Act 1972; to define English, Scottish, Welsh and Northern Irish waters; and for connected purposes. And the same was read the First time; and ordered to be read a Second time on Friday 13 May, and to be printed. [Bill 73].

Buses (Concessionary Fares)

Mr. Michael Foster, supported by Peter Bradley, Mr. Alan Campbell, Mr. Parmjit Dhanda, Mr. David Drew, Mr. James Plaskitt, Mr. Patrick Hall and Mrs. Janet Dean presented a Bill to make provision about concessionary fares on buses for elderly persons. And the same was read the First time; and ordered to be read a Second time on Friday 22 April, and to be printed. [Bill 74].

I beg to move,

That leave be given to bring in a Bill to make provision about the enforcement of entitlements to annual leave under the Working Time Regulations 1998 and to amend the National Minimum Wage Act 1998 in that connection; and for connected purposes.

The news that the national minimum wage is to be raised to more than £5 an hour in October this year hit all the national headlines last week. Seven years after the introduction of a national minimum wage, most people know about it. The work of the Inland Revenue national minimum wage enforcement agency's compliance officers has been effective. They are able to ensure that an employer is paying the whole work force the correct amount, and not just the worker who made the complaint. They can also visit some employers at random and target sectors and businesses that are notorious for low pay, such as restaurants, whose workers may be unwilling or unlikely to complain.

However, enforcement officers will often find that failure to pay the minimum wage is not the whole story. The employer who keeps his workers on illegal poverty wages is highly unlikely to be fulfilling the provisions of the working time directive, and in particular the right to four weeks paid holiday. Yet as things stand, national minimum wage compliance officers are unable to take action against employers who fail to give workers their proper holiday entitlement by, for example, not paying them the full rate or by not giving the full four weeks holiday. My Bill aims to extend the powers already exercised by the compliance officers in order to allow them to pursue an employer for failure to provide annual leave entitlement.

There are no definitive figures on the number of workers currently not receiving the paid holiday to which they are legally entitled. However, a 2002 TUC study of labour force survey data found that 400,000 full-time workers were receiving fewer than 12 days' paid leave, which means that even if they were receiving all eight bank holidays as additional paid leave, they were still not getting their statutory entitlement. More recently, a National Association of Citizens Advice Bureaux report entitled "Still Wish You Were Here", published in December 2004, stated that tens of thousands of the employment-related inquiries dealt with by their bureaux involve non-compliance with the right to paid holiday. This is likely to be a gross underestimate of the true numbers, because the right to paid holiday is not as well known or understood as the right to the national minimum wage. Those most likely to be losing out are probably in part-time or temporary work or in low-paid sectors, which are often non-unionised. Many of them will be women.

A study commissioned by the Department of Trade and Industry in November 2004, entitled "A survey of workers' experiences of the Working Time Regulations", found that 13 per cent. of a sample of workers were not receiving four weeks' paid leave. Only a third of that sample had any awareness of the right to paid holiday, and most of those did not know the actual law.

Some workers get no paid holiday at all because their employer tells them that they do not qualify, or that they have to have a particular length of service. In Aberdeen, where there are a large number of "temp" agency workers, there is a particular problem in respect of those who are told that they are receiving a slightly higher hourly rate for the hours that they work to cover their paid holiday entitlement. The GMB union, which I thank for raising this issue with me, has found examples of members who are not paid the full rate for their holiday. In one case, restaurant workers received a basic hourly rate that was below the national minimum wage, but which was made up through tips paid via the payroll. When staff were on holiday, they received only the basic hourly rate. In a furniture factory in Grantham, piece-workers queried their holiday pay because it was lower than what they earned in a normal week, and therefore fell below the national minimum wage.

In both cases, the workers raised the issue as a problem with the minimum wage, but when they were told that national minimum wage compliance officers could not take action on their holiday entitlement, they were upset, to say the least. They were told they had to go to an employment tribunal, which is a more complicated process and requires a worker first to raise the issue through the statutory grievance procedure. That is just too intimidating for a vulnerable worker to undertake—that is, if they still have a job at the end of it all. This procedure is not used for minimum wage violations, simply because it would leave an individual worker exposed to victimisation. If it is not appropriate for minimum wage violations, it is not appropriate for violations of paid holiday entitlement.

That is why I believe that the compliance officers who are already working on the national minimum wage should be given the same powers to enforce holiday entitlement. The powers have already proved effective in seeking out and ending poverty pay, so it is sensible to use them to ensure that workers receive their holiday pay entitlement. Compliance officers themselves say that holiday pay fits in well with national minimum wage work, given that to calculate a worker's hourly rate they have to understand how much money paid to the worker represents wages and what counts as holiday pay. If the normal weekly wage is illegally low, the holiday pay will fall short by the same amount. When arrears are due because of underpayment of the national minimum wage, there will inevitably be arrears of holiday pay, too. The simple solution is to extend the powers that national minimum wage compliance officers already have to cover infringements of paid holiday entitlement. That is precisely what my Bill will do.

I also want to highlight a particular problem faced by many of my constituents who work offshore in the oil and gas industry who are not, at present, getting their four weeks holiday entitlement. Despite the incorporation of the EU working time directive for the offshore industry into UK law through the Working Time (Amendment) Regulations, passed by the House on 22 October 2003, many of my constituents are still not getting their full holiday entitlement.

I realise how important the oil and gas industry is to the economic prosperity of my constituency and how much employment it provides. However, I remain puzzled at the intransigence of operators and contractors in refusing to give their offshore employees the same paid holiday entitlement that is enjoyed by their onshore colleagues. I find it particularly perverse that their lawyers are now arguing in an industrial tribunal that the horizontal amending directive—HAD, as it is more commonly known—which extends the working time directive to the offshore oil and gas exploitation sector, does not apply offshore. I need to repeat that, in case it has not been understood. Despite the fact that the regulations define "offshore work" as

"work performed mainly on or from offshore installations, including drilling rigs",

the industry is now arguing that the regulations do not apply offshore. I believe that that does no one any good. Indeed, it risks bringing the oil and gas industry into disrepute—in other respects, I am a great supporter of the industry—as the only industry that does not provide a section of its work force with the right to four weeks paid holiday. That is a disgrace.

This week, the Aberdeen and Grampian chamber of commerce published a report on the skills shortage in the oil and gas industry in the North sea and expressed concern that not enough young people were being attracted into the industry. School leavers who are looking for jobs with not only good prospects but good terms and conditions are unlikely to be impressed by the failure to give offshore workers their full holiday entitlement. This unnecessary battle through the courts sends out a totally wrong message to potential young workers.

I appeal to the Minister for Employment Relations, Consumers and Postal Services—I am pleased to see him in his place—to adopt Order in Council procedure sooner rather than later to enforce compliance with the working time directive, particularly if the industry continues to drag its heels. Of course, if my Bill is passed, the power would rest with the national minimum wage compliance officers to force even the employers in the oil and gas industry to provide full holiday entitlement to offshore workers and not leave people bogged down in an industrial tribunal.

I do not have to tell the House how important holidays are to us all. They help to improve our physical and mental well-being, and paid holiday entitlement means that such holidays can be taken without financial worries. This is a simple Bill, with the potential to improve the lives of thousands of people. I commend it to the House.

Question put and agreed to.

Bill ordered to be brought in by Miss Anne Begg, Mr. Frank Doran, Ann Keen, Jim Knight, Ms Dari Taylor, Mr. John Grogan, Kali Mountford, Rob Marris, Lady Hermon, Iain Wright, Mrs. Anne Campbell and Mr. Malcolm Savidge.

Annual Leave Entitlement (Enforcement)

Miss Anne Begg accordingly presented a Bill to make provision about the enforcement of entitlements to annual leave under the Working Time Regulations 1998 and to amend the National Minimum Wage Act 1998 in that connection; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 20 May; and to be printed [Bill 75].

I advise the House that Mr. Speaker has selected the amendment in the name of the Prime Minister.

I beg to move,

That this House notes that council tax bills have increased by 70 per cent. under the Labour Government, with further above-inflation rises planned in the forthcoming year and after the general election; expresses concern that pensioners have been hit hardest and calls on the Government to implement the Conservative policy of an automatic council tax discount for those aged 65 and over; notes with alarm the Government's plans in any third term for a revaluation which would lead to greater inequities and new higher council tax bands; rejects Liberal Democrat plans for a local income tax, regional income tax and higher national income tax; and calls for less bureaucracy and interference from Whitehall and regional bureaucrats in local government funding and for greater transparency in the allocation of local funding for councils.

I seem to be making a habit of standing before the Chamber to talk about a crisis. Last time, it was the crisis in housing and this time it is the crisis in local government funding. It seems to me that we have a Government who are prone to crises. Where the housing crisis particularly hurts the young, the council tax crisis particularly hurts the elderly—it cannot be said that the Office of the Deputy Prime Minister discriminates on grounds of age. People who have worked hard all their lives and saved for their retirement should live in dignity and security in old age, but today many of them, particularly those on fixed incomes, find it difficult to make ends meet because of the burden of taxation, which the Government have increased by stealth.

The council tax has proved to be the ultimate stealth tax under this Government, as council tax payers have seen their bills soar by 76 per cent. since 1997. That means that more than a third of the increase in the state pension has been swallowed up by council tax hikes.

Who brought it in? [Laughter.]

I do not think that this is funny, Mr. Deputy Speaker. This is a serious matter of—[Interruption.]

Order. Let me make it clear from the outset that I want no interventions from a sedentary position. If Members want to intervene, they must stand up and do so in the conventional way.

As I was saying, more than a third of the state pension increase has been swallowed up by council tax rises. This year, typical council tax bills will top £100 a month for the first time in the history of the council tax. Is it any wonder that people feel so betrayed, when they recall the Prime Minister saying:

"We have no plans to put up taxes"?

Is the hon. Lady aware that the position in Wales is even worse, because the rebanding has led to 33 per cent. of properties being allocated to a higher band and only 8 per cent. to a lower one? In effect, 25 per cent. of houses in Wales have been subjected to a further significant tax increase.

Before responding to his intervention, I would like to congratulate the hon. Gentleman on his 40th birthday. That is the good news, but I have to impart a bit of bad news. What he says about Wales is true—I shall come on to deal with it later in my analysis—but I remind the hon. Gentleman that in July 2003 his party voted in favour of increasing council tax bands.

The fact is that it has been convenient for the Chancellor to shift the burden of taxation on to local government, and we have seen a constant stream of unfunded burdens foisted on to local government, leaving local authorities no choice but to put up council tax.

On the issue of underfunding, will the hon. Lady tell us how she proposes to fund her party's offer of a council tax discount for pensioners?

I shall be happy to explain it later in my speech, but for the avoidance of any doubt, it would be worth quickly listing some of the unfunded burdens, which make uncomfortably long reading. The increase in national insurance has added £280 million to local authorities' costs and fuel duty has increased by 25 per cent. since 1997. Councils have been faced with the financial consequences of the landfill tax, the pension tax, numerous EU directives such as the end of life vehicle directive, the waste electrical and electronic equipment directive and so forth. All those have added costs to local government, which has not been granted matched funding from the centre.

The Government defence of those rises has been a master class in dissembling and disinformation, but that has not fooled the taxpayers. When MORI asked voters last year whom they blamed for their council tax increases, 78 per cent. said that they blamed central Government. Of course, they are right to do so, as on average 75 per cent. of what is spent on local services derives from central Government grant.

The Minister is fond of telling the House that every local authority has received an above-inflation increase in formula grant, but that bland statement conceals the fact that the Government have so manipulated the level of the grant to different authorities that there are glaring contrasts in the increases that councils have had to make to council tax to maintain services. The really revealing figure emerges when we look at Government grant per capita to each local authority which, conveniently, I was given in a written answer on 11 January. At the top end, councils such as Nottingham have enjoyed a grant increase of more than 76 per cent. since 1998 and, guess what, Sedgefield is in the top five, with a 68 per cent. increase. Every authority with an per capita grant increase below 20 per cent. has suffered a real-terms cut, and that includes many Conservative-held district councils. Sevenoaks is at the bottom of the pile, with a 5.1 per cent. reduction that is, of course, a 30 per cent. cut in real terms.

Does the hon. Lady accept that overall local government has done very well from this Government? It has had a 33 per cent. increase in real terms in grant since 1997, compared with a 7 per cent. cut over the previous four years. Of the so-called burdens that have been inflicted on local authorities, which she has just read out, can she tell us which burdens her party will commit itself to removing, should it by some mischance happen to win the general election?

I shall come on to the removal of burdens. The point is that increases in grant vary from area to area. Perhaps the hon. Gentleman should go back to his constituency and, no doubt through gritted teeth, inform his pensioners that under our proposals a single pensioner living alone would be £456 better off when her council tax is halved.

We continually hear the story of how local government has done very well in the past eight years of Labour Government. If that is the case, can my hon. Friend tell us why we have seen such a record increase in council tax?

I thank my hon. Friend for that intervention. He has given me the opportunity to reveal the inequity of the grant distribution. The sheer range of the allocations beggars belief, but it helps to explain why so many Conservative authorities have been short-changed since 1997. The Government have now been rumbled, and in the debate on local government finance settlements last month, the Minister fell into his own trap by threatening councils with capping if this year's council tax increases are above 5 per cent. He suddenly realised that he may have bitten the hand that feeds him. The truth is that efficient, well run Conservative councils are the goose that lays the golden egg for this Government.

While we are on the question of equity, I should perhaps thank the hon. Lady for her proposal to reduce my council tax bill by £500 a year. Is that really sensible, however, given that people on very small pensions will get no benefit at all? Is not it logical to provide help for all council tax payers, rather than just the better-off?

With respect, I suggest that the full detail of our proposal is not completely clear to the hon. Gentleman. There is a cap of £500 and I shall explain that in more detail. I remind him, however, that it was his party that committed itself to stop means-testing. If he is in any doubt about what pensioners feel about means-testing, he should go and ask them, because they find it offensive to be means-tested in later life. That is why our discount would be universally available to the over-65s.

How does the hon. Lady explain the record council tax increases we have had in Cambridgeshire? Recent grant increases include 11.2 per cent. from April this year, 8 per cent. for the current year and 11 per cent. for last year. Despite those record increases in grant from a Labour Government, we have had record increases in council tax from a Conservative county council.

The hon. Lady seems not to have got the essential point at this stage of the debate, which is that the grants distributed to various parts of the country are very inequitable. Cambridgeshire has been in receipt of a below-average Government grant, and one of the consequences has been that the local authority has been forced to recover more of what it costs to fund local services from local taxation.

Will the hon. Lady please correct the record? Cambridgeshire has not received below-average grant increases: it has received above-average grant increases in each of the past three years. For the sake of accuracy, will she please now confirm that?

The Minister is very knowledgeable about local government finance and he knows the answer to his own question. It is because Cambridgeshire is an education authority. The unitary authorities have fared better under his grant system and the district councils have fared poorly.

It is small wonder that Runnymede council, which was rated "excellent" by the Government's watchdog, has had to double its council tax since 1997 to make up for its 20 per cent. decrease in real terms grant. One council leader rang me up this week saying that he will have to risk capping with a 5.9 per cent. increase because he is just not prepared to cut services. As a unitary authority, his council received a poor settlement of a 4.4 per cent. increase, compared to an average of 6.1 per cent. for comparable authorities. It just goes to show how unfair the system is.

Eight years ago, the Government started with a policy of deliberately forcing up council tax in what they perceived as affluent areas, then they panicked and capped, and they are now forcing service cuts on the same areas. Would the Minister like to tell me which services he wants councils such as Southend to cut?

We could spend a great deal longer than a single Opposition day discussing the smoke and mirrors deployed by this Administration in local government finance, but the fact is that the people to whom we are accountable—the tax-paying public—know that since 1997 council tax has gone through the roof.

Does my hon. Friend share my deep misgivings about the behaviour of the Government in relation to the West Mercia constabulary? Some 300 additional officers were paid for entirely out of increases in the council tax. The Government's reaction has been to nominate the authority and threaten to cap it. On top of that, they try to take credit for the additional police officers. The Government cannot have it both ways.

I thank my hon. Friend for that intervention. In another helpful written answer on 28 February, it was revealed that the per capita funding for the police also shows incredible inequity in its distribution.

The pain of the crisis in local government finance has fallen disproportionately on our pensioners, exchanging their dignity and security for anxiety and penury. We must not forget that under this Prime Minister 2 million pensioners still live in poverty. And there is worse to come. If Labour should get a third term in office and council tax inflation continues on the same trajectory that it has followed since 1997, band D bills will hit £1,836 by the end of that third term. Moreover, under Government plans to introduce new, higher bands—a measure that has met support from both Labour and, as I mentioned, the Liberal Democrats—a typical household bill will be taken to well over £2,000.

The hon. Lady was talking earlier about universality as a panacea to the problems, but has she considered the question in the round? What would happen to pensioners whose payment of council tax was entirely discounted? Has she considered how the Conservative proposal could be paid for, given that there are, I believe, proposals to end other universal benefits, such as winter fuel payments, TV licences and tax relief for pensioners?

Of course the proposal has been carefully thought out. It is, as the Institute for Fiscal Studies pointed out, fully costed and fully funded. I reassure the hon. Lady that the discount for pensioners, which I am about to deal with in more detail, would come on top of the existing council tax benefit, single person's discount and, as my hon. Friend the Member for Havant (Mr. Willetts) confirmed, winter fuel payments. [Interruption.] If Labour Members will hold on while I discuss in more detail what our proposal will consist of—perhaps when they see its merits they will join me in challenging the Government to match it—many of their questions will be answered.

The Government have committed themselves to the revaluation of property, which is already being undertaken in Wales, where four times as many homes have moved up one or more bands as have moved down. If that were repeated in England, 7 million homes would go up a band. How else should that exercise be described but as rigged revaluation? It is a ticking tax time bomb, primed to explode on the doorsteps if Labour wins the next general election.

Does the hon. Lady agree that the effect of the revaluation is not an increase in the total amount of council tax revenues but redistribution in collection to reflect more accurately the value of properties? If more properties end up in a higher band, that reflects the fact that more properties in that area have gone up in value, but bands will go down in other areas and people will pay less.

I am concerned about the hon. Gentleman's naivety in this matter. Although I agree that the objective should not be to increase the total amount of money raised because it is a completely disconnected fact that property prices have risen, the fact is that the revaluation is being used in Wales as a redistributive tool. Therefore, we conclude that its extrapolation to England would have a redistributive effect and, in fact, aggravate the inequity that I have been describing in distribution of central Government grant.

Will the hon. Lady clarify her position on council tax, given that the hon. Member for Brentwood and Ongar (Mr. Pickles), who is in her own team, told the House on 2 February,

"Any council tax system inevitably requires some form of revaluation"?—[Official Report, 2 February 2005; Vol. 430, c. 929.]

Would they keep council tax or not?

I think that I have made it perfectly clear that we are proposing corrections to problems in the council tax system that have been vastly aggravated by the Government.

Wriggling!